Firstly, let me say how much I enjoy your column found at www.lewrockwell.com . Keep up the good work!
I am writing to ask your opinion on some general principles regarding pricing/value of a damaged high-end SUV.
There is a bit of background that I have provided but it is not overly complex.
This 2012 Mercedes SUV was bought new by us in western Canada in the summer of 2012 [Note: 1. price likely higher than same vehicle in the USA due to less competition here, and 2. the Cdn dollar is bought for $0.95 US].
Base price was $59,400 but:
premium package $4600
driving assistance package $800
Bi-Xenon headlight package $1000
leather upholstery $1990
trailer hitch $675
TOTAL MSRP $68,465
In addition, special windshield treatment was $1295 and the documentation/admin charges, A/C tax, tire tax, security etch, transport & PDI charges and 5% VAT took the total price to:
TOTAL SALE PRICE $72,673 CAN [summer of 2012]
We travel approx. 60 miles/day – all on a first class, newly-paved, well-maintained highway [our acreage is 30 miles out of town]. In the 15 or so months since taking delivery, the vehicle had approx 36,000 miles on it by my wife, the owner. The oil [Mobil1] & oil filter were changed more frequently than required per the warranty . Other scheduled maintenance was done on time, each time, as required, by Mercedes here in Canada.
In the fall of 2012, four new wheels and winter tires were bought from a Mercedes dealer at a cost of $4700 since original delivery to us of the SUV. This fall, the vehicle was taken back to the dealer that sold it to us and we paid for them to take off our four summer tires/wheels and balance/install our four winter tires/wheels. Four days later, while on the highway, the front driver’s side tire and wheel separated from the vehicle and bounced away. The vehicle slewed hard on its disk brake and was brought under control and stopped on the road side. The wheel/tire were not found by us. There was body damage to the wheel well. The vehicle was towed from the accident scene back to the dealer at the dealer’s expense.
The dealer accepted responsibility for the improper tire installation. The tire nuts had not been torqued as required. The technician was fired by the dealer [or so they told us]. The dealer has had the body work repaired and repainted, has replaced the wheel and tire — all at their expense and has provided a loaner vehicle to my wife during these repairs.
Our concern [aside from the extreme risk posed to my wife and to other motorists due to the negligent work] is that this vehicle, despite the repairs, will now be worth less on the market than if it had not had the accident. Honesty and ethics require that this accident be disclosed to any future buyer. In addition to the service/repair records on the vehicle [on the Mercedes Benz system], there is a service here called “Car Fax” which tracks vehicle histories, accidents and warranty repairs on vehicles. Every buyer has access to this info and will, therefore, learn of this fiasco. We believe that these facts, once disclosed, will affect negatively the resale price of this SUV.
The dealer has denies that there will be a reduction in value due to this accident. They have offered to take the 2012 SUV in trade for a new ML 350 Diesel. Further, they have stated to us that such a deal would be done at their “policy price,” whatever that is. They have stated that they would make no profit on such a trade-in deal — in effect they claim they would waive the 9% profit that they normally make on such a new vehicle sale*.
The price of a new 2014 ML 350 Diesel with the same options and features is approx $73,000. Take away 9% and we’re at $66,430.00 [“policy price”].
The problem we are now running into with this dealer relates to the value they are offering for the damaged/repaired 2012 ML 350 Diesel. They initially offered us $47,000 for our 2012 on trade. We protested, showed evidence of what other Mercedes dealers in the province are reselling the same vehicle for [$61,000 to $63,000]. Our dealer then came back at $52,000 for our trade-in.
This strikes us as unfair and predatory, especially since they told us that they would waive their 9% on the sale of a new SUV to us and that they would not profit from the deal. Offering us $52,000 for a vehicle that would be resold for $60,000+ seems to be taking advantage.
We are not expecting to profit from this unfortunate accident. In fact, we are prepared to pay the fair and reasonable difference on a trade-in settlement. In my view, if anyone should have to eat some costs, it should be the negligent party. By this I mean any modest costs that are above & beyond their “no profit to them” stance. After all, my wife is the party who has been put at risk, inconvenience [plus stress for a few months and loss of vacation time] and now they want her to take the hit on her trade-in.
We think that she should be given something closer to the resale price of similar used 2012 vehicles [i.e., closer to the $60,000 that dealers get for used 2012 ML 350 Diesels with same options/features]. If we were offered, say, $58,000 for our 2012 and were offered a 2014 virtually identical to our 2012 for the “9% off” “policy price,” we would take the deal. The difference would be $8,430.00.
However, the dealer wants to charge us for the transport & PDI [$1,997] on top of any deal we might make to settle this.
Thus, we are willing to pay $8,430 cash difference and the dealer eats the transport charges [since this fiasco was caused by their admitted negligence].
The dealer wants $14,430 cash difference plus $1,997 for transport for a total of $16,427 cash difference. The dealer does not have a model in stock currently that matches our 2012, thus there would be a couple months waiting for delivery.
Eric, what do you think? I value your insight and experience and hope that you can offer some guidance to us.
I look forward to hearing from you, and remain
* I have seen info that asserts that typical dealer margin on a new car is 14%, not 9%.