Over the last few weeks my daughter has been discussing trading in their car and getting one of the newish Chinese brands. Let us be honest they seem to be everywhere now and are hard to miss and this is all price driven. When Covid and the lockdowns happened there was a significant change in the market due to lack of inventory on the show room floors.
The Chinese filled that void with brands such as BAIC (Mercedes) and Chery ( Land Rover/Jaguar) and they seem to be hitting the mark. When the big car manufacturers of the West wanted to supply the Chinese market they had to team up with local State Owned car manufacturers and why now we are seeing a better quality car coming out of China. The Chinese used the West knowledge to provide a better finished product.
I was offered the Chery brand back in the 1990's and was part of a Chinese conglomerate that made BMW (assembled) and Renault vehicles. I did turn them down because they were that nasty and saw them as a tin on wheels. How times have changed and I would even consider test driving one today.
My daughter has a VW which is seriously over priced for what the vehicle offers with the upside being the readily available parts and servicing along with the resale value. My question to her was to think how much her current car will be in 3 years compared to a Chinese equivalent and this thought had never entered her head. I personally think she will be even more out of pocket and to consider just keeping what they already have. The problem is most Chinese cars are not at the 5 year mark so this is an answer no one really knows and it could be a severe lesson to learn. I would guess anywhere between 50% and 60% as a depreciation value and possibly more depending on the make and model.
I would just like her to consider the pitfalls before jumping in feet first because there are always other options. I have a feeling she would regret doing a trade in purchase option because that is not the smartest play here. My son regrets not listening 3 years ago when I offered to help and his young impatience got the better of him which cost him thousands.
Firstly I would never trade a vehicle in via a dealership and would never buy a car from a dealership with my current knowledge and experience. This would see the dealership score profit by making profit twice out of you from what is effectively one sale.
Around 8 years ago I did 12 months market research for a friend of mine who owns a few car dealerships. This research involved attending car auctions and the fluctuating prices depending on the time of the month. One has to remember that the low mileage high end cars are mainly bought by the dealers themselves and are on their show room floors within 48 hours of purchasing with a hefty 40-50% mark up. The 3rd week of the month showed the cheapest auction prices which is more about common sense as the end of the month was the priciest.
I have told my daughter to sell her car privately and then give me two weeks to find the car she desires because the market is currently flooded with repossessions. I have no idea what the resale value is on a Chinese repossession, but I can assure you it will be below 50% of trade. This would guarantee when you came to resell that vehicle you would at least get your money back in 2 or 3 years time. The service plan and warranty will still cover you for this period because these vehicles are still new with some even not having enough on the clock for their first service.
I did this with a Nissan Pathfinder I sold years ago and got exactly what I had paid for it 4 years later. Once you know how the system works and how these businesses make profit you have to play them at their own game and not become a client of theirs.