Why Are Cars Worth More In Different States?

[LexKid630]

Why is it that a cars are worth more in different states? Like if you were to go online and look at dealer prices for a certain car, each state would have a different price. Sometimes even $3 - 4,000 in difference. So an hour drive from RI to MA could save you $3,000 ??

[LexKid630]

I think this is why they ask you for your zip when using KBB etc. just don't know why...

[monarch]

In general, MSRP window sticker prices should all be the same or very nearly the same. But actual selling prices can vary regionally and even within states and even within the same model line due to variations in factory rebates, optional equipement level and hidden factory-to-dealer incentives (if any). For example, the sales volume a dealer achieves can affect the size of the hidden factory-to-dealer incentive. Then there are seasonal variations as well (the slow selling months are typically Jan & Feb). However, my experiences are based more with Toyota dealers than Lexus dealers, so I am assuming Lexus dealers operate roughly in the same fashion.

[bktobk3233]

I would dare to use the old addage of "supply and demand". If you can get more money for the same car...why not.

I would also say that median household income (varies at different parts of the country) which is a factor of the local cost of living, has much to do with it.

Let's say that a married couple earns $200k in Southern California and live in a home that is valued at $800k. It's not to hard to sell them a $45K car.

Those same people, in another part of the country, would earn say about 1/2 of that (not trying to insult anyone, just trying to illustrate; allbeit extreme). It then becomes harder to sell that car at that price.

I do live in So. Cal. and find it amazing what people pay for cars vs. homes and incomes. I can't fathum making a $500 payment for a car if I had to pay $1000 (or less someplaces) for a mortgage (Square footage being equal). Then insurance, fuel, tires, etc. on top of that. If you had the "inflated" incomes of these select areas of the country then these other expenses seem minor. And a vehicle would only be 10% of total annual income vs. 30% (again, just a crude illustration; an attorney would like me to state "actual percentage will vary")

So in a strange twist of economics, it's actually easier to afford a Lexus here in So. Cal because the cost of living is higher.

I think it goes like this:

Higher cost of living=higher income=more disposable income=higher asking prices for vehicles. I'm not sure I totally understand it either; but it sure feels that way out here.

My humble opinion.