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Discussion Starter #1
I have been toying with the idea of picking up a used 2016 or 2017 Volt. For reference, I have a 2012 Red Chevy Volt loaded with every available option. It is super nice. I am not ready to run out and buy, but I have been watching values of used Volts on the usual Channels of Cars.com, Autotrader.com, and CarGurus.com

Having said that, there seems to be a rather large gap between asking prices and what I would consider to be true market value. For example, most used Premiers (which is what I would want if purchased) are easily listed for over 25k and that is looking at the lowest listed models.

A quick example for myself would be to consider what has been paid in the past.

A 40k new premier with the 20% off (back a few months back) would be 32,000k. A standard discount before the 20% off was around 3-5k, so lets be easy going and give a dealer discount of 2k only. That brings us to 30k. Use the federal tax credit of 7.5k and now we are down to 22.5k

These are not using any Private offers or Costco or Farm Bureau discounts or state specific incentives.

And then the obvious, these cars are now used and should receive another 10-20% discount for being used. It seems a fair market value for a used 2016 or 2017 Volt should be right around 20k give or take a very small amount. This is copied and pasted from NADA.


2016 Chevrolet Volt
Sedan 4D LTZ Premier I4 Electric


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Rough
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Retail
Base Price $21,275 $22,975 $24,375 $28,100
Mileage (10,000) $675 $675 $675 $675
Total Base Price $21,950 $23,650 $25,050 $28,775
Options: (change)
Driver Confidence Pkg. $400 $400 $400 $450
Navigation System $725 $725 $725 $825
Price with Options $23,075 $24,775 $26,175 $30,050

SO, NADA is giving a trade in of 26,175 for a clean, loaded, 2016 Volt. This seems to be terribly out of whack. KBB, gives a little less on trade in values, but still higher than they should be considering the tax credits.

Bottom line seems to be the market price has not caught up with reality yet, Thoughts?
 

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I have no special knowledge of used car prices, just stating the obvious, demand probably exceeds supply at lower prices. Not unexpected since there probably are not yet very many used gen 2 Volts on the market. Could also be that the prices of used gen 1 Volts, plus a premium for gen 2 improvements, sets a floor for the price of used gen 2 Volts.

KNS
 

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It's simple math to determine how the tax credit affects the price of used Volts, as you illustrate. But something tells me that KBB, NADA, etc. don't just build a simple "-7500" function into whatever algorithm they use to estimate values of used Volts. And they have very limited sales data to work with at this stage for used Gen 2's. I think their figures will gradually close in on what you call "true market value" as more used Gen 2 transactions occur and they can add that info to their database. That is, unless too many people continue to overpay for a used Gen 2...
 

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While a savy Volt enthausist would know all about the available rebates/state and federal credits and come up with a fair market value of a used Volt (I went through this when I had Tesla appraise my 2013 Volt which they claimed was worth $11K as a trade on a CPO Model S) when I pushed back they came back with almost a verbatim accounting of ALL the discounts I COULD have revived here in Illinois when I purchased it. They assumed I got the GM price reduction GM did on the 13, that I got the full $7500 federal tax credit, that I got the 10% Illinois cash credit (mine came to $3914) and worked from there.

Not everyone gets or got these credits. So pricing a used Volt is more difficult that a normal car to buyers and sellers.
 

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I have puzzled about how used Volt pricing is/should be affected by the original buyer's after-tax credit cost, and wondering why there has been no thread that I could find focusing on this very situation before now!

My "new" 2015, for example, becoming a "used" car when I drove it off the lot, was then worth significantly more, according to NADA, KBB, etc., than I paid for it, when all was said and done, even including sales and registration taxes. I have reached the conclusion that my personal income tax situation, bargaining ability, and any "angles" (like a Loyalty or Private Offer) that I may have used to get my cost down are none of a prospective buyer's business, and a FMV that only focuses on what people are actually paying, is really the only "fair" way to gauge an appropriate price.

I anticipate that, if I buy another new Volt/Bolt in the next year or two, I'll recover more than my actual cost for the '15 in the bargain, whether by private sale or trade-in. If this works out like I think it will, I do plan to buy another new EV every couple of years until the tax incentives (or our personal income tax liabilities) change adversely.
 

