After taking a new-car test-drive, you find out that while the dealership has the year, make and model you want, it doesn't have one with the color and options you simply must have.
"Not to worry," the salesperson says. "I can find you that car — no problem. So let's go ahead and make a deal."
If you go forward, you're embarking on a "dealer trade." Is it a good idea to let the salesperson handle the search? Or are you better off going to the dealership that actually has the car you want in stock?
For many car buyers, a dealer trade can work well. But in other cases it may create problems you didn't anticipate. The key is to know what you're getting into before you agree to pursue a dealer trade.
What Is a Dealer Trade?
As the name implies, a dealer trade is an exchange of vehicles between dealers (it's also called a "dealer swap"). Mike Bradley, Internet sales manager for Selman Chevrolet in Orange, California, says dealer trades allow the salesperson to gain the business of a customer who walks onto the lot. Salespeople want to do everything in their power to prevent customers from taking their business elsewhere.
How Does It Work?
Using a restricted-access computer search tool (meaning one that's not available to car shoppers), the dealership is able to cast a wide search with very specific criteria. So if you have your heart set on a car with a certain color or trim level, the dealer can quickly locate that vehicle. In most cases, the dealership will ask for a deposit or have you fill out a credit application to ensure that you are serious about the purchase.
"Dealers don't like to dealer-trade unless they think they can send that car down the road," Bradley says.
Dealerships often maintain relationships with other dealers of the same brand in their area, allowing them to do such trades. The most common method is to swap for a similarly equipped vehicle. Sometimes the dealer that has the sought-after car will request a different vehicle from the one it traded so it can replenish whatever inventory it lacks. Or the dealership that has helped out a fellow dealer might just bank that favor, saving for an occasion in which one of its salespeople needs a specific car to make a sale.
Can You Still Negotiate the Price of the Vehicle?
You absolutely can negotiate on price in this situation, says Oren Weintraub, president of Authority Auto, an auto concierge company in Los Angeles. "But it is essential to negotiate the deal before the trade," he says.
Make your offer on the vehicle as if it were on the dealer's lot. Once you settle on a price, you'll want to get it in writing, and make sure that any deposit you give is refundable, Weintraub says.
Here is a list of pros and cons to consider if a dealer says it can get your car in a dealer trade:
- One point of contact: You only have to work with one dealership: the one you started with.
- Convenient: You don't have to take time out of your schedule to conduct another car search. The dealer will locate your vehicle for you.
- Fast: A dealer trade is much faster than custom-ordering a car.
- The price may not be the lowest: The dealer that has the vehicle is always in a better position when it comes to holding the line on price. It may be worth your while to keep searching yourself, or let someone else, such as a car concierge, do the legwork for you.
- No guarantees: You can spend the whole day at the dealership as salespeople try to find a car for a trade, but they might not be able to get a vehicle for you, says Weintraub. Just because your dealer offers to trade for the car doesn't mean that the other dealer will come through.
- It doesn't work with all vehicles: A dealer is not likely to trade one of its cars if it is in high demand or is only available in limited quantities.
A Potential Complication
When we were shopping for an Edmunds long-term vehicle some time ago, we considered a dealer trade, but still wanted to inspect the car for ourselves before the swap took place. But we learned that the mere fact of going to look at the car could jeopardize the trade. Here's why:
You're working with Dealer A. The car that's up for trade is at Dealer B, and you want to go look at it before the trade takes place. But Dealer A has a legitimate concern: If Dealer B sees you looking at its vehicle, it may be less likely to trade it to Dealer A. Dealer A's salesperson loses the sale — and possibly the commission or bonus associated with it.
There's a way around this. We suggest going to a relatively neutral source (call it Dealer C) to look at a vehicle that's close to the one you want. Is there a chance that either Dealer B or C would give you a better price on the car? Maybe, but you'd have to start the sales process all over again. Convenience is what makes a dealer trade so appealing.
Is a Dealer Trade Right for You?
Whether to do a dealer trade comes down to a personal preference, says Weintraub, the auto concierge.
"If getting the best price is paramount, you'll want to go to the dealer that has the vehicle in stock," he says.
If you enjoy the level of service at a certain dealer, are a repeat customer, don't have time for a prolonged search or don't have another dealer near you, a dealer trade might be a good option for you. Just be aware of what's going on behind the scenes.
To find a dealership that knows how to treat shoppers right, please visit Edmunds.com's Dealer Ratings and Reviews.