What Car Dealers don't want you to know

[MadMaxR44]

Came across this site with some information the dealers keep top secret. Check it out.
AOL Autos: Article (http://site.aol.com/autos/article/12.adp)

Think about this next time You pay anything over dealer invoice.

[done]

Came across this site with some information the dealers keep top secret. Check it out.
AOL Autos: Article (http://site.aol.com/autos/article/12.adp)

Think about this next time You pay anything over dealer invoice.

Then your point is that dealers should only make 3% on the sale, regardless of any other factors?

[Fred]

Oh boy... this is close to the GSM mod kit discussion about pricing... Well I suppose microsoft is only entitled to $10 for Windows 2003 Enterprise Server because the CD's and books are only about $5 total in material...

Even if you don't want to pay over invoice, they know there's other suckers that will pay the higher price... If a general manager is greedy and won't settle for less comission, you're not getting your car... keep in mind that some dealers may not give comission for sales under msrp (I know it would suck working there but it's really just an example)

[boggart]

Done obviously used to sell cars.

What on earth is wrong with consumers arming themselves with the most information possible and getting the best deals possible? Should this privilege be reserved only for the dealers?

I know dealers are there to make money, and have no problems with that. But, if I went to Wal-Mart and the price of a gallon of milk was different for each of 50 customers, I'd be hacked. Why are car dealers different? If MSRP is a good price why aren't cars sold at that price? If invoice was a good price for a car, why aren't cars always sold for invoice? Why does the dealer ALWAYS keep all of the customer incentives that go along with the new car purchase?

No, dealers can make money, but they don't have to TRY to rape everyone who walks in their door to buy a car either....

As far as it being like the GSM discussion. What is wrong with a group of guys sitting around and discussing whether or not they think any product is worth what it is going for? I've pronounced my take on a certain single exhaust system numerous times. I don't harbor hard feelings for the company, think they make a fine product, but think that the price should be less. I didn't ask them to lower the price, but I did explain why I thought their price was out of line. If they want to lower it fine (they did too, at least on the GB), if not I don't have to buy it.

It's not wrong to have a discussion. After all, this is a "discussion board", right?

[done]

Done obviously used to sell cars.



In point of fact, yes I did. For a while in 64/65 and then again in 78/82. The process was the same then. It has not changed. It doesn't change because, in general, the car buying public does not want it to change. The dealers are in business and have a reasonble expectation of that business being profitable. If flat rate pricing was what the public wanted, then that is what all dealers would do.

I worked in a flat rate store for a while and dealt with a lot of unhappy customers when they found out what their trades were really worth. At the last store I worked at, each senior salesmane could make any deal he could, with a known minimum. However, I spent far more time trying to get people financed than I ever did selling the deal and squeezing for the last nickle.

So what is right? Are all dealers fair and honest 100% of the time? Nope. Are all cutomers fair and honest 100% of the time. Nope.

So that is the system we have. You are not going to change it, so learn to work it. As the article said, you are not going to get the holdback, so the information is not very useful. By the way, they get even more incentives for the "leftovers" when the new models come out.

All that being said, I buy my cars at invoice, less any factory incentives. I try to get the deal there quickly so as not to waste my time or anyone elses. I don't mind that the dealer makes money. I for darn sure make money on the stuff I sell.

[Currently Cruzin]

I have to agree with "Done". I have been in sales all of my adult life. Being a salesman is not an easy job. Its the same with any big ticket item whether its a car, big screen T.V. or any other expensive item. There is always room for bargaining and there will always be dealers that are ready to take advantage of someone just as there are other dealers that will treat you and there salesman fairly.

[Dilliam]

It is really simple. Offer what you think is fair, and if the dealer can't make a dime on it, he can say no. There seems to be a small pity party in this thread for dealers. No one is forcing them to accept an offer

[DrVali]

www.fightingchance.com

Best way to buy a car.

[MCaesar]

In point of fact, yes I did. For a while in 64/65 and then again in 78/82. The process was the same then. It has not changed. It doesn't change because, in general, the car buying public does not want it to change. The dealers are in business and have a reasonble expectation of that business being profitable. If flat rate pricing was what the public wanted, then that is what all dealers would do.

