Trade-In Values Dropping Faster than Order Progress

[JustNick]

I'm sure this is a universal experience at this point, but at the beginning of the ordering process I was pretty in the green with my trade-in that's going towards my RRaptor. Now that my RRaptor has been marked as in production, a double check of my trade value shows that I'm in fact now $4k in the hole! That's an almost $6k drop in trade value in about 2.5 months (according to KBB). If used car values keep dropping this fast, I'm confident that my entire down payment will be swallowed by the negative equity I'm suddenly left holding. Who else out there is sharing my pain?

For those curious, my trade is a 2019 Audi A6 Prestige in near-mint condition

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[wnytaxman]

Oh do I feel your pain! My 2022 Genesis GV80 had a list of $68,000 new and when I placed the order for my Lariat in May, the Blue Book was $41,000. As I have done more research I find that "luxury cars" are known for that type of hit. I'm waiting to see how far down the pike the value has gone when my truck comes in later this month or early next month.

I talked to a friend who always seems to be driving the high end cars and I asked him about the depreciation hit. I was surprised when he told me that he never buys new. He just waits and buys a two or three year old car used with less than 30,000 miles. He saves about $30-40k per car.

 

[jbethune]

Here too; 20k for my mazda cx-5 trade in when i placed my order per kbb now at 17.5. not as big a hit as you but still!

 

[dhacK]

Trade valve also depends on where you are located as well. My '21 Ranger TREMOR is worth more here in Nevada than in Indiana. I found the Ranger Raptor that I want at a dealer at MSRP but between what they offered for trade in added to the cost of going there and back I decided to pull the plug and wait until next year. The mark up in this area along with "Couldn't care if I bought or not" mind set I would still be thousands ahead buying in Indiana even after paying for fuel in 2100 mile round trip.
Admittedly had I found the unit in Indiana days earlier and they met me in the middle on the trade I would have done it. If I had completed the deal yesterday I would have to drive from Reno to Shelbyville, IN and back and have only one day before setting out again on a 800 mile road trip to a class reunion that I do not want to miss.
If anyone wants to know a dealer that sells MSRP try Hubler in Shelbyville. Overall good to deal with as well. We just didn't agree on trade value and with the timing I didn't push any further.

 

[JustNick]

Oh do I feel your pain! My 2022 Genesis GV80 had a list of $68,000 new and when I placed the order for my Lariat in May, the Blue Book was $41,000. As I have done more research I find that "luxury cars" are known for that type of hit. I'm waiting to see how far down the pike the value has gone when my truck comes in later this month or early next month.

I talked to a friend who always seems to be driving the high end cars and I asked him about the depreciation hit. I was surprised when he told me that he never buys new. He just waits and buys a two or three year old car used with less than 30,000 miles. He saves about $30-40k per car.

I believe my A6 had an MSRP of ~$74k back in 2019, and I bought it with 42k on the clock in 2023 for right at $40k. Right now I'm hovering around a $24k trade in value which is absolutely wild to me.

They've been saying that the used car market was going to make a correction "soon" for so long, and I guess the definition of "soon" is whenever I go car shopping lol

 

[John E Davies]

I am pretty sure the used car price bubble from the last two years hasn’t just weakened, it has popped. Prices were grossly higher than they should have been. It is a financial folly to buy a new vehicle, unless you just don’t mind the big resale hit. My RR was my first brand new vehicle in 25 years, all others have been well used or lightly Certified Used. But the model you buy also is a huge factor. I bought my 2013 Land Cruiser 200 used with 90,000 miles for $42,000, put 70,000 mostly towing miles on it, and sold it seven years later (to fund the RR) for $27,500. I know my new RR is a foolish buy, but it may be my very last vehicle since I am almost 72. I really needed a vehicle with all the latest driver assistance features that my LC 200 lacked, so a lot of used vehicles simply did not have all that stuff that I needed. .I had checked out the new Tacomas, but nothing about them appealed to me like this feisty trucklet does. It makes me grin every time I get in. I just wish the interior wasn’t black, it shows every darn spec of dust.

