What does paying the exorbitant dealer price get you?

BarnyardEngineering

Well-known Member
Location
Rochester, NY
Our local dealer's auction is coming up, where they sell off the used equipment that's been sitting on their lots for the last 6+ months, unsold. Most everything is sold without reserve, and only brings a fraction of the price they had it listed for on the lot.

As an example, they had a Farmall 656 gas hydro, kinda rough looking, sitting on their lot for $6000. Won't budge an inch on price. Sold at the auction for $2300. It's typical for used tractors to sell for 1/3 to 1/2 of the dealer asking price.

Now if they had it marked $3500 on the lot, they could have sold it in a hot minute, and would have been $1200 + auctioneer's commission ahead of the game.

For the longest time, I have wanted to walk into that dealership, sit down at the salesman's desk, and say, "Look, I can wait until the September auction and buy this thing for 1/3 of what you are asking. If I were to pay you what you want for it here and now, what am I getting for all that extra money?"

Anybody know, what do you get, besides a sore behind and a smoking crater in your wallet?

Sure, I am rolling the dice that some idiot doesn't come in there and buy it out from under me, but I have yet to have something I was interested in not be at the clearance auction. I think most everyone knows to wait for the auction.
 
At least around here no dealers hold regular auctions, plus if at auction probably no warranty as is where is, if I buy used equipment at
dealer and it has problem they will stand behind it with labor and usually some parts discount. That being said if they held regular
auction people would wait. Dealer probably has no money tied up in used equipment anyway and if they have a yearly auction need
equipment for said auction.

Joe
 
Sold at the auction, none of the
salesmen have to claim direct
responsibility for the pricing. It may
still count against them depending
what they actually gave for it on
trade.

If you have a reputable dealer, they
may have some sympathy if you have
problems with it and paid full price.
The auction is as-is where-is.

Reality is when the sales department
gets used to doing multi million
dollar deals, a 6000 dollar tractor is
chump change.
 
Dealers local to me , tend to send , older stuff to
consignment auctions, many miles away. And yes
they end up getting much less than they would have
sold them to you for. Their only interest is really in
selling new equipment, sure they take in trades to
facilitate a sale, and if they can flip it for more than
they have in any piece of equipment, great.
Problems start when folks looking for bargains , buy
older equipment, and expect it to work as new, and
want the dealer to warranty some 25 year old baler
that they said was good condition. In truth ,
everyone knows that a 25 year old baler was traded
in on a new one because of one reason, it was worn
out.
Dealers would be just as happy not taking trades ,
and just selling new equipment. And leaving you to
resell your old stuff the best you can. If you try to
price a new piece of equipment, say a tractor at one
dealer, with no trade . Then go down the road to
another dealership with the same line of equipment,
wanting to buy the same tractor with a tired old
tractor to trade in as part of your payment. You will
find the tractor with the trade will look like it cost
more, before deducting your trade allowance. And
if they allow you $5000.00 on paper for your 45 year
old IH tractor, they can't very well roll it out into the
front line of their used equipment for half what they
allowed you for it , you may become suspicious that
your trade value was indeed , only the salesman
playing with numbers.
 
If they don't want to bother with the used equipment, then why bother even putting it up for sale? They go through all the trouble of cleaning it up, pricing it, advertising it. Lot of time and expense for zero return.

Park it in the back lot, and save it for the auction.

When they put it up for sale and advertise it, they inevitably have people calling in and wasting the sales staff's time. Again, if they don't want to bother with the used equipment, they sure have a funny way of showing it.
 
All the dealers around here do that. Some will have the auction at their own yard and others will arrange to take stuff to a consignment sale. Both venues work out the same in the end. More often than not any of them will take more than a couple baths on stuff because they have receivables due to a creditor. The dealer figures they will make up the loss down the road. I will say that the dealers who are cagey about auctions will take something a distance from their yard so hopefully the local customer base does not know about the beating the dealer took.
 
Our local dealer had auctions to get rid of lawn and garden items. Even though I knew it was run crooked I still bought a used mower deck for the JD750 off them. What was crooked was you could see numbers written very small in marker on the items. This was actually reverse code of what they had in the item. So auctioneer could pull bids out of thin air until he got to that figure then once a real bidder bid they could own it. In the end you only paid what you were willing to spend anyhow. We got the mower for what we wanted to pay for it as there was not much other interest in it.
Other dealer had their sale in a building and ran the mowers through. Auctioneer and dealer (announcer) set at a desk and I'm betting had written down what the magic numbers were they wanted.
 