I worked in a flat rate store for a while and dealt with a lot of unhappy customers when they found out what their trades were really worth. At the last store I worked at, each senior salesmane could make any deal he could, with a known minimum. However, I spent far more time trying to get people financed than I ever did selling the deal and squeezing for the last nickle.

So what is right? Are all dealers fair and honest 100% of the time? Nope. Are all cutomers fair and honest 100% of the time. Nope.

So that is the system we have. You are not going to change it, so learn to work it. As the article said, you are not going to get the holdback, so the information is not very useful. By the way, they get even more incentives for the "leftovers" when the new models come out.

All that being said, I buy my cars at invoice, less any factory incentives. I try to get the deal there quickly so as not to waste my time or anyone elses. I don't mind that the dealer makes money. I for darn sure make money on the stuff I sell.

I agree with Done - the system works. Are we capitalists or not?

If you don't like the practice of one dealer then you can always go to another.

And 1 price is not all its cracked up to be anyway. They can steal your trade, switch customers to a lease, give a higher rate, etc. 1 price is for lazy people who don't want to take the time to find the true selling price of a model and the true worth of their trade.

[MadMaxR44]

Wow, Here I try to give you guys some interesting information and people go putting words in my mouth. No, I'm not saying the dealer should only make 3% on the deal. What I am trying to do is arm buyers with info to help them haggle the best price and not fall for dealers telling you their only making 1500 on a car if they let it go for 1500 over invoice, and let's be serious here, how many of you have even paid less than MSRP on your LX's. You know some dealers have told me that they pay the MSRP price that's on the window sticker so they only profit they make is what they sell it for above that price. That's lying. But apparantly i'm the bad guy for giving away their secrets.

[done]

Wow, Here I try to give you guys some interesting information and people go putting words in my mouth. No, I'm not saying the dealer should only make 3% on the deal. What I am trying to do is arm buyers with info to help them haggle the best price and not fall for dealers telling you their only making 1500 on a car if they let it go for 1500 over invoice, and let's be serious here, how many of you have even paid less than MSRP on your LX's. You know some dealers have told me that they pay the MSRP price that's on the window sticker so they only profit they make is what they sell it for above that price. That's lying. But apparantly i'm the bad guy for giving away their secrets.

No, your not a bad guy. You started an interesting discussion. I thought I could add to it from my experience. By the way, the holdback does have some conditions attatched to it, but most dealers do always get it. Oh, I paid invoice for my LX.

[CoolVanilla]

I see what done, CC and others are saying. The dealer has every right in the world to make as much money as possible. They also have the right to refuse to sell if the profit margin isn't high enough.

What I don't understand is why the same approach isn't tolerated in other industries or with other consumer goods? I can't think of anything else I buy where its expected I'm going to be taken advantage of and its my job to limit its extent.

Also, and I ask this as innocently as possible, if this is what I really want as a consumer, why have the employee / no haggle pricing programs of late been so successful?

Please do help me understand. I, for one, have given up on dealerships and now hire a broker; by far a superior buying experience. But I still think this is something I shouldn't *need* in order to assure I don't miss some minor detail after 5 hours of haggling that ends up screwing me out of hundreds.

[MCaesar]

I see what done, CC and others are saying. The dealer has every right in the world to make as much money as possible. They also have the right to refuse to sell if the profit margin isn't high enough.

What I don't understand is why the same approach isn't tolerated in other industries or with other consumer goods? I can't think of anything else I buy where its expected I'm going to be taken advantage of and its my job to limit its extent.

Also, and I ask this as innocently as possible, if this is what I really want as a consumer, why have the employee / no haggle pricing programs of late been so successful?

Please do help me understand. I, for one, have given up on dealerships and now hire a broker; by far a superior buying experience. But I still think this is something I shouldn't *need* in order to assure I don't miss some minor detail after 5 hours of haggling that ends up screwing me out of hundreds.

