BNR34

iTrader: (1)

Before I looked into it, I too was thinking like the general public that car's dealer get their used cars dirt cheap from the auction and resell them for a huge profit. I was guessing they make $5k~$10k off each car.

Then I made a friend who buy and sell used cars, he took me to an actual Manheim auction. I saw it with my own eyes the conditions and prices of about 25 Lexus from Lexus financial. I can't believe how small the profit margin is, the sold prices I saw was pretty much the lowest list price on autotrader of comparable cars! And that was before auction fees, reconditioning and overheads! I was shocked!

I am sure it has a lot to do with timing and the specific region, but from what I saw, the profit margin was REALLY small. $500~$2000 profit off each $20k~$30k car, if you are good at it and work hard on it.

hoonunya

The Lexus dealer 12 miles from me has 2 06's with ~45k miles and is asking $37k but they are CPO (non ultra). The larger dealer 90 miles away has 2 06's that he wants a fortune for, 1w/37k miles for $41k and 1 w/26k miles for $42k and neither is a CPO. These two are ultras and ultras are rare in this area but
The auction prices shown are lower than I expected.
It may be apples and oranges, but I don't imagine myself ever buying a used LS from a Lexus dealer near me.

BNR34

iTrader: (1)

I should have been more specific, the dealers I was talking about are small mom and pop used car dealers, not Lexus dealer. Lexus dealer always sell their cars for way more, mostly because they can. There are lots of people in this world feels better by buying from a dealer, my sister for example, I think it gives them a sense of security, they feels like there is more of a guarantee that the cars are good. I don't feel that way, whether a car is good or bad have nothing to do with where it came from. So yeah, Lexus dealer charges way more, but they also got a much bigger overheads, so it is understandable that they have to make a higher profit to stay afloat.

For everyone who understand cars and knows what they are doing, the Lexus dealers would be the last place they buy from.

hoonunya

I can see mom and pop's making 500-2k. I was thinking Lexus dealers. The dealer near me is the only one for about 80 miles so he has a captive audience.
Most people won't buy a used car under any circumstances. I've been driving for over 40 years and I think I've bought 8 new cars in that time (and 2 of those were for my kids when they graduated college on scholarships).
I can't stand the thought of all the money lost when you drive a new car off the lot.

AlexusAnja

For me, to buy new goes down in likelihood exponentially as the price goes to $40K and beyond. I drive cars to the ground. I don't buy and get rid of vehicles just to get a new (or used) again. So, for me, I would not buy a used $35K car, but for the LS which originally MSRP'd for $60K, I CAN'T afford that new, so I have no choice but to get used. In this case, getting used is a very good alternative.

My wife and I were set to get a new GS350AWD, but balked at the last minute when we saw how affordable the LS430's were. I have no regrets whatsoever for turning to the LS instead. Now when we see the GS driving down the road, we think "man, we were so close to getting that and it's SO SMALL !!! "

hoonunya

NO! I drive cars into the ground. Before I got this car, I had a '79, '96, and '04. The '04 was out of character (bought new) but I got it for my wife when she got her masters degree.
We only have 2 drivers in the house now but we keep an extra car. When we got the '05, we gave the '79 to our lawn guy for 1 lawn cleanup.
When we're driving down the road my wife has gotten tired of me saying "that guy paid twicw as much as I did".

BMW7_LS430

I checked out few cars Here before I bought mine. Their prices were very reasonable. They have a great business model with very low overheads.

I am no way affiliated to them and finally I did not buy from them.

They had this 06 Black UL with saddle/PCS/70K miles for $27.5K. I thought it was very reasonable. I thought it was THE ultimate LS430 and almost bought it but then I stuck to my decision on not buying a black car.

AlexusAnja

to that. I should have stayed away from black too but I couldn't resist... I'm a black extremist... I love black and white vehicles. I wash my car and dry it, but before I can get it into my garage, it's got dust already... oh, for the humanities !!!!

