Monday, August 22, 2005

What employee pricing does to me

Prior to GM’s Employee Pricing campaign, my GMC truck, which is only a year old blue-booked for about $1,000 more than I paid for it.  Now that the campaign has been running, my truck is worth about $7,000 less than I owe; this is a direct trickle-down effect of the discounted price of new vehicles and the value of my car will most certainly not be going up with all of the new vehicles that have been dumped on the market at rock-bottom prices.

So what’s this mean?  Let’s say, for example, I wanted to get an “Ultimate 4x4” Lincoln navigator (I don’t, but that’s not the point here); it retails for $57,795, is employee priced at $49,719, and I receive an additional $2,000 cash back — that leaves me $5,000 upside down, meaning that the total amount I would finance would be $54,719 for a net of a $3,000 savings.  Alternatively, let’s say I wanted to get a Chevrolet Tahoe Z71 4x4; it retails for $44,760 and is employee priced at $36,058 — that leaves me $7,000 upside down, meaning the total amount I would finance would be $43,058 for a net of about a $1,000 savings.  Finally, let’s say I wanted a base model (not 100% sure what this entails, but I’m sure it doesn’t have luxury options or 4x4 and the Jeep site doesn’t list pricing for non-base models) Jeep Grand Cherokee; it retails for $27,050 and is employee priced at $24,165 with an additional $2,000 cash rebate — that leave me $5,000 updside down, meaning that the total amount I would finance would be $29,165 for a net of $2,000+ dollars over the retail price of the vehicle.

What’s the lesson here?  Check out the Blue Book value of your car!  It was one thing when you could roll some of the debt you owed on a trade-in into a 0% financing deal, but these employee pricing campaigns are not at 0%.

I’m just waiting to see what the manufacturers start doing in October.

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