question about manufacturer rebates
 

a colleague is looking at a used vehicle that is only a few months old and is still current, but sells for new right now with $15k off after manufacturer's rebates. he can't wait the 5-8 weeks it would take to order new for what he needs, but this used one is exactly what he wants... but the used car lot it is at is selling it for depreciated value based off original msrp, and does not reflect the rebates. So in reality, the vehicle in question actually costs more used than when it was new after rebates...! i thought this was an isolated thing, but after looking through craigslist i noticed that there are many used current models advertised the same way.

is this how it's supposed to work, or am i looking at everything wrong? :confused:

You have a valid point.

Let's say I'm a dealer and I have a new 2011 F150 sitting on the for $60,000 with 0% interest over 72 months, and $1000 in manufacturer's rebates.

I go on auction to buy some used stock, and I find a nice 6 month old 2011 F150 ex-rental for $46,000. (same truck as the $60,000 truck, but 6months old) So I buy it for $46,000, pay my auction fees and safety, detail, lot fees, etc, now up to $47,000 cost, and mark it up to $50,000.

If you are a cash buyer, and you come to my lot looking for a new F150 and you don't give a rat's ass about the 0% interest, would you rather buy the new 2011 for $60,000, or the 6-month old 2011 for $50,000???

It's a no brainer, you'd buy the slightly used one.

Now, it's Feb 1st and Ford has just taken away the 0% interest and given a total of $8000 in rebates instead of the 0% interest. That $60,000 truck is now $52,000, which is only $2000 grand more than the used one I have sitting next to it.

I can't drop the used one by $8000 since I only have $3000 markup.

This shit happens all the time, and all you can do is wait until the rebate switches back to interest rate based, and then sell the used truck at that point.

There is also the availability factor.

For example, there are pretty much ZERO 2011 MKXs available across Canada. They are all sold out. If we found a 2011 MKX on auction, we would pounce on it, because then we'd at least have one to sell, or at least show and test drive to earn a factory order.. and since it would be one of the only ones around, we could probably sell it for close to what a brand new one costs, because someone would want to buy it who doesnt want to wait for a factory order or more inventory to show up.