Yesterday was my last day selling for Findlay Volkswagen in St George. I spent two years with them, learned a lot, had success, loved the management team, Quinn, Curtis and Jason. They try really hard to be good, honorable people. Despite that, my wife and I have decided we need to move on. We're relocating to the Salt Lake area. I don't know what comes next, but I'm going to keep this blog going, I'll keep writing, and if I can help you with a car purchase, research or negotiations, please let me know. Varlo Davenport
"In the wake of intense Hurricane Harvey flooding, automotive data firm Black Book estimates that as many as 500,000 vehicles will be effectively destroyed throughout the Texas region."
Jeff S. Bartlett, Consumer Reports
We've been talking about this for a while now - this is a great article explaining the problem, and telling you what to watch for.
You know that old saw, "If a deal looks too good to be true, it is." The reality of that has been bugging the heck out of me the last few weeks. There are other dealers in the region who advertise some AMAZING deals on new cars. They're running ads showing prices thousands of dollars less than any other dealership. They're doing everything they can to get you onto their lot - they know that if they can just get you in the door, the odds of them selling a car go up exponentially. So, they promise the sun and moon and the stars and the kitchen sink and a new toaster. (Ok, that last part wasn't true, no one has offered a new toaster for years and years.) all to get you to visit them.
There's a technique called "Rebate Stacking," you can read about it here, that seems to be one of their favorites. In addition, they'll include semi hidden conditions. They'll require you to finance through them, (then they can mark up your credit rate), or they may insist that you trade in a car with a minimum value, then they'll low-ball you on the car to make up the difference.
There is a great article on www.thetruthaboutcars.com that talks about this and other deceptive tricks. The author has a suggesting for how to suss out a phony deal. He suggests that you offer to put a deposit down on that specific car and at that price. If the dealership won't take your deposit, and insists you come in and talk first, it's very likely the the deal, or vehicle are not going to be available.
(Side note, please, if you do nothing else - try and determine the ball park value of your car before you trade it in. Remember, you're looking for an approximate wholesale value. Take a little time and visit the websites for Kelly Blue Book, or even better find Edmunds.com's True Market Value. And for heavens sake, please be realistic about your car's condition.)
Anyway - dealerships all pay the same amount for new cars. Think about it, if we don't have the color or model you like, we'll try to swap with another dealership. We give them one of our cars, and they ship us theirs. Would dealerships really do that if one of them was paying a lot less for their inventory?
I'd also recommend you read Yelp and Google reviews of the dealerships you're considering working with - see what other people's experiences have been like. Sure, everyone has a bad day every now and again, but if you see the same complaint over and over again . . .
So, last thought, please don't feed the trolls. If less than reputable dealerships are successful at getting you in by using manipulative or shady advertising techniques, they're going to keep doing it.
One of the most commonly asked questions I’ve heard on the lot in the past few months has been, “So, when will they (VW) be bringing diesel back?”
Now, my crystal ball has never worked really well, however, consider the following; as was widely reported as part of their $14.7 billion dollar settlement, VW has agreed to pay $2.7 billion for environmental cleanup, and $2 billion dollars to promote zero emissions vehicles. Couple that with a report on April 28th, 2017 in electrek.co, where it is reported that the automaker has committed to spend $10 billion dollars on research and development of electric vehicles over the next 5 years. With that kind of commitment, even if made under duress, my own prediction is that diesel is not going to be shown a lot of love.
In 1892 Rudolph Diesel invented the compression engine that bears his name. 125 years later there have been many, many improvements, but just like the horse and carriage, at a certain point, something better came along. There are still people making the argument about horses being better than cars - and years from now there will probably be those making the same kinds of arguments about the internal combustion engine versus electric or hybrid or fuel cell - or whatever we end up with.
In the mean time, we can sell the modified pre-owned TDI diesels, and it’s possible that a new diesel could come back, but I doubt it. There is no denying that there is something very enjoyable about taking your old horse out for a ride, but you don’t have to do anything more than a web search for “electric car performance” to see that change is happening - and most of it, (including the VW ID Buzz) looks really fun.
Last week we received our first 2018 Tiguan on the lot. This is the new model with 3rd row seating, a new 2 liter engine, driver assist features and the 6 year, 72,000 mile bumper to bumper limited warranty. I’ve been really looking forward to this vehicle, I really enjoy driving the current Tiguan, but it has a couple of aspects I’m not really crazy about.
When VW sent a trainer to familiarize us with the car, I was excited to see it, but not as impressed as I had wanted to be. I’m not sure why, maybe I'd built it up too much in my head, but it just seemed cramped. The features were very nice, the wide infotainment screen, the digital cockpit, (the stuff we’ve seen on the new Atlas) – I think part of it is because the model we got to see was Grey, and I really wanted to see the Habanero Orange. (Hey, visuals matter!)
