How do dealerships determine the value of your car?

What Does The Black Book Value Mean? You can think of the Black Book values as an estimated wholesale value of a vehicle that dealers use to ensure profits when buying or selling used cars.

What is the average time a car sits on a lot?

Through April 13, the average new vehicle sat on the dealer lot for 70 days. That’s the highest level for any month since July 2009, according to J.D. Power. Nearly 30 percent of all new vehicles sold so far this year were on the lot more than 90 days.

Do cars depreciate at dealerships?

When something depreciates, it diminishes in value over time. As personal car ownership continues to decline, car dealerships are saddled with inventory depreciation as new and pre-owned vehicles remain unsold on the lot, diminishing in value every day.

What do dealerships do with cars that don’t sell?

Car dealerships are franchises. That means they buy new cars from the manufacturer and sell them at a higher price to make a profit. There are a few options for the dealership when their cars don’t sell. They can ship the unsold cars to a different market where the specific model might be in demand.

How much value does a car loose off the lot?

A new car depreciates or loses value almost immediately after you drive it off a dealer’s lot. As a quick rule of thumb, a car will lose between 15\% and 20\% of its value each year according to Bankrate.com.

How much does a car depreciate in value after you drive it off the lot?

Depreciation begins as soon as you drive off the lot. Your car’s value decreases around 20\% to 30\% by the end of the first year. From years two to six, depreciation ranges from 15\% to 18\% per year, according to recent data from Black Book, which tracks used-car pricing.

Why do dealerships sell cars at auction?

Some car dealerships want to get rid of their cars taking up lot space for some time. Dealerships sell these cars to auctions to make room for newer cars and have a bit of a return to their investment. Some owners trade their Cars to banks and insurance so that they can get a newer one.

How much does a car depreciate in value each year?

A new car depreciates or loses value almost immediately after you drive it off a dealer’s lot. As a quick rule of thumb, a car will lose between 15\% and 20\% of its value each year according to Bankrate.com. A car in its second year will be worth 80\% to 85\% of its first year value…

How much will a car go down in value per year?

As a quick rule of thumb, a car will lose between 15\% and 20\% of its value each year according to Bankrate.com. A car in its second year will be worth 80\% to 85\% of its first year value and a car in its third year will be worth 80\% to 85\% of its second-year value.

How can I maximize my used car sales?

This will help maximize your front-end gross. Time equals money, so the more time a car sits on the lot, the less money it’s worth, which decreases your gross profit potential. Plus, creating more inventory turnover in a shorter period of time will help your used car department reach its “turn and earn” goals. 2. Lower Your Holding Costs

How long can a car sit on a dealership lot?

When it comes to inventory turnover, set a strict 45-day inventory turn policy In the past, dealers would let unsold cars sit on their lots for 90, even 120 days. The standard is now 45 days before a vehicle loses its front-end profit potential, due to rising vehicle costs, price competition, depreciation, and holding costs.