The car buyer’s conundrum has long centred around whether part exchanging is the best way to sell a used car. A few years ago, it could be more profitable than selling a car privately for some sellers. And it’s always been the most convenient. But is that still the case? We investigate part exchanging cars.
What is part exchanging?
There are two motor industry terms for selling a car: trade in and part exchange. Trading a car in is simply another way of saying you’re selling it to a dealer. Part exchanging is when you take the car to a dealership and exchange it for a new model. The reference to ‘part’ is because for most drivers the value of their existing car is less than the replacement model they’ve chosen, so its value contributes towards offsetting some of the cost of the new model.
Selling a car is tricky
Much of the appeal of making a part exchange is the convenience of the process. Anyone who’s had to sell a car will know it’s rarely straightforward. You put an ad on a website or in the local press hoping to be inundated with offers. But the calls you do get are generally from sales people offering other ways of selling your car. When you do hear from buyers they’re frequently dreamers, or ‘tyre kickers’ in car dealer circles. Then if you sell your car before you’ve got the new one, you’re without wheels. Or if you wait until you’ve collected your new car, you’ve got the old one – and the money that’s tied up in it – hanging around.
Why part exchange makes life easy
You take your old car along to the dealer and agree a price on it. This is then deducted from what you pay them for your new car. When your new car is ready, you go along to the dealership with the paperwork for your car and effectively swap cars.
What about value?
According to motor trade valuation experts, drivers will get more money for their car when selling it privately than handing it to a dealer as a part exchange. A few years ago, in the wake of the 2008/09 recession, dealers were facing a shortage of second-hand stock. This peaked in 2014, when values for second-hand cars were at their highest according to Glass’s, a used car valuer. In some cases, four and five-year old cars in good condition with the right specification were being bought for more than they were worth on paper. It truly was a seller’s market. That is no longer the case and values of used cars are falling faster than in the past.
How do dealers view part exchange?
If your car is a tatty old heap with bits about to fall off, the dealer will view it as an inconvenience that they will send to a specialist car auction. However, if it’s a few years old and ticks all the boxes for colour, equipment, mileage and so on, they’ll take valuing it more seriously. But they won’t want to offer over the odds for it because that will dent their profit margin. And they’ll be more interested in trying to lure you into the new model with a low interest rate finance package while trying to sell you all the extras that go with it, not to mention the countless options available on new models.
Part ex vs. trade in?
Remember, not all car dealerships are the same. Some might specialise in selling six-year old Fords, for example. They may even have an arrangement where the local Ford franchises sell them used models. To them, your car could be worth more than it might be to the organisation you’re buying your new car from. And as ever, always play dealers off one another, to make them compete for your business. For example, when buying a new Volkswagen Golf and part exchanging an old VW Polo, speak with a handful of VW dealers to see which offers the best deal.
The truth is that for most car dealers, the part exchange is a side show to the main event. And with values of used cars coming down and probably set to tumble more with the current economic uncertainty, that won’t change. If want to secure the best possible price for your car and are up for a challenge, sell your car privately. If you want the convenience, part exchange it. A happy middle ground could be to find a dealer that will value your car more highly. Then trade it in on the day you’re collecting your new model.