Beware of crafty dealers in car trade-in
For car dealerships and buyers globally, all is not well. The smooth quick deals of yesteryears are no more. The auto industry is in turmoil amid disruptions on virtually all fronts including freight rates, semiconductor supply chains hitches, soaring price of a professional car wash, and now the invasion of Ukraine by Russia.
The main disruptor is the global shortage of computer chips used in car production, as well as other materials such as copper, aluminium, and cobalt, which has led to fewer new vehicles rolling off production lines—leaving buyers scrambling for the few available brand new and used units.
This has seen used car prices rise at extraordinary rates as more people consider purchasing them amid low supply.
Industry reports show that the monthly average price for used cars and old car system solutions has for the first time edged beyond the Sh958,900 mark in February –an indication of the price pressure choking buyers.
The Kenyan market, which is highly dependent on used car imports from Japan, has not been spared this mess as dealers face increased competition from other buyers in source markets—pushing unit prices through the roof.
For instance, popular 2015 Japanese models such as Toyota Harrier, Toyota Fielder, Toyota Rav 4, Toyota Premio, and Nissan X-Trail have seen their import prices increase by a range of between Sh408,000 and Sh791,000 since last August. Prices of low-range vehicles such as Nissan Note and Vitz have also risen above the Sh1 million mark.
Auction prices rise
Historically, when second-hand auction prices rise, dealerships entice customers with trade-ins with the hope of pushing more new cars out of showrooms.
As expected this is already happening in the country in a more pronounced manner as confirmed by last week’s entry of Toyota Kenya into the car trade-in business as a strategy to grow sales of its new vehicles.
Toyota Kenya Managing Director Arvinder Reel.
.
Toyota is the biggest dealer of new cars in the country, dealing in a variety of its namesake models including Land Cruiser, Fortuner, and Rav 4.
“We are venturing into trade-in of cars to increase sales of new vehicles in the country,” said Arvinder Reel, the managing director of CFAO Motors Kenya Limited.
A motorist will be able to surrender his or her car and pay an additional amount to acquire a new model. The dealer, which has changed its name to CFAO Motors Kenya Limited, will run the trade-in model by working with its affiliates that sell used cars. The growing shift towards trade-ins is, however, fraught with challenges that both dealers and customers must appreciate.
An agent at Nairobi’s used car dealership, Jonizwheelz who only identified himself as Mose knows the risks of trade-ins. His experience has taught him that someone trading in a vehicle is either in a rush to get a new car or is trying to get rid of a write-off and make a bargain while at it.
He sizes scratch marks as evidence of an accident, listens to cranking joints, ticking meters indicating overheating, and drives the bargain like a peddle to the floor. “Most people who trade in are getting a new car and do not have time to sell their vehicles. So the prices will always be low,” he told Smart Business.
Big risk
“Some though will leave you with a car whose gearbox is a goner or which overheats and you will only discover after they have traded the car so it is a big risk on our side,” he said.
Sellers, too, have to be cautious to avoid being duped by dealers in trade-in contracts. Dealers can make a lot of money off your trade-in, at least double the profit they earn on a new car.
They have devised ways of buying used cars on the cheap and reselling at mouth-watering prices.
If you want to dispose of your car, you should first consider selling it directly then using the money plus a top-up to get the vehicle of your dreams.
Kenya’s expansive online listings offer a variety of platforms to sell vehicles directly at a bargain where you can seal a great deal.
But there will always be those who have no time to haggle and figure out how to let professionals handle the selling.
It is worth their while to learn the tricks used in this trade. Most car buyers don't think much about their trade-in and don't take the time to figure out its true value. Knowing the price of your vehicle's current market-going rate is a starter. Secondly, do not mix trade-in with new purchases since traders exploit your bias of what a good deal is.
Trade-in
When you allow a dealer to combine your trade-in with the purchase, they will negotiate the price of the new car, they'll give you a good deal but will rip you off on the trade-in. It works the other way too. If you're concentrating on the price they offer for your trade-in, they'll give you a good deal but fleece you on the price of the new car.
Dealers will also hit you with such a low value you’ll call yourself to a meeting and consider selling your car in parts. This low balling technique makes you question the value of your car and any concessions they give in increasing the bargain feel like a victory.
The only way to beat this is to shop your trade-in to multiple dealers.
Then lastly like Mose, they will point out the defaults of your car to bog down prices. Every single scratch, ding, dent, and worn-out part is a shilling less.
They may utter some comments under their breath — just loud enough for you to hear and make you question the value of your vehicle.
To beat this you need some salesmanship skills and sell the bright sides, the tyres you just replaced recently, the frequent service you give to your car keeping it well maintained, and playing down the urgency to dispose of that sentimental piece of the family asset. BY DAILY NATION


Post a Comment