John Davies
Spokane WA USA

 

[PhoenixRanger]

I think it also depends on the vehicle/manufacturer. There are many used Toyotas and Hondas still holding their value (if you can find one). We've been looking for our daughter and have not been able to find a good used Rav4 or CRV here in the Phoenix area for much less than a new one--which there are plenty now. I expect companies like Carvana and CarMax are feeling the used car market correction the worst--demand has weakened and people just aren't buying used cars like they were a few years ago.

 

[JustNick]

I tend to agree with John that the bubble bursting is upon us. It makes sense to me to see it in the trade in values before real prices since the dealers see the upcoming market volatility and have to mitigate the risk, i.e. offer less than top dollar on your trade so they're not the ones holding the bag at the end of the day. But also to PhoenixRanger's point, I think the historical value-holders will stay high for longer due to their still limited-supply

This IMO will probably lead to fewer new car purchases because so many people are upside down in their loans, so no amount of interest rate deals could get them to make a move without a sizeable down payment to offset their loss in equity.

I can count myself lucky and do some mental gymnastics since the vehicle before the A6 was a '19 ranger lariat that I bought early 2020, drove for 3 years and put 35k miles on it, and then sold it for just a little less than I originally bought it for. In a normal world, that would have been a good $10k hit on value, so technically I'm still ahead. Right? Right??

 

[Dubfound]

I traded in my M3 for a Ranger Raptor in April. I just checked KBB and it actually increased in trade value by like $5k. Strange.

 

[HyperM3]

If you have the ability to pre-trade your car, have something else to drive in the meantime, I highly recommend it. Not only will you lock in the value now and still get the tax savings(if applicable), but you wont incure any additional depreciation. The market is absolutely trending downward, and has been for the past 8 months, making a correction back to normal compared to the inflated Covid era.

 

[JustNick]

If you have the ability to pre-trade your car, have something else to drive in the meantime, I highly recommend it. Not only will you lock in the value now and still get the tax savings(if applicable), but you wont incure any additional depreciation. The market is absolutely trending downward, and has been for the past 8 months, making a correction back to normal compared to the inflated Covid era.

I wasn't even aware that was an option, and I just sold my Bronco II because it was sitting there collecting dust. I was thinking about attempting to line up an in and out trade, but that's likely going to be a nightmare to line up with how inconsistent delivery times are after the trucks are built

 

[HyperM3]

I wasn't even aware that was an option, and I just sold my Bronco II because it was sitting there collecting dust. I was thinking about attempting to line up an in and out trade, but that's likely going to be a nightmare to line up with how inconsistent delivery times are after the trucks are built

A lot of people dont know its an option. I have been in auto sales for almost 2 decades. Its something we offer customers(at least here in NJ), when the market is volatile and assets depreciate faster than usual. This is so they can lock in the trade value towards the new vehicle regardless when the new one arrives.

 

[mpcraven]

...There are many used Toyotas and Hondas still holding their value (if you can find one). ...

So that hints at another aspect of this whole thread. I ordered a new Ranger after about a year of looking at used prices that were so high that a new vehicle didn't seem like much more of a reach. Should I hear used prices ever fall much I"m not looking!

 

[Austidog]

Instead of trading in my 2020 Ranger XL when I got my 24 XLT in June, I took my dealer’s advice and sold it to CarMax for 3k less than I paid for it 3.5 years ago. Luckily, in Missouri, you can sell a car without trading it in and still get the net amount tax benefit.

 

[Fattirz in NC]

I know it’s an inconvenience, but have any of you considered selling outright to private sales vs dealer trade in? There is often logistics to work out, especially if a loaner vehicle is needed, but it might be with the hassle? Dealers are notorious for lowballing on trades and there is still a high demand for nice used vehicles.

Year ago my wife was going to trade in a well maintained Ford Freestyle for a ‘16 Honda Pilot. I laughed at the $1100 trade offered by the dealer and sold it in 2 days on Craigslist for $2500 cash with no attempted haggling. I plan to do the same thing when I decide to pull the trigger on a new truck and unload my old F-150.

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