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Comment by kmbfjr | Hacker News Reader

The whole ecosystem for car sales in the US is rigged, and not just dealerships.

I had a surplus car, researched “fair market” value for private sale versus selling it to a dealership. I was closing up an estate, getting rid of it easily, but fairly was the goal.

It was a 2013 Subaru Impreza with 149,000 miles that I’d have to clean up for sale to a private party, I opted to unload it as a sale to a dealer. Trade in value quoted at three sites (kbb, edmunds, carfax) was $3500. Private party sale was $4100, retail sale that a buyer would pay at a dealer $5200.

Dealer puts new tires on it lists for $9999 and suddenly the three sites list “fair market” retail at $11,000, trade in at $7000 and private party at $9000.

Same VIN entered, same mileage, suddenly the car on the lot is worth more when owned by a dealership according to KBB, Edmunds and Carfax.

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This is normal. You buy a car from a guy on the street, it could break on the drive home and you’re mostly shit outta luck. Even if you have a legal claim (and you usually don’t since the sale is as-is), it’s not worth the trouble and they’re likely to be judgment proof.

On the other hand, dealers usually include a warranty of some kind with their “certified pre-owned” vehicles. And as repeat players, they have a reputation to keep. The manufacturer also imposes further rules on them to protect the car brand.

Fwiw, I strongly oppose laws that protect the dealership business. But this specific thing you’ve noticed is not some grand conspiracy (how would that work anyway?). It’s just rational consumer behavior.

It's highly unlikely that's a car with 150k miles gets listed as a CPO. And, regardless, that should not affect the market price of the vehicle in general for private sale / trade in.

> You buy a car from a guy on the street, it could break on the drive home and you’re mostly shit outta luck.

Then why did the private party value double overnight?

Probably because the Kelly blue book is just sourcing local data and the dealer’s listing had an outsized effect on the average, like another commenter pointed out. KBB is not the be all, end all.

That doesn't quite seem responsive to your parent comment. They recognize that the dealer price is higher.

What's weird is that every price jumped after selling the car to a dealer, not that the retail price was higher than the trade-in price.

> Trade in value quoted at three sites (kbb, edmunds, carfax) was $3500. Private party sale was $4100, retail sale that a buyer would pay at a dealer $5200.

> Dealer puts new tires on it lists for $9999 and suddenly the three sites list “fair market” retail at $11,000, trade in at $7000 and private party at $9000.

How much did the tires cost?

>What's weird is that every price jumped after selling the car to a dealer, not that the retail price was higher than the trade-in price.

It's based on comps. Dealer in your zip listed it at a comical price and it dragged the price up because data was sparse.

That's their summary of what was changed. It's likely not the full list. The car would typically get a full detailing, inspections, cosmetic repairs, etc. as part of that process.

I tried that 'buy from a man on the street' thing a couple of times. Young, wasn't spending much anyway. I was fairly experienced at spotting the easy problems. Both times I bought someone else's well-hidden problem. One lasted a year, one a month. Friends, then dealers (with a warranty).

It sounds like those websites didn't have much data to analyze to determine the price, and the dealer had better market info, and then the websites scraped the dealer's listing and used the dealer's listing in their models which caused the website prices to change (because of the lack of previous data).

A friend of mine totalled my car while I was on vacation, not at fault, and my insurance company used these sites to lowball me. Being a used car, about 10 years old at the time, there were very few comparable vehicles for sale in my area. The insurance company wouldn't even accept one out of state. I dickered for a few weeks until I found one on Craigslist for $1k over the offering price -- I called my adjuster immediately, and he was happy to pay it out and never hear from me again.

If you actually want a fair price on a trade-in, you'll need to sell it on commission. Less parking, advertising, and expenses to get it into saleable shape -- and you don't get the money upfront while you're trying to whittle down your loan. If you want to just walk away from the car and deduct it from your purchase, you pay dearly for that convenience.

Your example is a bit of extreme but dealers can fix up a car in ways that’s not affordable to us. I’ve seen cars with paint chips and scratches come out looking brand new after a professional fixes it. Same with interior.

Again I highly doubt the dealer in your example did enough to double the price of the car. However I could see them adding a few thousand after their professionals fix and repair cosmetic issues. They usually have people on hand who can do these repairs correctly and cheaper than the retail price they would charge us to fix a single car.

They can also just send it off to a wholesale auction to get the cash out of it. Much less than what they'd list it for on the lot, but that's typically what they base their trade-in on. Especially on a car with 150k miles on it.

This could have just been weird time during the used car bubble. Prices were changing fast.

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