If looking at a old tractor or baler or whatever , gets
you on their lot, half their job is done. Then the next
step is to show the old pieces, and then "up sell"
you on to new, their main line. It is all about
marketing, and if you insist on buying the old stuff
they have on offer, they will take a profit and sell it
to you. But they would rather sell you new. Most of
the real good quality used equipment never reaches
the lot. If the salesman is doing his job, he has
already been dropping in to chat with some
potential buyers of a "good piece I have coming in".
A truly good salesman will have a home for any
good used equipment, before the deal is inked. That
way they know just what they can offer for trade
allowance, and know that they will not saddle the
dealership with a large inventory of slow moving ,
low value used equipment, with grass growing up
around it. People don't want to go to shop for
equipment at a dealership that could be mistaken
for a junk yard, lol
 
(quoted from post at 07:02:44 09/21/17) If they don't want to bother with the used equipment, then why bother even putting it up for sale? They go through all the trouble of cleaning it up, pricing it, advertising it. Lot of time and expense for zero return.

Park it in the back lot, and save it for the auction.

When they put it up for sale and advertise it, they inevitably have people calling in and wasting the sales staff's time. Again, if they don't want to bother with the used equipment, they sure have a funny way of showing it.

That used piece of equipment brings people onto the lot or at least gets a phone call that they can pitch new equipment to.

Rick
 
As far as an auctioneer knowing the starting point at least around here when it is done it is well disguised. Probably why they work out of a truck as they go down the row. Nobody in the crowd can see what is going on in the truck so who knows who put out the starting bid. If a dealer is selling he most likely was assigned several bid numbers so the buybacks don't look too obvious. Jockey's buy as well so the crowd gets used to one bid number buying several items. Items do in fact do not wind up being sold for lack of payment so if something is still there a couple weeks after the sale it is said the guy could not pay for it and how are you to know if that is not true. In some ways the internet just aided the clandestine bid process as the auctioneer as can just holler "the internet opens with XXXX dollars and how can you dispute that. Again, you can't see what is going on in the truck.
 
Any dealer that I have known fairly well has always said that taking trades is "an evil necessity" in the business as if you do not take the trade somebody else will to move a piece off their lot. It has been said if customers could be made to know how much it costs to take in a used piece in most instances more would opt to sell their equipment on their on and in the end receive a much better deal on the new item.
 
A few years ago I drove up to Calgary Alberta,,I stopped at the Deere dealers to look around,,"None" of them had any used equipment ,,it was only new,one salesman told me that they ether sent it on to a consignment auction or the owners sold it before they bought new equipment.. Most dealers will not give a fair price for your trade in,,they ether jack the price of the new up or just plain offer a low price for what you have,,same with car/truck dealers,,like it or not that is just the way it is...If you think what you have is worth more it is up to you to sell it as a separate deal, then do your best with a straight out deal with the dealer.
 
Ain't that the truth. I tried to trade my Gehl round baler for a new Deere in 1997. Right out of the gate they lied to me and said they were just here and looked at it. They said they'd be here that day,when nobody showed up,I called to see when somebody was coming. The salesman on the phone told me so and so was just there and looked at it. Trouble was,I was in the field using it and had been all along. I asked what they wanted to give me? He said $1500. I called the Gehl dealer about trading for another Gehl. He came and looked at it and gave me $5500 on trade for another Gehl.
 
I spent the last 11 years working for a car dealership. Man you guys don't have a clew, just speculating
on your part. Most of the responses are nothing but garbage. Do what ZTRmowers has stated.
 
Maybe I don't have a "clew" but it sure seems to me like if they *NEED* to sell the used equipment at the exorbitant prices they're asking to keep the doors open, that they sure wouldn't be letting it go for pennies on the dollar at the auction!
 
One thing is for sure and that is never assume you got the best of any deal. You may do better at one dealer than another but in the end
the dealer is going to win. And he has to if he is going to stay in business. I have found if I get what I wanted for what I figure is a
fair price I am satisfied. They all have their gimmicks so do your research and don't pay more than what you think it is worth and you
won't be kicking yourself later. You might miss out on one item but will find something else that you will be even more satisfied with.
 
