Dealership artificially raised the numbers

[Bigfoot]

Here is a question that has bothered me for a while. The numbers are rounded to simplify the question, but the concept remains the same. (Don't worry, I did not trade in the X5 . . . the names were changed to protect the innocent.)

When I traded in my BMW, the Benz dealership offered $30,000 trade in value.
The dealer agreed to sell the brand new Benz for $50,000.
(The MSRP was $55,000 so I saved $5,000)

My cost would be $20,000. (plus tax, title, Lic)

When the sales contract was drawn up, the Benz price was raised to (the MSRP) $55,000 and the BMW trade in value was raised to $35,000. My cost was still $20,000 (plus tax, title, Lic) but the numbers were falsely elevated to show the dealer selling the Benz for 5 grand more and giving me 5 grand more for my BMW.

When I questioned the number changes, they said it is standard and they have to do it that way. Since I still paid the same amount, I let it slide. But it has always bothered me a little.

Why do they do this? Did they really have to change the numbers? It was a straight cash deal.

Thanks in advance for your insight.

[mrkbbd]

That's what they did when I got my X5, I technically paid sticker but they artificially increased the trade-in value on my other car

[LeMansX5]

I know they increase the trade-in value so that they have to pay less tax. They pay tax on difference. Some dealers include a trade-in (some car they bought on auction)when you have none.

[BruinMan]

Hey Bigfoot,
Was this your thread from another fourm?
http://www.my350z.com/forum/showthread.php?t=208462

Just wondering? lol.....

[Last5oh]

Originally Posted by mrkbbd

That's what they did when I got my X5, I technically paid sticker but they artificially increased the trade-in value on my other car

SAME HERE!!!! Still wondering about it.... if the bottom line is the same why do through all the trouble???? My guess is that they are trying to hit some performance metric that deals with unit selling price excluding trade-in.

[E61Silver]

My guess is that it makes look more profitable and therefore the salesman gets a bigger commission.

[Bigfoot]

Originally Posted by BruinMan

Hey Bigfoot,
Was this your thread from another fourm?
http://www.my350z.com/forum/showthread.php?t=208462

Just wondering? lol.....

Thanks for the good laugh. No. Not my thread. No back hair on my body. Bigfoot is just an alias (kind of like a certain moderator who pretends to sport a burly unibrow). That guy in the thread must shave his hands because hair does not naturally stop abruptly like that. Very funny thread. Poor guy never came back.

Back to my question . . .

I suspect they want to show sales at MSRP so they artificially inflate the numbers. In Minnesota, they use the MSRP to get the max tax out of you no matter how much of a discount you can negotiate. They recently killed the Jesse Ventura law limiting the maximum tax for your license plate. Since we only pay tax on the difference between the trade and new car, my tax would not increase. That is why I let it slide. I just don't like it. Now when they sell my trade in, they can make a profit and still claim a loss because they artificially inflated the trade in value.

[dkl]

Originally Posted by Bigfoot

Now when they sell my trade in, they can make a profit and still claim a loss because they artificially inflated the trade in value.

Ahhhhh...I think you nailed it.

[JCL]

Originally Posted by dkl

Ahhhhh...I think you nailed it.

Don't agree.

The paper loss on one vehicle (the trade) cancels out the paper profit on the other (new) vehicle. It nets out. There is no difference on the tax you pay (as long as you are taxed on the difference) or the tax the dealer pays (there is the same profit on the combined two car deal, either way).

They are simply protecting the price point for the new vehicle transaction. Average transaction prices get tracked, and this shows up as a full list transaction instead of a discounted one.

[mwares212]

Now that you mention this, the same thing happened to me when I bought my new X5 in January. They gave me a great deal off MSRP, but officially sold me my car at MSRP but gave me more for my trade. I do not know why the dealer did this. I ended up paying the same, so I don't really care.