DEFINITIONS

This is an overview of vehicle pricing, both retail and wholesale, and a look at costs.

• Retail - Retail pricing generally relates to vehicle showroom and display lots, where the facility overhead, cost of inventory, sales, and staff are factored into the price of each vehicle sold, as you would expect in any business. Retail pricing at a large dealership can be $3,000 to $4,000 above actual cost of the average vehicle. The smaller the dealer, the smaller the necessary margin.

• Wholesale - Wholesale pricing will range from actual cost to about $1,000 over cost. Wholesale dealers usually have no inventory or lot overhead and factor in the cost to locate and deliver a vehicle, plus a relatively narrow margin.

• Wholesale Book - Use of valuation books such as Kelley or NADA can be useful, but you need to know which vehicles sell above book and which sell below book. For example, some vehicles sell above wholesale book (ie: Toyota), and many are below book (ie: Infiniti). Most banks loan on wholesale book value.

• Trade-In Value - Mathmatically speaking, trade-in value is the amount you are allowed as a credit against your retail purchase. However, it is common practice to show the purchase price and trade-in value artificially high. The way to find the real trade-in value is to know the no-trade price of the vehicle you are purchasing, less the amount that you are paying. The best way to lower the cost of your purchase is to sell your own vehicle and do a no-trade purchase - better yet, let us help you with a vehicle locate and wholesale purchase.

• Actual Cost - As you would expect, the actual dealer cost of a vehicle is what determines your price, wholesale or retail. Your lowest cost will be a no-trade purchase though a Wholesaler. Please give us a try - there is no charge to look!