How to Price a Demo Car
Is a Demo Car with 6,000 Miles New or Used?
Nobody really gets a good deal on a demo car. That's why I do not recommend buying them. Since no pricing data is available, you can't easily valuate it. In most states there are no laws about labeling a car as new or used, except that once it has been titled, it's used. This allows the dealer to legally claim their demo with 5,000 to 10,000 miles is "New."
How do You Determine the Price
If the Car is Less Than 8 Months Old:
- First, calculate a fair profit offer the same way I taught you for a regular car
- Next see how many miles are on it and multiply by $0.20 to get the "Mileage Adjustment Factor"
- Now multiply the number of months it has been on the lot by 0.015 and then by MSRP to get the "Age Adjustment Factor"
- Take the price you got in Step 1 and subtract the amounts from Step's 2 and 3 and this will be your offer - don't pay a penny more
Here is an example of a car with a $20,000 MSRP (True Dealer Cost $16,000) that has 4,000 miles and has been on the lot for 4 months:
- Fair Profit Offer - $16,800
- Mileage Adjustment Factor - 4,000 x $0.20 = $800.00
- Age Adjustment Factor - 4 x .015 x $20,000 = $1,200.00
- Offer = $16,800 - $800 - $1,200 = $14,800
If the Car is 8 Months Old or More:
Once a car has been on the lot for this long, I consider it used and you should take off the full 20% depreciation from MSRP plus subtract for the mileage.
- Multiply MSRP x 0.8 to get your "Baseline"
- Take the mileage and multiply by $0.20 to get the "Mileage Adjustment Factor"
- Subtract the amount from Step 2 off of the Baseline from Step 1
When you are about to buy a "manager's special" car with mileage, you should run an AutoCheck Report to see if there are any records of it being in a wreck, sold at auction, odometer rolled back, etc. I just don't trust high mileage "new cars." Also, the report tells you when the dealer received the car, a very important factor in our price calculation.