Something funny happened on the way to the auto auction, the price went up. Hey , this is putting a lot of smiles on both new and used car dealers.
It’s also putting a smile on some people who had their vehicles repossessed. It turns out that some people are actually getting a check for money made on the car when the lender sells it.
OK, so how is this happening? The repo rate is down; it peaked at around 1.9 million in 2009 and was about 1.5 million in 2010. About twenty two percent of retail customers who bought or leased vehicles in June, 2011 had negative equity in their trade ins, down from twenty four percent a year earlier.
Couple all this with the high demand for used cars because of price and payment considerations, the past clunker program, the tragedy in Japan, etc. and it appears used car prices will continue to increase. These high residual prices are leading the resurgence of leasing. The higher residual bringing lease prices down.
Bottom line, a smart dealer will step up to his trades and pay the money with the intention to retail as many as possible for maximum profit. For those that don’t sell retail , a successful trade in price will almost always guarantee a profit if sold retail or wholesale. Dealers should seek cars before they are repossessed, especially those that can be bought below book value. Incorporate this into your marketing strategy in print, radio, tv, and internet.
Paul R Hauke BA MBA , president of Iffpf Media ™ , as a leader in the Automotive Retail Business, provides this website and information free of charge. Feel free to check out the Iffpf Media(tm)website for all services and products offered.
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