Knowing How To Purchase A Motor Vehicle At The Right Price
Over the last few weeks my daughter has been discussing trading in their car and getting one of the newish Chinese brands. Let us be honest they seem to be everywhere now and are hard to miss and this is all price driven. When Covid and the lockdowns happened there was a significant change in the market due to lack of inventory on the show room floors.
The Chinese filled that void with brands such as BAIC (Mercedes) and Chery ( Land Rover/Jaguar) and they seem to be hitting the mark. When the big car manufacturers of the West wanted to supply the Chinese market they had to team up with local State Owned car manufacturers and why now we are seeing a better quality car coming out of China. The Chinese used the West knowledge to provide a better finished product.
I was offered the Chery brand back in the 1990's and was part of a Chinese conglomerate that made BMW (assembled) and Renault vehicles. I did turn them down because they were that nasty and saw them as a tin on wheels. How times have changed and I would even consider test driving one today.
My daughter has a VW which is seriously over priced for what the vehicle offers with the upside being the readily available parts and servicing along with the resale value. My question to her was to think how much her current car will be in 3 years compared to a Chinese equivalent and this thought had never entered her head. I personally think she will be even more out of pocket and to consider just keeping what they already have. The problem is most Chinese cars are not at the 5 year mark so this is an answer no one really knows and it could be a severe lesson to learn. I would guess anywhere between 50% and 60% as a depreciation value and possibly more depending on the make and model.
I would just like her to consider the pitfalls before jumping in feet first because there are always other options. I have a feeling she would regret doing a trade in purchase option because that is not the smartest play here. My son regrets not listening 3 years ago when I offered to help and his young impatience got the better of him which cost him thousands.
Firstly I would never trade a vehicle in via a dealership and would never buy a car from a dealership with my current knowledge and experience. This would see the dealership score profit by making profit twice out of you from what is effectively one sale.
Around 8 years ago I did 12 months market research for a friend of mine who owns a few car dealerships. This research involved attending car auctions and the fluctuating prices depending on the time of the month. One has to remember that the low mileage high end cars are mainly bought by the dealers themselves and are on their show room floors within 48 hours of purchasing with a hefty 40-50% mark up. The 3rd week of the month showed the cheapest auction prices which is more about common sense as the end of the month was the priciest.
I have told my daughter to sell her car privately and then give me two weeks to find the car she desires because the market is currently flooded with repossessions. I have no idea what the resale value is on a Chinese repossession, but I can assure you it will be below 50% of trade. This would guarantee when you came to resell that vehicle you would at least get your money back in 2 or 3 years time. The service plan and warranty will still cover you for this period because these vehicles are still new with some even not having enough on the clock for their first service.
I did this with a Nissan Pathfinder I sold years ago and got exactly what I had paid for it 4 years later. Once you know how the system works and how these businesses make profit you have to play them at their own game and not become a client of theirs.
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I've been kind of impressed with some of the Kia models lately, but I don't think I could bring myself to buy a foreign car. Even though most of them are all made overseas anyway.
KIA and Hyundai are actually not bad even though I personally would not own one.
I feel like you can get a higher end luxury style for a pretty good price. I haven't really looked though. It's hard because most US companies don't make cars anymore. It's all trucks and SUV/Crossovers.
The Chinese cars make me feel a bit nervous, even if some of them are the result of partnerships with well-known western brands. Perhaps my perspective is somewhat shewed by watching too many "horror story" YouTube clips about the horrible quality... I can really relate to your "tin on wheels" remark.
It's good to "know the ropes" of car sales, though.
For the time being, we're content with our 1997 Nissan Maxima and our 2003 Chevy pickup truck.
I think most of us think that way and it is understandable to have concerns. If you consider that most of what China has today it has been stolen technology from other nations that gave them the basics to even start. It doesn't matter what they have done with it since but they needed the technology theft to get going. I have seen reports they have developed their own commercial planes now that can use Boeing parts and tells you who they have copied.
Fact, most of what they have was stolen.
What would also concern me is based on talking with an acquaintance who was working in Beijing for four years... "shortcuts" is such an ingrained thing in the culture that you might never know what was omitted from one of those stolen designs in the name of expediency and keeping the price low.
That is very true and why you have to check the specifications every 6 months because they cut back to make profit. This is how Chinese factories work and you have to spot check if they supply you with anything. We had items with less steel supplied that were actually very dangerous and had to be sent back.
It is true that when we had to buy a car, we also went around the market for a whole week and then after that we saw the car all over the online market, then we liked a car, so we bought it. Bought it after showing it to the mechanic.