Why is certain optional equipment worth so much more than other options that might cost the same or more when new?

This is another great example of the law of supply and demand being extremely demonstrable in the used vehicle market. When new, what manufacturers charge for options is largely dependent on the expense to produce the option. When used, the value of options is much more dependent on demand. Diesel engines, for instance, in a 2004 Chevy pick up retailed for about $5,100 and today they are so popular and relatively rare that we add $6200 for the option and that may not be enough. On the other hand in 2004 night vision was a $2,200 option on a Cadillac Deville and we have a $500 add for it, and that may be too much. Ultimately the value of options is determined by consumers. If they demand it and are willing to pay for it, it will have value, and vice versa. VW Jetta diesels (TDIs) cost about $1500 more than a comparable gas engine and today are often worth about $4,000 more. There is a large demand and short supply, and consumers are willing to pay a premium for them. On the other hand, few people care if the Jetta has OnStar, a $700 option, and consequently we have no add for it.  If I were a consumer and the Jetta fit my needs, I’d be standing in line for the new high tech diesel engine version soon to be introduced for sale in this country.

Best times to trade

Is there a good time to trade a vehicle? A bad time?

 In general you can count on the wholesale auto market being pretty strong from mid- January through May. June tends to be iffy, July and August declining steadily, September iffy, October & November often declining rapidly, December unpredictable (iffy).
So you can count on getting pretty good value for most vehicles in those January to June months when the market is strong and dealers are usually aggressively buying and trading. After that you are looking at a steady month to month decline culminating in the lows of October, November. I don’t think it is unusual for many vehicles to experience as much as 40-50% of their yearly depreciation during the three months of September, October, and November, so you can see that trading during those months can be problematic.  Of course if you have a convertible and live where it gets cold, the dead of winter would probably be a particularly bad time to trade it. Sometimes dealers with deep pockets and strong nerves stock up on convertibles in the late fall/early winter and sell them in the spring and make retail kinds of profits selling to dealers. Risky, but can be profitable.  Keep in mind that these are generalities and must be balanced against when it’s a good time to buy a vehicle (generally when manufacturers and/or dealers are desperate to sell, and that is less predictable).

Which options return the most value in relation to their cost?

Of course the aforementioned diesels often return well over 100% of their cost.  Some other options that are good buys are automatic transmission, 4 wheel drive, moon roof, leather (where it is expected), DVD players, navigation, third seats (in wagons and SUVs), heated seats (in colder climates luxury vehicles without heated seats can be extremely difficult to sell in the wholesale market), special wheels. Options that don’t hold value well can be such things as passenger power seats, headlight washers, certain engine upgrades (4 to 6-cylinders, 6 to 8-cylinders, 8 to bigger 8-cylinders), leather (where it’s not expected), Anti-lock brakes, heated mirrors.

How much do dealers make on a retail sale?

That’s very hard to say. In general, the lower the price range of the vehicle, the less a dealer has to spend reconditioning a vehicle, and the lower his expense structure the less profit he can afford to make. Typically a dealer can sell a lot more $10,000 vehicles than $30,000 vehicles (there being many more consumers looking for used vehicles in the $10,000 range than the $30,000 range) and a dealer selling $10,000 vehicles typically has a more modest expense structure than one selling $30,000 vehicles and can therefore sustain his business with less profit per car. It is also typically much more expensive to recondition a $30,000 vehicle out of warranty than a $10,000 vehicle. These are the primary factors determining profit structure. It is a highly competitive business and shopping around will almost always lead you to dealers with competitive pricing and profit margins.