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Discussion Starter #7
As I was browsing, (this morning actually) I came across a used Blue Premier listed for 34,xxx. It was hilarious to read the description of how buying this used car was going to save you money over a new one!! Anyway, I have purchased many cars and fully understand that an asking price is an ASKING price, not a selling price. However, at the moment, with KBB and NADA and dealers being so far ABOVE in what a used VOLT should be worth, negotiating for a used one becomes incredibly difficult until the market price is more stabilized.
 

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Found your thread;)

The rebate here is applied after taxes, is it in the US? Although your taxes are lower than up here, you need to factor it in.

Here taxes is 15% so the $8k rebate doesn't even cover taxes.
 

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Discussion Starter #9
Found your thread;)

The rebate here is applied after taxes, is it in the US? Although your taxes are lower than up here, you need to factor it in.

Here taxes is 15% so the $8k rebate doesn't even cover taxes.
In the United States, the rebate isn't a rebate at all. It is a tax credit, which reduces what you pay or owe when you file your taxes. Here, it is 7500 as long as you qualify for it (have enough liability to use it). Taxes is paid on the full purchase price at the time of purchase, minus the value of a trade, if you have one.
 

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Use the federal tax credit of 7.5k and now we are down to 22.5k
That is not at all how the federal tax credit works. It is not a rebate, only a tax credit and it is UP TO 7500. Most people will not get the whole 7500 off their taxes. It is according how much you are paying the feds. I have already checked into this with my accountant.
It is not going to affect how much one pays or finances at time of purchase.
 

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Discussion Starter #11
That is not at all how the federal tax credit works. It is not a rebate, only a tax credit and it is UP TO 7500. Most people will not get the whole 7500 off their taxes. It is according how much you are paying the feds. I have already checked into this with my accountant.
It is not going to affect how much one pays or finances at time of purchase.
You caught the "tail" end of a conversation. We are talking about purchasing a used Volt and determining what "fair market value" is.
 

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Sheesh! <plus these additional characters to meet the Board's minimum post length requirement>
 

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What you are doing is comparing a new price to a used price. This is not a 'fair market value'.

Market value is based on the market at the time of the transaction. It has zero to do with the original transaction price and even less relationship to original MSRP. And no, it isn't fair. See ELR pricing or a 1963 'Vette.

If people are willing to pay more for a used Volt than a new one, that's what the market value will be based on for the next one to come up for sale. Kind of like 'comps' in realty.

Trade in value is a whole different thing more based on auction value than retail transaction. And no, you really didn't get the dollar amount shown on the paperwork.

If gasoline doubles in price, used Volts will go up as well as any other efficient car.
 

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Discussion Starter #17
What you are doing is comparing a new price to a used price. This is not a 'fair market value'.

Market value is based on the market at the time of the transaction. It has zero to do with the original transaction price and even less relationship to original MSRP. And no, it isn't fair. See ELR pricing or a 1963 'Vette.

If people are willing to pay more for a used Volt than a new one, that's what the market value will be based on for the next one to come up for sale. Kind of like 'comps' in realty.

Trade in value is a whole different thing more based on auction value than retail transaction. And no, you really didn't get the dollar amount shown on the paperwork.

If gasoline doubles in price, used Volts will go up as well as any other efficient car.
I understand your position. Lets use a scenario here.

You go to dealer A to purchase a 40k Volt. GM is running 20% off. You use a private offer and have Farm Bureau Insurance. You pay an effective price of 30,500 before any taxes or fees. The year ends and you claim the tax credit. You are now down to an effective price of 23k not counting any fees or taxes. Six months later you decide you want to upgrade your Volt to something else, car B. Dealer A says, we can take your car in on trade for 21.5k. You state, "Hey, I have already checked NADA and they say my car is worth 26.5 as a trade in and that is what I want. They chuckle a little bit and state the obvious going back through all the discounts and credits you received when you purchased the car.


Would you be surprised at their offer? Would you really expect them to give you more? They know what you paid.
 

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That is not at all how the federal tax credit works. It is not a rebate, only a tax credit and it is UP TO 7500. Most people will not get the whole 7500 off their taxes. It is according how much you are paying the feds. I have already checked into this with my accountant.
It is not going to affect how much one pays or finances at time of purchase.
I'm not sure if your accountant is wrong or we're just mixing up words, but if you have over a $7500 tax burden (the total tax you owe before subtracting what you've paid in withholdings) you will get the whole tax credit. So a typical taxpayer would have to be earning less than $60k per year or have some other special tax benefit kicking in to not qualify for the full tax credit. Alas, if you are making less than $60k per year, unless you have a nest egg of cash sitting around, you have no business buying a new $35k car. That's financial suicide.

