Automotive Sales Training Tip: justifying trade-in values PART III
Hi, welcome to Wye ProTips. I'm Hector Bosotti. Today's topic is part three on justifying trade-in values. When you're going out to do that, and you're going to try to justify the trade-in, in our earlier segment, we referenced talking about marketability first to sort of soften the blow to the mechanical and cosmetic reconditioning that the vehicle requires. This is a really great strategy, I encourage you to do so. When it comes to the actual numbers, you might want to use a table similar to this one. If your manager researches the retail value of the vehicle, we could use that to our advantages because we know the customers are also looking at retail values. There's no use hiding it, you might as well get it on the table and explain how we arrived at the trade-in value. Let's look at this example here. A retail value of the customers trade-in is fetching $7,500 in the marketplace. Now what we start to do is deduct all of our cost. We have profit otherwise known as operational cost that we could share with our customers. In this case here, the manager has indicated $1,000, that could change, and I'll show you in another example how we can do that. Next, we have reconditioning mechanical, which consists of breaks, $700, tires, $600, and ball joints for $450. Cosmetic reconditioning consisting of a rear bumper that needs painting for $250 and some detailing for $200, which is how we arrived at the trade-in value of $4,300. This adds credibility and legitimizes how we arrived at that trading value. Now, in some cases, you're going to have a higher retail value on the vehicle, but you still want to appraise the vehicle for the original amount. In this next example right here, we have increased the retail value of the vehicle to $8,000, but we still want a $4,300 trade-in value to be shown. What we need to do is increase the operating cost from $1,000 to $1,500 so we can get to the same number. Lastly, if DB, perhaps the customer has been shopping around. You always want to keep the trade value tax credit as an ace up your sleeve, but if the customer has been shopping around in other dealerships, you might need to actually present that on a first service. In this particular example, we've added an extra line showing the tax savings. Visit wyemanagement.com and check out when the next power closing workshop is coming your way, or better yet, contact your training manager and see how we can run in one of those workshops. Riding your dealership and start improving your closing ratios, justifying more trade-ins and holding more gross profits. For Wye Management, I'm Hector Bosotti. Stay tuned for more Wye ProTips coming your way. For more automotive sales training resources, visit www.wyemanagement.com or call 1.888.993.6468 and discover how an automotive training solution could work for your dealership.
