I will tell you - I DO work in the car business. I currently am a branch manager and senior credit buyer for an national auto finance company. I have previously been a BDC manager, F&I Director, Used Car Manager, General Sales Manager and General Manager for dealerships from Florida to California. I have been in the car business for over a decade and my dad was in for 30 years before me. I guess I would qualify as an expert in the car business.

I need to note a few things about your statements.

First, I can't think of a single bank that is using MMR right now to value vehicles. Ally had a 10% market share last month and they used NADA Clean Trade (NOT retail). Many of the CU are using NADA Retail right now, but that won't last for long. My bank uses Clean Black Book. Chase was using MMR in 2008, but they are also back to NADA.

Second, you mentioned that you just tell your cash buyers to take the buyer's order to the CU. You wouldn't have lasted very long in any dealership that I have run & if you are a F&I manager then your PVR must be in the toilet. Why in the world would you send a potential conversion customer to a credit union to use their money when you can beat a CU rates on prime customers right now. BB&T is doing 2.5% @ 72mo on cars right now & they are allowing 2 points of participation! Why would you give that money away???

Third, I am sure you are aware the illusion of a cash deal being better is about 20 years in the past. I was always less likely to deal on a cash customer (unless it was an aged unit that my floor plan was getting pricey on) because I knew that I probably wouldn't have another bite at the apple to make more money. No finance reserve, probably no products and typically poor surveys. Best way to buy a car right now is to know what your private financing rates would be, let them load your trade refusing any cash down & then in the box add any cash down you might have + give the F&I manager a chance to beat/match your private financing rates. You will always get the best deal that way because it encourages the dealership to overpump your trade & lets them think they can get reserve money. They are more likely to decrease the price of the purchase unit.

Fourth, retail is NOT what banks will pay for a car. There are many formulas that come into play with what a bank will advance, but the basic theory is credit + income + DTI + PTI + CBB/NADA Clean Trade=% of advance. There can also be allowances based on trade equity vs inequity & rebates. This also doesn't take into account backend allowance. There is a reason why every bank has a matrix & debt calculators.

I know you said that no one pays retail for cars at all, but I never found that to be true. I just always followed the price/value theory and built the value in my cars. I also told my sales people that it doesn't take a sales person to sell a MB S550 - that car sells itself. A real salesperson can make someone happy that they are driving home in a 5 year old Kia Rio with crank windows.

Maybe things are a little different in the state work in, but I have worked in FL, GA, CA, TX, NM, AZ. I have always been told that TX, FL, & CA are the NFL of the car business.

PS - Franc - I can still get you out the door with 5 pieces of paper on a cash deal down here!!!