I'm doing Subaru shopping now, and one of the Dealership send this to me. What do you think on this? I think it seems like Subaru can hold its value pretty good.



"Sometimes customers call me/write me to ask, "Why doesn't Subaru have 'Employee Pricing' discounts and '0% financing for 72 Months' promotions like the bigger brands do?"

That's a good question, and one that I would like to address. Let's start with a story:

Recently a customer came to trade-in a luxury brand American car that he had purchased two years before. When we did the appraisal we discovered that the car's trade-in value was only 1/3 the original MSRP of $36,000. He was disappointed to say the least, but when you consider that when he purchased the car new he received
1). a $4,000 "Employee Pricing" discount, plus
2). a $3,000 dealer discount, plus
3). a $2,000 factory rebate, plus
4). low rate financing, it becomes obvious that his $36,000 car was really a $26,000 car with $10,000 worth of "fluff" added into its MSRP by the manufacturer.

As a result of deep retail and manufacturer discount policies this brand of vehicle has been permanently devalued in the wholesale markets. And so, while it may seem unfair, $13,000 is the true trade-in value for this otherwise very nice recent year luxury car.

By contrast, a quality European or Japanese car (including Subaru) with a $36,000 MSRP ends up selling retail for $34,000-$35,000. In other words, the amount of "fluff" added into the MSRP is nominal. Plus, the quality of the engineering, the quality of the materials used, and the quality of the customer service attached to the brand combine to assure buyers that, not only does the car have a high value in the marketplace today, it will also have a high resale value in the future.

Think about it; if you knew you could buy a new $46,000 Mercedes for $36,000, would you still view Mercedes as a high quality high value luxury brand car? Or would you feel that Mercedes' brand image had been cheapened?

The practice of motiviating buyers with exhorbitant discounts/rebates/low rate financing incentives is one of the major reasons big American carmakers are in the trouble they are in today. High quality, high value cars (like Subaru) begin with a reasonable MSRP, sell at a fair market price, then strive to continually deliver high value after the sale. That seems to be all the "incentive" most customers are looking for when buying a new Subaru. :-D

Thank you again for your interest in Subaru of Dallas and Subaru brand vehicles. I hope I'll be hearing from you again soon."

 

Some of that email content may be dealer hype to get you to buy from them. They didn't name the "luxury brand American car" in your email so we can't look up its trade-in value on sites like www.kbb.com. Subaru vehicles depreciate just like most other non-exotic cars but Japanese vehicles in general hold their value pretty well.

Subaru will periodically send me literature with a 'guaranteed' trade-in value. The latest one stated that the dealership would give me a minimum trade-in allowance of $14,000 if my MY2002 WRX sedan has less than 75,000 miles on the odometer (which it does). That's not too shabby considering that I couldn't sell it for that amount to a private party, at least locally.

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