But this week we got a vehicle delivered to our lot, and I finally got a chance to drive it. I’ve got to say it – this car is just as much fun to drive as the 2 row Tiguan! The driving dynamics remain quintessentially VW, responsive steering and acceleration, (oh, and a buttery smooth 8 speed transmission) coupled with a striking, ergonomically designed interior, very comfortable seats, and a very user friendly “infotainment” suite. (I hate the word “infotainment” it just sounds so made up posh.)
The new 2 liter engine was very responsive, and one thing that I like is that it only requires mid-grade fuel, (the older model has required high octane fuel). The new Tiguan will also make almost all of the driver assist features available too. Anyway, maybe I was just a little puffy when the trainer was here, or I hadn't gotten enough sleep, but I'm sold - I’m still holding out for the bright orange paint though! (Don’t worry, there are conservative colors too.)
I am really excited to start showing this vehicle to customers. Price ranges from $25,345 for the base model, to around $38,000 for the fully loaded SEL Premium. Fuel efficiency is 22 mpg city, 27 mpg highway.
We had a ton of questions about car leases this week, so I'm working on a longer article - but while doing research, I ran across a nice little article "5 Dumb Car Leasing Mistakes To Avoid" on the website www.bankrate.com. For this entry I'm going to address the great points the article raises, and show you how we help you avoid those mistakes at my dealership. (Read the article first - it's not very long.)
Mistake #1 - Paying Too Much Money Up Front
In order to get you in to look at their cars, companies will try almost anything - and in this particular version of the game - the company will take one of their least expensive models, set the mileage at the lowest possible, tell you that you need to put down a couple of thousand dollars - but then distract you from the part telling you that it also requires you make the first payment and that you still need to pay for taxes and license, or some other nonsense. (If one of those deals looks too good to be true - find and read the fine print - it probably is too good to be true.)
There are a number of variables that come into a lease, but when we write up a lease, we work hard to be as transparent as possible - we don't want you to have any surprises. And, if your credit score allows, we'll write your lease with nothing down, nothing due, and no payment for 30 days.
Mistake #2 - Forgetting Gap Insurance
There's no real way around the fact that your new car depreciates as soon as it goes off the lot. If you get in a wreck and total the car, your insurance company is going to pay you what the car is worth, not what you owe. The difference between those two numbers is the "gap". We have Gap Insurance already built into the leases we write - so this isn't going to be an issue for you.
Mistake #3 - Underestimating Miles You've Driven
It would be a good idea to do a little research on this prior to agreeing on a mileage number with the dealer. One of the easiest ways to estimate your mileage is to check your last oil change receipt. How many miles have you gone since your last oil change? How long has it been since your oil change - use those numbers to estimate how much you actually drive. If you go over on your miles, you will have used up more of the service life of the vehicle, you're going to have to make up the difference.
One thing - some articles make it sound like lease contracts are tricking you by charging you more for a lease with more miles. ??? How does that make sense? You're buying more of the life of the car, so of course it's going to cost you more.
Mistake #4 - Not maintaining the car
At the end of your contract, your leasing company is expecting to get back a car that still has value. They will expect the tires to still have a lot of miles left on them, they'll expect that the windshield will be intact, with no chips or cracks, and they'll expect the interior and exterior to be in good condition.
Of course you should maintain your car - but if you know that at the end of three years you're going to want to trade up for another new car under warranty, you may want to consider a Wear/Care insurance policy. With the wear/care policy we offer, you can bring the car back with bad tires, chips in the glass, and dings in the doors, and we'll just smile and accept your keys. (I don't know if it's typical, but with one recent customer we figured out that the wear/care insurance would actually be cheaper that buying a new set of tires.)
Mistake #5 - Leasing For Too Long
One of the real selling points of a 3 year, 36,000 mile lease, is that the car will always be under warranty. That doesn't work for everyone, and so longer leases, with more miles are an option. You just need to know that you will be responsible for anything not covered by the warranty.
At our dealership we can cover you with a State Farm* "wrap" warranty, and extend your protection for just about any length of time, or number of miles. So if you need to lease your vehicle for 4 years, and don't want to worry about paying for unexpected repairs, we've got a solution for you.
*Accepted anywhere in the USA and Canada
The last couple of weeks I've had several people ask me to help them find an inexpensive "run around town" car. (For some strange reason they almost always ask for a price around $10K.) I know they can be found - but a good car at a dealership for under that price may be a challenge.
