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Question from somebody who is new to buying and selling cars!!!

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Ding-Dong | 10:01 Wed 31st Aug 2005 | Motoring
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Two years ago I bought my first brand new car - since l started my first job fifteen years ago, I've always had company cars, and therefore was automatically bought a new one every couple of years or so. Two years ago, I started to receive a car allowance from work, and went out and bough a new car that was listed at �22,000, although I did receive a discount as I went to the same garage where my firm buys all its company cars.

Anyway - two years down the line, I'm bored of it, and therefore am looking to change, and as a result I've been to a couple of garages who have offered me �7,000!!! part-exchange.

My question is this - how can they possibly justify offering me just �7,000, when they will put this particular model on the forecourt for at least �12,000. It just doesn't seem morally right - I feel like I'm being mugged - the only difference being is that these people smile at me whilst they are doing it. Also, what is the point of Parker's, Glasse's and CAP guide, who all say part-ex sohlud be about �9,000!!!

Do dealerships bandy together and operate as a little cartel?

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As above.........welcome to the real world of motoring of never-ending expense just to keep the bl**dy thing legal and fit for the road.  Depreciation in the first 3 years is horrendous and after that you'll get ripped off for an annual MOT.

Not only welcome to the real world of motoring, welcome to the free market economy dear chap. I wonder what profession you have to be able to afford a 22K car and not understand the rudiments of Western Capitalism. The mind truly does boggle..................
Question Author

I understand I'm going to be hammered with depreciation, what I'm struggling to come to terms with is that these guttersnipes two years ago were extolling the virtues of my chosen make and model and were fawning to the point that it was embarrasing, and yet two years later they are telling me that this very same vehicle is now only worth �7k part-ex, even though it will appear on their forecourt at �12k. Am I really the only one who finds this morally questionable!

And I guess it also shows that the likes of Parker's et al are clearly not worth the paper they are written on.

Yes, I'm very very peeved.

However, it has taught me a very valuable lesson: I will never buy a brand new car again. 

What you have to understand is that there are generally two values for every car, it's trade price and retail.

By going back to a dealership and getting a part exchange you're being offered the trade value.

If there was no difference between the two then the used car industry wouldn't exist.

The only way you're likely to get anywhere near the retail is to sell it privately - that means you putting in the leg work making it sell that the dealership would otherwise do should you take up their trade offer and let them retail it.

I'm actually in the trade so let me tell you how it is. A car is worth what someone is prepared to pay for it in hard cash, Garages have offered you �7000 for your car when the guides say it is worth �9000. The clue is in the very word - "GUIDE" Parkers main aim is to sell their magazine, What sort of response do you think you will get if you ring them up and ask them to buy it for �9000???!!! Admittedly, Glass and Cap are more accurate but are still only guides, Cars can be "behind book"  or "over book" depending on what they are worth in relation to the guide prices.

If the car is up for �12000 on a forecourt, so what? the car will have had a fair bit of money spent on it to recondition it and valet it, and depending on the sort of garage, A warranty will have to be provided. These all cost money which comes out of the margin, as does VAT which the garage pays on the WHOLE difference between the buying and selling price.

Finally, Will the car sell at �12000? ten chances to one that whoever buys it will want a discount, (Like you got) or that their part exchange vehicle will be taken against it for more money than it is worth, thus using up more of the margin.

Like I said, I'm in the trade, I make a decent living but its hard work and it makes me sick that people are so quick to judge and think we earn fortunes for doing nothing!  

Thanks Frankieola, I'm not quite in the trade but very closely connected (my boyfriends a used car salesman in the process of starting a business in which I'm very actively involved), and couldn't be bothered to type out such a lengthy (but in depth and accurate I may add!)explananation.
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Its not a Rover is it ?
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To set your boggling mind at rest Ward-Minter, clearly I have a much better and more well paid job than you do, as �22,000 on a new car is very easily affordable. I've just also taken delivery of a new motorbike as well - I now have three - and have also moved to a bigger house with a 300ft garden, so I am very comfortably off. Thank you for your interest.

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