part exchanges

part exchanges..

What's my car worth in part exchange? often this can be the crucial factor in whether a sale proceeds or stalls. Unfortunately, for both customer and dealer, the answer is not that straightforward. What you may be offered for your pride and joy in part exchange - and what it's really worth - are often completely different numbers. The short answer to the true value question is - it's what someone is prepared to pay for it on the day. A dealer's final part ex offer, however, will depend on a number of factors - what profit margin the dealer has 'over' the car you are interested in, how long he has had it in stock and how desperate he is to move it along.

But to start with he has got to decide how he is going to dispose of your car. If it's a nice thing, say a popular 5 door hatch in a good colour with power steering, sensible miles and history, he may decide to retail it - and his offer should reflect the fact. If your car is an absolute dog that no one in their right mind would want, in doom blue (flat navy to you) with a zillion miles, no spec and even less history, then it's either sold to the trade or it goes to the automotive equivalent of the knackers yard - the local car auction - or 'the block' as it's affectionately known. In either case you are going to be offered something between not a lot and bugger all.

but I've been offered Ł1500 more for it down the road.. don't forget the old adage that there is no such thing as a free lunch, and bear in mind that the phrase was probably first coined in a used car showroom. The statement "minimum Ł1000 part exchange allowance" should alert the switched-on buyer to the fact that the advertising dealer has got at least a grand of discount to play within his screen price. The dealer certainly hasn't had a pang of conscience and decided to be charitable - it's simply a marketing tactic.

the over allowance.. the difference between a part exchange price and the true value of a vehicle is known as the over allowance. This is how it works. Assume similar cars and exactly the same part exchange vehicle.

Dealer A                                                                 Dealer B
Screen Price Ł7995                                               Screen Price Ł9995
Part ex value Ł2995                                              Part ex value Ł4495
Balance Ł5000                                                        Balance Ł5500

Dealer B has offered a lump more for the part exchange than Dealer A - Ł1500 more in fact. But Dealer B's car is over priced by Ł2000, whereas Dealer A's car is competitively priced. Dealer A's part ex value is probably very near the car's true value and in this case Mr Punter would be Ł500 better off accepting the lower part exchange price and not Dealer B's over allowance.
As ever it's the 'price to change' that is the only important number.

and if your first thought is.. "I wouldn't fall for that. I'd spot Dealer B's over-priced car straight away" - then I can tell you from bitter experience that otherwise intelligent people struggle to come to terms with the 'price to change' conundrum. As a result, armed with an ambitious valuation of his own car, Mr Unrealistic Punter will spend whole weekends trudging from one wet and windy forecourt to another, being serially insulted. Eventually if he is lucky he may happen across a dealer who is so desperate to move a particular 'sticker', that a deal will be struck. What he fails to realise is, that by adopting a daft value for his own car, Mr Unrealistic Punter has effectively narrowed his choice of deals down to virtually zero - and this not a good basis for buying anything - particularly a used car.

to sum up.. do your research so you can spot when an advertised car is priced competitively. At the same time try to get a feel for what you should be realistically asking for your own car. The fact that you are reading this page means that you should be aware of the internet as a very useful tool for price comparisons. It's not coincidental either, that Autotrader Interactive is the most popular car site on the web, the recently re-launched site actually works very well and with a database of something like 200,000 cars for sale, a few minutes surfing can save you a hell of a lot of leg work.

a recent quote.. "I've trekked round dozens of garages over the last 3 months and they are all offering me in part exchange, at least Ł1500 less than I want for my car"

and another.." I know their car is way over priced and not as nice as yours, but they have offered me what I want for my part exchange"

Copyright Š P. Gunundez 2004
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