Quicker trade-in process keeps focus on new-car deal

General Sales Manager John Knaggs and consultant Kairee Haley will take "whatever we can resell" as trade-ins. Photo credit: DAVID BARKHOLZ

GRAND RAPIDS, Mich. -- Obtaining a trade-in value is the most disliked aspect of a transaction for car buyers.

It ranks below new-vehicle price negotiation and even filling out paperwork, according to research by the AutoTrader Group, which examined 250,000 new- and used-vehicle transactions over two years.

So dealerships are searching for ways that get customers through the trade-in appraisal as quickly and painlessly as possible.

Many customers overvalue their trade-ins, said Kevin Creech, general sales manager of Ralph Thayer Volkswagen in suburban Detroit, so salespeople need to manage those expectations.

Creech has his salespeople wait until after a customer has committed to a new vehicle before discussing the trade-in. Appraising the trade-in earlier can shift the focus from the enthusiasm for the new car to objections over the appraisal. "We want to get the emotion on the new vehicle," he said.

Creech then has his salespeople silently walk around the vehicle with the customer, touching dings or taking a long look at flaws.

At that point, the customer often explains the flaws, thereby coming to grips with the reality of the trade, he said. That can happen in three minutes. Also, salespeople are required at the time to collect insurance verification and registration information so that the customer doesn't have to return to the trade-in vehicle, Creech said.

After the customer and salesperson return to the store, the trade-in is taken by an appraiser for a test drive and a value placed on it, Creech said. The whole process takes about 15 minutes, he said.

AutoTrader Group Vice President Kevin Filan said trade-in negotiations can be long and nerve-wracking, draining excitement from a new-car sale. He said they can run 45 minutes.

Berger Chevrolet in Grand Rapids, Mich., is determined not to let trade-ins stand in the way of car sales, said John Knaggs, the store's general sales manager.

Sitting with Knaggs in his office, Berger sales consultant Kairee Haley said that in her two years at the store, she has seen the dealership take in trade all manner of cars, motorcycles, campers -- even a TV. The store also will allow customers to trade two vehicles to buy one.

"Whatever we can resell, we'll take in," she said.

Haley was with Knaggs after they had handled the tricky trade-in of a 1982 Chevrolet Corvette, which was integral to a customer agreeing to buy a 2014 Chevy Camaro RS.

The customer wanted $5,000 for the Corvette. The store initially offered $2,500. They later agreed on $4,000.

Knaggs has trained each of his four sales managers to test drive and appraise trade-ins so the vehicles needn't be taken to a nearby Berger used-car center for appraisal.

In the case of the Corvette, Knaggs said he did the test drive and appraisal because he has more experience than the younger sales managers with older-model vehicles.

Haley said it took about 20 minutes to appraise the Corvette and another 20 minutes of back-and-forth with the customer until he was satisfied with the price.

With nine other Chevrolet stores within 20 miles of Berger Chevrolet, the store needs to compete on price for every deal, including trade-ins, said dealer principal Matt Berger.

He said bargaining will continue to be a mainstay at his store. "About 50 percent of the customers we see are going to have trades," Berger said. "So they are going to have to be negotiated to some extent."

You can reach David Barkholz at dbarkholz@crain.com -- Follow David on Twitter: @barkholzatan



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