I believe that I understand your points (Cliffy & CalgaryDave). However, my question (imprecisely communicated
) is not addressed in your answers. I'll try to clarify some of the loose terminology that I used in my original post.
Short response/question:
Is the "reasonable profit" the
average difference between the Dealer purchase price via trade-in/auction and the avg selling price for the area? If so, disagreements can occur if the buyer knows the avg selling price and the dealer refuses go below it or close to it.
Long response/question:
Let see. Cliffy stated that: "The thing that matters is what other similar vehicles are selling for in the same area." I understand this. Dealers want to maximize profits. They can attempt to accomplish this by selling their used vehicles at a price point (determined by demand, region, etc.) that is greater than the priced paid for vehicles from consumers/auctions (if they can properly forecast the "price point" number).
In Cliffy's example:
"The dealer paid $17,000 for one of them and 13,000 for the other. You can buy either one of them for $19,000. Which one is a better deal? Which one do you as a consumer get better value from? It doesn't matter, does it? Dealer profit is totally irrelevant on a used car."
I'm confused as to why "Dealer profit is totally irrelevant on a used car." In the scenario Cliffy describes above, the dealer makes a profit on each vehicle (different amounts, but profit nonetheless). Are you saying that 19K is their lowest price they'll take? If that is so, they've got 30k invested in the two vehicles (avg 15k), and they are looking to make an avg profit on each of 4k. Would this be a suitable way to define "reasonable profit" on a used vehicle?
In other words, if I know what dealers are paying for their vehicles (avg 15k). AND, I know what the avg selling price happens to be (say 19k). I'm assuming that these prices are in fact different with the avg price the dealer pays being LESS than the AVG price consumers are paying. Would this difference between the two figures equal what the dealer's view as a reasonable profit?