Obsidian = Obsessed with Cleaning...

BlackUltra

I thought this thread would produce a least one person who could describe a "new" LS430 buying experience but I guess we are all "used" owners. Nonetheless, it has produced some interesting thoughts on car buying. It appears we have some real automobile negotiation "studs".

I6turbo

iTrader: (1)

This is not categorically true. I've bought a lot of cars in my life (~40), several from individuals and several from dealers. I have often found Lexus dealers willing to sell LS430s and GX470s (two vehicles I've purchased most recently -- haven't shopped other models) at similar or even LOWER prices than individuals or other dealers. NOW, they often START OUT asking 2K - 5K more than mom and pop dealers, but the ones I've dealt with (including some that I didn't end up purchasing from) would get down when you started negotiating. Perhaps this isn't the norm, but it's certainly has been my experience and it means that at least some of the Lexus dealers are very competitive (the ones I dealt with were in FL, GA, and TX).

BNR34

iTrader: (1)

I6turbo,

I guess every situration depends.

What you said is very true in today's market situration, where the dealer is actually cheaper then private seller, because the dealer is much more in tune with their car's actual market value, where private seller are still going by the much higher blue book values, and refused to believe their cars actually worth much less in the open market.

I actually don't blame Lexus dealer selling their cars for more, I fully realized they have a big overhead to cover. Especialy CPO cars that comes with a warranty.

I6turbo

iTrader: (1)

Yes, I found that CPO in effect came at very little upcharge. Plus, I think it is reasonable to pay a LITTLE more to a Lexus dealer even if you don't have a warranty per se, because generally speaking they will take care of you within reason. I think they'd probably fix anything that you could find within 30 days, and perhaps even longer if something went wrong. To me, there's some value in knowing that you could get the car, check it out for a couple of weeks, then get any issues corrected.

Anyway, IMO, bottom line is that if you find a car you like at a Lexus dealer, just make him the offer you think is fair based upon what you see in the market. IME, there's a decent chance that you might end up getting the car.

AlexusAnja

Here's the thing. We may think that salesmen are the scum of the earth and they can and will do anything for a sell, but they're human. If experienced enough, and you may call it arogance if you want, but they can detect when a person is really serious about purchasing a vehicle, or they're just goofing around. They may interpret the situation right, or they may interpret it wrong, but if someone goes in very casual and not really interested and speaks like they're not interested, then of course the salesperson is going to be less likely to want to deal.

When I went to my first Lexus dealer to look for a vehicle, I told the guy straight off the bat what year range I was looking for, what price range, color, options, etc. that I had to have and then how much range I had with each. I told him I was ready to buy the right car, but that if it's not up to my expectations, please don't try to make the sell. He knew exactly where I was coming from and so he only called me when the vehicles that fit my range came in. I test drove a few and for one reason or another, the vehicles were not "perfect" for me and he knew that. But, with each vehicle, he gave me his "best offer" and each time it was close to or better than comparable vehicles on autotrader.com/cars.com.

I wanted atleast a CL trim and that was final, but he did try his best on some ML that I saw. If I was willing to go down to a ML, I would have probably gotten from him. It's just going into a negotiation with the right mindset, attitude, and expectations. If you go in thinking the guy is going to screw me, I'm going to get taken for a ride, I'm going to rob this guy, etc. then that mindset is going to to translate to your voice, body language, etc. and they'll pick up on it.

BlackUltra

Thanks and I think a lot of us feel the same way when dealing with dealers. However, since all sales people are not alike I would think it really depends on the sales person you are dealing with or in fact probably their Sales Manager who ultimately will OK the deal.

Budhah

What a lot of people don't realize, is that everything they buy is from a salesman, even if it is just sitting on the store shelf. The salesman may be a tv ad, Newspaper display, or oily aluminum siding salesman... It is a dirty job, but someone has to do it. Had a friend that was a Volvo salesman, His previous job was a mammogram tech before. Said he much perfrerred the VOLVO 760. LOL