Take 19 years in the industry, 25+ weekly meetings, and nearly 1,500 price changes weekly and you learn a few lessons, understanding the pulse of the evolving retail market for used cars.
Low Mileage Budget Cars do not Work
Budget cars are typically rental cars priced to accommodate those seeking a vehicle based on price or a budget. Referring mainly to late model Malibu’s, Altima’s, Focus, Fusion’s, Chrysler 200’s, Accord’s, Camry’s and others . Some Managers will try and buy the above models with features and miles that make them stand out in their marketplace. The problem, however, is that the dealer tends to pay more for vehicles with lower miles and stand out features. Thus, the pricing for the car ends up being more than the average comparable vehicle, which ends up adding that vehicle to the aged units list.
One of the biggest problems with this buying philosophy is that hundreds of vehicles nationwide end up sitting on the lot becoming aged inventory. The budget customer does not pay for the low miles if it does not fit their budget. There are also many banks that will not allow the customer to pay $20 more a month (or $1000 more) for 2014 with 21, XXX miles (low miles) than one with 35, XXX (market average miles) miles. Miles and Features do dictate the average pricing for the budget car. The manager has to price the car based on average market value. [Read more…]