Thursday, June 26, 2008

What Happens After a Car is Traded-In?

Have you ever wondered what happens after a car is traded in? Let's say you buy a new 2008 Honda Accord and trade in your 2003 Toyota Camry. What happens to your old Camry after you drive off the lot with that new Accord?

In most cases, the dealer is going to extract the monetary value out of that trade-in as soon as possible. If the trade-in is a low mileage, good condition example of a popular make/model, the dealer may put it on its used lot and hope for a quick sale. If the car has minor issues that can be fixed relatively quickly & cheap (i.e., bald tires, interior carpet stains), the dealer may fix it up quickly and try to get a quick sale. However, there's no guarantee that the dealer will put the car on its used lot just because the car is low mileage, in good condition, and popular. If you trade-in a Honda Civic at a Porsche dealership, chances are the dealer will not put a used Civic next to its fleet of used BMWs, Porsches, and Mercedes. Dealers typically attract a certain profile of customers for their particular make, and they try to carry inventory, new & used, that is consistent with their customers' profile.

If the dealer thinks the trade-in doesn't fit with his used inventory, the dealer will just wholesale the car and send it to an auction. If that Camry or Civic trade-in is in good condition, chances are it'll get snapped up at the auction by another used dealer who will then put it on its lot forsale. The lot could be affiliated with a new dealership or one that just focuses on used cars.

If the trade-in has high mileage, is in need of repairs, or is an unpopular make/model (i.e., Pontiac Aztec), the car will fetch a much lower price at auction and the used dealer that purchases the car will spend as little money as possible to get the car up to pass-able condition for sale. This is why many auction cars are considered "undesirable".

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2 comments:

Wilson said...

My cousin recommended this blog and she was totally right keep up the fantastic work!

Used Cars

Toyota Chaser For Sale said...

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