Trying to get my wife into a TDI but she went to far over her lease miles on a Civic to make it work with low payments. But while we are there at the VW dealer, the salesman says to me that they can't keep any used TDI's for more than a couple of days and why don't I trade in mine.
Well I drove the Jetta 2010 and wowed at the power and the transmission. Of course I want it. So I ask, "How much will you give me for my 2002 excellent condition 119k miles all maintenance up to date and nothing owed on it."
They offered me $3700? Isn't that ultra low or am I missing something?
That seems low. That being said:
Basically, a trade from an individual is worth whatever the dealer would pay for the same car at the auction. In other words, if someone wants to trade a 2003 New Beetle in, for instance, the dealer can look at a Manheim Market Report and look at all similar Beetles that have sold recently at most major auto auctions across the USA. You can filter for geographic area, trim level, miles, color, etc, and you can get a real good idea of actual wholesale values that cars actually brought at auction.
For instance, if someone did a national auction search on a 2002 Jetta similar to yours, they might turn up a bunch of responses to the query. Now, if 100 cars similar to yours sold recently at auction for $5000, then a $3700 trade bid would be low. Now, you can't fault them for asking, I guess. You might be crazy enough to take their offer. However, you don't get anywhere by completely insulting your clients, so your initial offer should be in the realm of reason, and you leave yourself some negotiating room up from there.
Obviously, your opinion of the local market, your personal inspection of the car, service records, etc, all bear into what you are willing to invest in a trade in unit as the sales manager. Basically, you ask yourself what can I sell this for, what does this person want for the trade, and what will I have to invest into the car to get it lot ready. Add to this a profit margin, because you are running a business.
In your case, you have a relatively unique car. A MMR on your car might not turn up a million hits. There might be a limited number of cars similar to yours that sold nationally at any given time. Now, you take a 2007 Ford Focus, and there will be a zillion hits. Someone comes into the store wanting $10k in trade for their Focus, and a Manheim report shows that 1500 of them sold last week at an average auction price of $5500, then, well, the market value of that Focus is pretty much $5500 on trade no matter how much the person wants $10k, and no matter what Kelley Blue Book says the car is worth or any other ivory tower website that doesn't actually show hard cash transaction data.
Anyway, you may have known some or all of this, I just posted it in the event you weren't sure how trades are basically evaluated at car dealerships. The bottom line is, the store is going to take your car, put some money in it to get it lot ready, and want to make money selling it. This means you are going to get wholesale value in exchange for your convenience of not having to mess around with selling it. In essence, the store takes the risk, and you walk away from your trade. It becomes their problem. Depending on what you are trading, it might make sense to dump it and make it their problem and get a low trade number, or it might make sense to sell your car yourself and reap the benefits of a car with good resale and high interest from buyers.
Trading a relatively rare and sought after car like yours often makes no sense. They often bring nice private party sale values, sell easily, and accepting a wholesale bid from a dealer is going to mean you take a hit. The dealer has to look at trades from a glass half empty standpoint. Worst case scenario, if they for some reason get no hits on your car, what can they dump it at the auction and get for it. That is what they'll give you. The more desirable your car, the more risk they will be willing to assume and the more they will allow you on trade. A better car will make them think, gee, this is hot property, we really want it. They will give you more. This only works up to a point, though. Basically, you're almost always better off, for obvious reasons, selling your car yourself. This applies even more to unique cars like TDIs.
In your case, their logic is probably something like this: we give the guy $3700. We invest, on average, say $500 on all our trades to get them lot ready. So using that rough number, we are at $4200. We have to pay a salesperson $100 in commission to sell it, so we are now breaking even if we sell it at $4300. They might have left some room to wiggle with you in the initial number, say $500. So, assuming they eventually wiggle up to $4300, add the average $500 recon cost, and a $100 commission they are at $4900 break even. They sell the car for $5900 on the lot and make $1000 all said and done.
Now, I've been out of the business for a while, and have no idea what cars like yours are presently bringing at wholesale auction or retail sale being 8 or 9 years old with 120k on them. But whatever the retail number they think they can get is, take $1000 profit off, take $500 recon off, take $100 commission off, and there should be roughly the number that would be a fair offer on your car. If you think your car could retail for $8000, then $6000-6500 range would probably be a reasonable trade bid. Again, they are not going to start negotiating with you at $6k. They will do this mental math, start at $4500 or $5k, and see if you take it before eventually working up to $6-ish or $6500.
My numbers are all made up, but this should explain the process in admittedly a longwinded manner.
