Can manufacturers value trade-ins accurately?

  24 March 2014

The relationship between manufacturers and retailers is an interesting one as manufacturers increasingly intervene in areas outside of new car sales, such as used cars and aftersales.

 When times are as good as they are now, this meddling increases for two reasons. First, manufacturers feel that if retailers are making more money they too should be entitled to a bigger slice of it. And second; because retailers are making more money, they probably won’t complain as much as they might in harder times.

 This, to me, seems a cyclical thing.

 What’s new this time round is the online side of manufacturer involvement and the worrying development that they are looking to get involved in part-exchange pricing.

 Citroen and Honda are claiming they’d like to get to the point where a retail customer could go to the manufacturer’s website and not only get a price on a new car, but also a trade-in valuation on their current used vehicle –giving a ‘cost-to-change’ price.

 How the mechanics of such a system would work are difficult to understand given the age-old problems of valuing trade-ins. and other similar businesses already offer online valuations for used cars. From personal experience, they quote the absolute minimum price and then, before payment, give the vehicle a final going over, before reducing the figure offered still further.

 Using the model would leave the manufacturer (and its retailers) at a disadvantage against competitors who might offer higher trade-in values. Meanwhile, offering a better trade-in price online risks profitability, too. Even if the buyer accepts the figure quoted, it may not be right for the retailer that eventually will handle that customer. If the trade-in price drops as a result, this I suspect this will lead to increased customer dissatisfaction.

 More and more people are shopping online, but they’ll buy only if they think the deal offered is a fair one. If it’s below-par, they’ll go elsewhere. Simple.

 While we’re watching and reporting on this subject, we’d love to hear your thoughts, so please don’t hesitate to get in touch using the link below.

 Tristan Young

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