Car Trade and Retail Prices

Car Trade price and Retail price

The idea of Trade price and Retail price is not unique to car sales. Anyone that deals or trades in anything operates within the same rules. Antique dealers, diamond dealers, furniture dealers, in fact everyone making a living buying and selling anything, all work in the same way – they have to or they will go out of business rather quickly. If anyone buys anything with a view to selling it on at a profit, they will pay this “Trade Price” because they can only sell it at the recognised “Retail Price”. This is especially true in car sales as there are so many ways to find the Retail price of any car it is difficult to imagine a dealer advertising a car at a much greater amount and expecting to sell it.

Even when you are buying something at the same time – trading in your car for a better one – the dealer is taking your car in as part of the deal. They are allowing you a certain amount of money for it – they are buying it from you. If they gave you anything approaching the Retail price for it, they will end up with a forecourt full of used cars that they can make no money on… bankruptcy looms!

So, part exchange your car and you will only ever get the Trade price for it – this is the most fundamental thing that you have to understand. (See our section about car valuation)

It follows then, that the way to get the best price for your car is to sell it privately? True. However, this website is all about getting a better deal when you trade in your car but this is worth mentioning in passing…

If you can advertise and sell your car privately then you WILL be able to get the Retail price for it. You should get the same sort of price for it as a dealer would expect to sell it for, having taken it in part exchange. You will lose far less money. However, selling your car privately is not without problems. You have the cost of any advertising, (hopefully) endless phone calls, the inconvenience of people coming to your house, the usual scattering of annoying timewasters and always the worry that, if the car went wrong after someone buys it, they might come back to you.

The other difficulty in selling your old car privately is then trying to buy a new one, more or less at the same time, so that you are not without a car. For all these reasons many (if not most) people find it impractical to sell privately and have to part exchange… and what price do we get for our part exchange? Yes, that’s right – you will get the Trade price, “bottom book”... a lot less that you think you should get but, armed with this knowledge, car salespeople will find it harder to deal with you and very definitely harder to fool you! You will be able to negotiate a better deal.

So, what is the best way to determine the Trade price for your part exchange car – and the Retail price for any car you are thinking of buying?

Remember the Trade price is what you will get when you part exchange your car and the Retail price is the price that a car should sell for on the open market. There are slight variations on these – always downward variations – adjustments for higher mileage and/or less that average condition etc.

There are many places on the Internet, magazines and guide books that you can consult. Most people know the AA and have come across Parkers Used Car Guide. You can get a good idea of both Trade and Retail prices for just about any car, including any (downward) adjustments that should be made, from these.

Try:

The AA website - free

Parkers Used Car Price Guide - free

These are quite good but the definitive guide that car dealers use is Glass’s Guide which is their Trade “bible”. It is THE way that car dealers will value your car; they often scoff at other price guides.

Glass’s Guide – costs £2.95

You can look up the Trade (and Retail) prices for your part exchange car on the Glass’s Guide website but it will cost you £2.95 to do so. However, it is worth it to get the real Trade price for your car – the same price that the car salesperson will find when they look up your part exchange car in their printed version of Glass’s Guide. Using the Glass’s website you can even get your car valuation just by entering your car registration number!

Buying a Used Car

You don’t really need to pay Glass’s Guide for a Retail price for any/every car you are considering buying – there are plenty of other places that will give you a good enough guide. Apart from that, if a particular dealer says their car is £xxxx then… that is the price they are asking… they can ask whatever they want! If it is a used car, you should treat this as a starting price, you have a place from which to start negotiating. Knowing, now, how much you will REALLY get for your car makes this process easier.

Buying a Brand New Car

If you are buying a brand new car then an interesting free guide to look at is the WhatCar website.

WhatCar - free

They show you the manufacturers’ list price for most new cars but they also show you another price for each car. They call it the “Target Price” and it is the price at which that new car can typically be bought for – quite often £1000 (or more) LESS than the manufacturers’ list price! WhatCar says that “The Target Price is a realistic discount that should be within your reach at a dealer near you.” However, even then, they suggest you use that Target Price as the starting price for the car – negotiate from there!

We would endorse that fully: The Target price can be bettered, it’s just down to your negotiating skills.

* As you now know how much you will really get for your car (Trade price), you won’t be fooled by inflated offers from the car salesperson.

* You know the manufacturers’ list price – ignore that

* You know the Target Price (in the case of a new car) or you know the asking price for that used car you have got your eye on.

We will look more closely at negotiating tactics that you can use – and those clever tactics that the car salesperson will use on you – in later sections of this website but first we need to look at car loans.

Car Valuation - Contents Page - Car Loans