(quoted from post at 17:58:56 09/21/17) I spent the last 11 years working for a car dealership. Man you guys don't have a clew, just speculating
on your part. Most of the responses are nothing but garbage. Do what ZTRmowers has stated.

I have to agree, the dealer has to buy low to be able to make some profit on it. I understand it might be worse for a car dealer, they don't make a lot on new sales, or so I'm told, and hope to make it up on used car sales and service work. I don't take offense when I 'm seemingly low balled on a trade, it's up to me to take it or leave it. On my last trade I chose to take it rather than deal with all the morons you tend to get when you put it on C-list or set it out at the road. Much less hassle for me and the price was fair.
 

The more I cut dealers out of the picture, the happier I seem to be. Car dealers, equipment dealers, etc are only interested in new sales, leases, and servicing new or nearly new equipment.

It's called "disintermediation". The internet and modern communication give us the ability to cut the dealer out of the picture in many cases, even with "new" purchases, so that's what I do.

A note on auctions and auctioneers "taking" fake bids from unseen bidders. My father has, on several occasions, stopped the auctioneer and asked, "Point to the other bidder."

I remember he totally caught one auctioneer who pointed to someplace in the crowd and said "He's right there." Everyone "right there" shook their heads.

The auctioneer was totally busted and there was more than a few names yelled at him from the crowd, many starting with "son of a ..." Pa just walked up to the auctioneer and said, "Boy, you better straighten up. Best you start over on this one. Pull that again and you know what happens." And he did!

BTW, quite a number of people walked off and told the clerk to shove the item they won up his @@@, they weren't paying. Bottom line is if you suspect fake bidding, call out the auctioneer on it. Yeah, doesn't work if the internet is in play, but it's a good shot across the bow.

Grouse
 
Our local JD megadealer had its annual lawn and garden sale last weekend. It was the same deal as you describe, you know its crooked going in but just bid your price and be done. They ran them thru the shop while the auctioneer sat in the truck and sold them. After a while you could pick up on the hand signals between the ring men and the auctioneer. Caught them a couple times where the fake bid from mid air got hung with the high bid, then all of a sudden they backed the price up to the highest real bid and THEN sold it. Also a few that sold that the auctioneer said sold, said the selling price and buyer number without looking up from his paper or taking a breath.

The biggest b!$&*h of the whole thing was that I looked the mower I bought (JD GX345) over 2 days before the sale, looked at it again the morning of the sale and the hood was fine. Went to load it up after sale and the hood was cracked where someone looking at it jerked it open and broke it. Nothing $350 won't fix......

And like BarnyardEngineering talked about, I only gave half what they had it listed online for the week prior to the sale. When I decided I wanted to upgrade mowers, it was an easy decision to just wait for the auction.
 
I've never understood that, either.

When I was a GM salesman, the dealer hired a high falutin' sales consultant from back East. All the guy did was screw up the whole business. One day an older fellow and a teenage gal walked in. He told me, "This is my granddaughter. I have $1700 cash in my pocket and I'm going to buy her a car before the day is over". Remember, this was 25 years ago.

They homed in on a sporty little Buick two door that was on the lot tagged $3995, which was about twice what it should have been tagged, but that was what the consultant decreed. This consultant wouldn't even negotiate on the price. The guy and his granddaughter walked. Two weeks later, the dealership sold the Buick on the Omaha auto auction for $1300. Go figure.

A month later, the dealer fired the consultant at 4pm one afternoon. An hour later, there was a beer bust going in the Service Department. Two months later, I found greener pastures.

The whole scene with dealers makes absolutely no sense.
 
One reason is what a Kubota dealer that I buy some trade ins from told me.He said if he sells a used tractor with some age on it no matter what he tells the customer they will expect it
to be like a new tractor with the same guaranteed and whatever.So when he sells them to me at a bargain price he knows that's the last he'll hear about that tractor no matter what happens to it or if it blows up when I'm backing it off the trailer.Same with an auction when a dealer sells a tractor at an auction its AS IS no come backs.
 
Well the mega fiat dealer I used to work for would
take a used piece of equipment on trade they
wouldn't even bring it to the lot a lot of times I'd go
pick up piece of equipment from the old owners
farm and deliver it to the new farm they wouldn't
even change the oil or anything just move it from
one place to another
 

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