Back to the OPs topic, people have always paid too much for new cars. dealerships mark up cars to what they think they can get for them. But mark my words, when the Bolt and Tesla Model 3 are plentiful, you'll see new and used volt prices drop like crazy - I predict laste 2017.

And for those who don't believe that 20% off MSRP is possible? I bought a brand new $33k CTS for $23k and a new $44k MSRP volt for $21k. Both were deals of the decades, both required being patient and waiting for the right deal at the right time and doing special things like collecting for 7+ years on GM card rebates, while negotiating like a Ferengi late or well after the model year. In essence the manufacturer and dealers both took the depreciation hit from the first year so I got new cars for used car prices.
 

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Discussion Starter #19
That was my point.
But again, you misunderstood the conversation that had already taken place. A used Volt's value will be affected by $7,500 because it is used and the tax credit can ONLY be used on a new car. For example, you purchase a New Volt for 40k and pay full price (not likely but it is just an example). You take the $7500 tax credit (or any portion of it that you qualify for). Your car's value has instantly dropped by $7500 because the tax credit exists whether you could take advantage of it or not.
 

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Where to start??

if you have over a $7500 tax burden (the total tax you owe before subtracting what you've paid in withholdings) you will get the whole tax credit.
Withheld income in the hands of the IRS is still the taxpayer’s money, and has nothing to do with the taxpayer’s tax burden or its calculation. The availability of the $7500 EV credit is wholly dependent upon whether the taxpayer’s calculated income tax equals or exceeds that amount; if it’s less, the taxpayer gets a credit only equal to the tax due.

A used Volt's value will be affected by $7,500 because it is used and the tax credit can ONLY be used on a new car. For example, you purchase a New Volt for 40k and pay full price (not likely but it is just an example). You take the $7500 tax credit (or any portion of it that you qualify for). Your car's value has instantly dropped by $7500 because the tax credit exists whether you could take advantage of it or not.
The actual value of a vehicle at the moment it is sold equals what the buyer paid for it, and the seller’s cost has nothing to do with it. I’m certain that the sales data used by NADA, KBB, Etc. to calculate their fair market value reports include sales made by the many EV buyers whose tax situation was such that they got little or no “discount” because they couldn’t use all the credit. And, because of the wide variance among the states on credits or rebates that may be available to EV taxpayers in the various states, it would not be reasonably possible for them to take account of these credits/rebates, even if those data were relevant.

You go to dealer A to purchase a 40k Volt. GM is running 20% off. You use a private offer and have Farm Bureau Insurance. You pay an effective price of 30,500 before any taxes or fees. The year ends and you claim the tax credit. You are now down to an effective price of 23k not counting any fees or taxes. Six months later you decide you want to upgrade your Volt to something else, car B. Dealer A says, we can take your car in on trade for 21.5k. You state, "Hey, I have already checked NADA and they say my car is worth 26.5 as a trade in and that is what I want. They chuckle a little bit and state the obvious going back through all the discounts and credits you received when you purchased the car.

Would you be surprised at their offer? Would you really expect them to give you more? They know what you paid.
Dealer B may generally “know what you paid” Dealer A, by his awareness of factory rebates, etc., available to Dealer A at the time of sale, and especially if he somehow got a look at the sales contract, but even from that, he would not know where things like GM Credit Card “points” impacted the bottom line, as they generally look like cash brought to the transaction. And, Dealer B cannot ever really know what the buyer’s tax situation was for the purchase year, unless the buyer volunteers the information.

It would seem very unlikely that two informed sellers in the same market with identical used Volts, one of whom had used little or no tax incentives, and the other a whole bunch, would strike very different sales prices unless the transactions were both influenced by the confessions of each of their tax situations to their buyers!

My dealer knows how much federal and state tax benefit I got from our Volt purchase, and I’m betting that they’ll try to hammer me with a “net cost” approach to valuation if I decide to do a trade-in—I certainly would take advantage of having such information if I were the buyer. As to other dealers or individuals: what business of theirs is my private financial information?
 
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