Think about this - the dealership has to make a profit, right? I'm not talking about anything unreasonable, but enough to keep the lights on, pay the staff, keep the facilities current, advertise a bit. So, now your $10K vehicle just became really, let's say, an $8,500 vehicle, with some profit added on, and a little wiggle room for possible negotiation. (I have no idea what these numbers really are, I'm just trying to make a point.) You're also going to have to pay for taxes, license and fees. According to Carmax.com's calculator - for a $10K car in Utah, you'd be looking at about $1,150. So now, in order to keep your payment at $10K, you need to look for a car priced at around $8,875 and considering a need for profit too - your vehicle's ground level value is going to be about $7,400.
Well - if that's the case, why not just do a private purchase, why would you want to buy a car at a dealership? Actually, there are a number of reasons. One of the primary reasons is convenience. You can go to one place that has a variety of vehicles for you to shop, it will have (hopefully) a knowledgeable staff that can take you all the way through the purchasing process, and the ability to take care of all of the loan application paperwork for you. You don't have to drive to a sketchy neighborhood after work to negotiate with someone who put an add on craigslist, and may be leaving the county tomorrow. Part of what you're getting at a dealership is a relationship with the sales staff and management. I know several older sales people who have had customers buy dozens of cars from them, because they trust them. Even when they move to finance or management, people will come in "Because I only buy from ______."
Anyway, there are good used cars out there, but if you've asked a salesman to find you something in that $10k sweet spot, when they call, you really had better "hurry down" because it isn't going to last long.
You might be blinded by love. Not with the shiny new set of wheels that you’re contemplating buying - but with your trade in. I hate to say it, but when it comes to buying a new car, loving your old car may not be in your best interest, love just might let you down.
Case in point - a couple of weeks ago I had a couple who came in looking for a new car. After working with them for I while, I got a sense of their budget, desired payments, the usual stuff we try to understand. We test drove a car that was going to work for them - it seemed like things were going well. A couple of times Mrs. Customer remarked how she was going to miss her old car, and that she was going to hate getting rid of it.
Now Mrs. Customer said she had looked up her car’s value on line, she believed it was worth about $8,000 - but after going over it, my used car manager set its fair market value at $4000. I’m not questioning her honesty, but when I looked it up on line later the numbers I found matched my managers.
So why the discrepancy?
There are several factors that significantly impact the value of the car you are trying to get the dealership to buy, for the best price possible. In no particular order, they are; Age, Mileage, Condition, Equipment and Options, Supply and Demand, Tires and the History/Service Record.
Condition is the most obvious variable in your cars value. It’s cosmetic appeal has a significant impact on its value.
Often, like in any long term relationship, we tend to develop a kind of benevolent blindness and deafness. We stop seeing our partner’s flaws. With your car, you look at those little dings on your bumper often enough and you start to ignore them, same as with the chirping sound the glove box makes when you make a left turn. Those little flaws, like your high school sweetheart’s mispronouncing spaghetti, just add character, right? Actually, not so much. Consider this - how would you feel about a new car if, the first time you got a look at it, there were dents in the door, stains on the upholstery, McDonald's wrappers in the back, or a funky smell wafting out of the glove box. Remember that you’re wanting us to buy your car - the same way we want you to buy our car. If you don’t clean those things up you’re just making it easier for the Used Car appraiser to devalue your car, which will raise your payments and cost you money.
I wouldn’t worry about trying to fix any dents - just acknowledge that they are there and know that they’re going to affect your car’s value. At the very least though, vacuum the car out and clean the windows, consider cleaning the carpet and upholstery, and giving the dash a wipedown with Armor All too. Give the used car manager the opportunity to see your car in it’s best light - consider that you’re trying to talk him into buying your car, the same way a salesperson is working on you to get you to buy a new car.
Tires are another consideration - how much tread do you have left? Do the tires match? Let’s say your car is in good shape overall, except for its tires. If you have the means, check with a used tire store near you and see how much it will cost you to get a matched set that still have a good 50% of their tread left. I don’t know what the breakeven point will be - but especially on a nicer car that the lot will want to recondition and resell, this could have a positive impact on what you are offered.
Age and mileage are the other most obvious things that affect value. In addition to being indicators of wear and tear, the age of your car may mean that you have an older body style that’s no longer in fashion. Depreciation starts the minute you drive off the lot - and every mile you drive adds to it.
Conventional wisdom is that people average driving 12,000 to 15,000 miles per year. With that as a yardstick - it wouldn’t be unusual to see a 3 year old car with 36,000 to 45,000 miles. Less is, of course, more desirable. If you’re bringing in a 3 year old car that only has 18,000 miles on it, on average it will seem like it’s only been driven 6,000 miles a year - even though in reality you may have put 10,000 miles on it in the last 6 months, for all intents and purposes, it appears to be a lightly used car, and hence, more valuable.
