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Calculating Used Vehicle pricing.....

4K views 30 replies 12 participants last post by  BryanCO 
#1 ·
I saw this posted in another thread by ard. can anyone confirm that this is a real starting point? I am looking to pull the trigger on one this week and want to use this for making my offer.

"You REALLY need to be thinking in terms of "original cost" for each and every car...not "used car asking prices".

For every car you see, calculate the original invoice, tehn take off the ECO credit and add 500. This is the cost basis for the car when new.

Compare that number to the asking. Take off between 50 cents and 1.00 per mile.

THAT should be the target purchase price.

IMO
"
 
#4 ·
Solid advice from ard, IMO.

Another way: If you are able to get the MSRP for the specific vehicle (window sticker, BMW build-your-own etc) and I am assuming that you're looking for a diesel:

Take off $10,000 (aggressive haggling, with all normal incentives) off the MSRP. Then multiply the mileage with the $/mile ard gave and deduct that from the above and voila, you've got a price which should be close.

Example: a 2011 X5 diesel with 10,000 miles. MSRP was $60,000, it was probably sold for about $50,000 - $52,000. Say $50,000. 10,000 miles x $0.75/mile = $7,500. Used price $42,500.

Good luck!
 
#5 ·
Solid advice from ard, IMO.

Another way: If you are able to get the MSRP for the specific vehicle (window sticker, BMW build-your-own etc) and I am assuming that you're looking for a diesel:

Take off $10,000 (aggressive haggling, with all normal incentives) off the MSRP. Then multiply the mileage with the $/mile ard gave and deduct that from the above and voila, you've got a price which should be close.

Example: a 2011 X5 diesel with 10,000 miles. MSRP was $60,000, it was probably sold for about $50,000 - $52,000. Say $50,000. 10,000 miles x $0.75/mile = $7,500. Used price $42,500.

Good luck!
Excellent. I am going to offer just below what I have calculated for a 2012 x35d that is used. they are asking WAAAAAYYYYYYY too much for it so they will likely laugh. I have to go over 600 miles to go get it too........
 
#17 ·
I was car shopping a year go and haven't been following the used market much...

But the calculation should get you in the ballpark. However, .50 to 1.0 per mile is a big spread and likely represents three standard deviations of used X5 selling prices. Wow, I haven't used standard deviation in a sentence in a while.... :)

Anyway, we bought a 9 month old 2011. Spec'ed just how we wanted it, about 10% less than the best new price and was an easier purchase for me (some individual specific tax considerations).
 
#18 ·
good inputs

Of course this is all guesstimates, but I proposed it as a framework that works for really any car- the cost basis for all buyers into the market originally is key. The diesels had the ECO that everyone was getting, so you apply that...other cars will have a different calculus. But it is really the shared starting point for all buyers and sellers.

On the mileage, I use $1 per mile for the first 5k, then 75 cents for the next 5k, then 50cents or so...roughly. I'd use a higher per mile number for a 997TT, and a smaller number for a nissan pathfinder.

Given that the CPO=Gold Plan, the 'value' to you should be close to what a gold plan costs you...BUT it doesnt cost the dealer that much. 2500-3k seems a good deal. I mean if you bought the car and turned around to buy that plan it will cost what it costs. And the new tires thing is sometimes true, but sometimes the poor lease holder got nailed for new tires when he returned the lease, so hard to say it really was a dealer costs. Do keep in mind that the CPO probably costs the dealer $2k to BMWNA for the warranty... if the dealer is competing with a GOld plan at 3500, they will simply NOT enroll a car into a CPO that needs 2000 worth of refurbishing. Indeed they tend to take creampuffs, toss a detail on it, maybe the lessee pays for tires, and they make the extra 1-2k profit off the CPO.

As others have opined, finding 11,12 diesels at reasonable prices is a challenge. Dealers know that people will be out there, unable to negotiate effectively off MSRP for a new car and will fall for the false economy...and the rarity of diesels. The REAL trick is to find an owner that needs to get out of their car...

As a reference point, carmax gave Mike 47k for his 11k mile 2012... Original 'deal' price was about 52500... using my numbers youd subtract 5k and ~4k. So 43500. Clearly they were offering more. So keep this in mind and dont be inflexible if you really must buy used. FYI, carmax is asking $51k, "no haggle"

Finally, using the above example- if that car was 52,500 out the door new, WHY bother saving only $1500 with 11k miles? If it was CPOd (and carmax is NOT cpoing it) then the 'value' $4500 (3k+1500)... When you break down the carmax deal, 1500 saving to buy a used car.

So here is the conundrum- on the one hand, there is what you (we) THINK it is worth, based on original cost, use, depreciation...and then there is what people are paying or dealers are charging...

I guess what i am saying is that the market for used diesels is distorted by supply and demand making them a poor buy.

Rambling, I know...

A
 
#19 ·
Lets not forgot the True market value. Like mentioned above its distorted by supply and demand and what other dealers are charging etc. When it comes down to it for used vehicle pricing i go by the WHOLESALE BOOK VALUE. Most dealers will apparise a luxury car 3-5k back of wholesale book depending on the model. I also go by what the last vehilce sold at the auction for thats similar in miles and yr etc. Few things to consider hope that helps.
 
#20 ·
Unless you have a license, auction prices are not representative of what the OP is looking for in terms of a reasonable price he will pay for a used car. It may be what the dealer will give you on a trade, but it is not what Joe X will be able to buy the car for.

Maybe that's what you meant by "apparise a luxury car 3-5k back of wholesale book"? I didn't understand what you meant by that. Are you saying take auction prices and add $3-5k?

Jay
 
#21 ·
I sell cars for a living. Let me explain a little more. When we get cars in on "trade" we will appaise them 3-5 back of wholesale book if its a luxury car.
Whenever i help a freind buy a luxury car used i always go off the wholesale book value as my target price as typically they dealers will still have some wiggle room in that price even after CPO and Recon fees. Auction prices are usually 3-4 back of wholesale book so if a dealer takes a car in on trade and cant sell it for the asking price they can still take it to the auction and break even or make 1,000 or so. Just a example
 
#22 · (Edited)
ok, so how can a dealer ask 55895 for a used 2012 X5d with 12800 miles Premium, premium sound, cold weather, tech and thrid row seats? This is $895 more than a NEW ZERO miles '12 sells for currently. I have been told that 53800 would be as low as they can go......

Explain this scenario. I dont understand it. Orig invoice was 61,590, back out the 4500 eco you have 57,090 add $550 you have 57590 selling price new take off $0.75 per mile you get 47990. I would think this is a very fair first offer at negotiations.
 
#23 ·
Simple:

They'd rather YOU as a knowledgeable buyer, order the new car elsewhere. They are reserving their cars for dumb ones.
 
#25 ·
Once I decide what car I am buying and its options I do all of my negotiating on the internet. Before that I did my negotiating by snail mail to all of the dealers in my county. I also bought a Mustang for my daughter by faxing my required specs to all ford dealers in California. It was a left over year model so I could not order exactly what I wanted. I did find the exact car (including color) I wanted at a very good price.

Chuck
 
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