If you have a car you think you’ll be trading in, and you’ve got long road-trip planned, consider renting a car for the trip, (it might also give you the chance to test drive one of the vehicles you’re considering buying.)
Equipment and Options, just like when you’re buying a new car - more options and equipment raise the value of your trade in.
This is one thing that you may want to consider when buying a new car - sure, a base model will give you lower payments, but added options now, especially things that are performance oriented, like All Wheel Drive, or towing capacity, could be a real advantage in a couple of years when you want to trade again for a newer car.
Supply and Demand - that is a little harder to figure out. How many cars are there out there that are similar to yours - when you check out car lots, do you see many of them there? As for demand, there are certain name brands that command more resale value. And there are styles or models that are popular - on our lot, used pickup trucks don’t last long, there’s always a market for them. Obviously there are also car fads - why did we stop making station wagons? Because people stopped buying them.
History and Service Record - Carfax and Autocheck are the two primary companies that track vehicles for accidents, and evidence of regular maintenance. If you are in an accident and it’s reported to your insurance company - even if all repairs were done and the car was restored to mint condition - they will know, and it will likely have an affect on the value of your trade in.
Make a habit of keeping all of your car maintenance evidence. If you do your own oil changes, instead of going somewhere that reports to Carfax or Autocheck, make sure you keep your receipts. Just so you can prove that you’ve taken good care of your vehicle.
So now let’s go back to the first customer I was talking about - all of the facts aside - the real problem is that my customer was still emotionally attached to her current car, and took the offer we made to her as lowballing, and left the car lot all in a snit because we insulted her beloved little car. She had, as many of us do, an emotional connection to her car, and because of that she wasn’t willing or able to see the vehicle in the harsh light of a commodity in a commercial exchange. (I really think she was looking for an excuse to not buy a new car - and trade in value just gave her the reason she wanted.)
So - three things - first, eliminate as many of the negatives that your appraisal may discover, and accept that they may find bumps, dings and scratches that tell the story of your adventure with your car, but ultimately lower it’s value. Wash and vacuum the car - and consider an air freshener too. And third - as much as you can, emotionally detach from your old car - after all, it’s not going to a junkyard to be turned into scrap metal, it’s going to a farm out in the country where it will have lots of room to run and play . . .
As for internet tools:
The Finance Managers that I've met are some of the nicest people. Their job is fairly complex and covers a wide range of important responsibilities. I hear a lot of laughter coming out of our Finance Managers office. As nice as they are - no one wants to spend hours and hours in their offices. So, to expedite the process as much as possible, I suggest you have the following information and/or forms with you:
I’m going to ask for your patience and understanding today, you’ll see why in a minute.
At some point in just about every conversation you’re going to have with a car salesman, out on the lot, just kicking tires, you’re probably going to ask him “How much do you think my payments will be?” It’s an innocent question and I hate to say this, but we’re probably not going to be able to answer it. Not because we don’t want to, but in order to give you accurate numbers, we’d need a lot more information. What will your down payment be? Do you know the value of your trade in, and has it ever been in an accident. Are you upside down on your trade in? How much? How about your credit rating, is it good, bad, or thin? Will you register it in this state, or in one of the nearby, that is going to affect your taxes and fees. And then there is the interest rate you qualify for, (here’s when I need your patience):
Assuming a loan of $25,000, and you’re got good, but not perfect credit -
5 years @ 3% interest = $449.22 payment
6 years @ 3% interest = $379.84 payment
7 years @ 3% interest = $330.33 payment
Now assuming you’ve got great credit, with that same $25,000 loan -
5 years @ 0% interest = $416.68 payment
6 years @ 0% interest = $347.23 payment
7 years @ 0% interest = $297.63 payment
If your credit is not so good -
5 years @ 11% interest = $543.56 payment
6 years @ 11% interest = $475.85 payment
7 years @ 11% interest = $428.06 payment
So - we’ve got a range of payments from $297.63 to $543.56. Two lessons here - first, it pays to take care of your credit, second, if I tell you I think your payment will be about $400 - and because of some dings on your credit score that you forgot about, it’s actually going to be above $500, odds are you are not going to be happy with me, and you’re going to question if you can trust me. I want to deserve your trust. So I’m really not trying to put you off when you ask me about your payments, with my limited knowledge of your situation I could give you numbers that are really off. We have sales managers and finance people who are very good at their jobs and they are going to be able to take all of your situation into account - and give you good, solid numbers.