I can't think of anything else I buy where its expected I'm going to be taken advantage of and its my job to limit its extent.

real estate

Also, and I ask this as innocently as possible, if this is what I really want as a consumer, why have the employee / no haggle pricing programs of late been so successful?

Have they been successful? Sure, they help in market share but they don't help nearly as much in profitability. You sure don't see Toyota, Honda, or Lexus doing it do you? Last I checked Toyota was eating Detroit's lunch and dinner.

They are nothing better than rebates to move bad cars that no one wants. Make good cars and you don't need gimmicks. Try getting employee pricing on a hemi.

They work in increasing market share of bad cars because there is a huge percentage of the population that likes "a deal" and will not buy without one. Many years ago I sold Hondas and at that time we didn't discount at all. So to make some customers happy we would put marked up accessories on the cars just to be able to show them a discount.

To me, something is only worth what someone will pay for it. All else is noise. Call it employee pricing or Lee Iaccoca rebate it doesn't matter. All sales come down to what is the owner willing to let it go for.

[CoolVanilla]

I can't think of anything else I buy where its expected I'm going to be taken advantage of and its my job to limit its extent.

real estate
LOL I was thinking this might be true. But, having a couple of family members in both the selling and financing side of residential real estate, I've come to learn its still quite a bit different. I don't want to derail the thread so I'll just try to summarize: with real estate, you may be paying a ton for nothing, but at least you're completely aware of every charge before signing via a good faith estimate and escro. My last lease (before the Mag) was reworked after I had had the car a month and there was nothing I could do about it (my mo went down $10 a month but the residual went up $3k!). With real estate, if anyone tried anything that sniffed of this kind of thing, even if the deal was completely invalid from the get go, heads would roll, licenses would be lost and I would still have the deal I agreed too. There are no such repercussions for auto sales / financial guys (that I'm aware of).
You sure don't see Toyota, Honda, or Lexus doing it do you? Last I checked Toyota was eating Detroit's lunch and dinner.
They are nothing better than rebates to move bad cars that no one wants. Make good cars and you don't need gimmicks. Try getting employee pricing on a hemi.Fair enough.
To me, something is only worth what someone will pay for it. All else is noise. Call it employee pricing or Lee Iaccoca rebate it doesn't matter. All sales come down to what is the owner willing to let it go for.True, true.

Ah well. I guess thats just the way it is. I think I've found a way that works for me (broker) so that's what I'll be doing from here on out.

[MCaesar]

Can I get employee pricing on an SRT8?!!!!!!!!!!!!

[IDSmoker]

Why is the auto industry one of the few (barring real estate which is a whole 'nother kettle of fish) where it is impossible for the consumer to learn what the dealer/distributor paid the manufacturer for the product?

Unfortunately, holdback is rather old news. Once holdback became widely known, auto manufacturer's started using other ways to disguise the actual cost of an automobile (defined as what the dealership paid for it). Things like kickbacks to the dealer based on the actual number of vehicles within certain categories sold within different timeframes, make it impossible for anyone without access to the actual sales data from a particular dealership from knowing what that dealership paid for that vehicle. Just imagine how much fun it would be to buy and sell appliances using this methodolgy.

While I have no problem with a dealership making a profit off of our transaction, I do have a problem with them trying to hide how much profit they are making off of me.

For me, how much profit a company wants to make off of me is just part of the criteria I try to apply when making a large purchasing decision.

[CoolVanilla]

Can I get employee pricing on an SRT8?!!!!!!!!!!!!Dunno but I kind of doubt it... although a good friend of mine just bought his 05 Magnum RT at employee pricing and they threw in the nav unit for free (paid just over $30k out the door). Needless to say, he ain't my friend anymore ;)

[done]

Why is the auto industry one of the few (barring real estate which is a whole 'nother kettle of fish) where it is impossible for the consumer to learn what the dealer/distributor paid the manufacturer for the product?

Unfortunately, holdback is rather old news. Once holdback became widely known, auto manufacturer's started using other ways to disguise the actual cost of an automobile (defined as what the dealership paid for it). Things like kickbacks to the dealer based on the actual number of vehicles within certain categories sold within different timeframes, make it impossible for anyone without access to the actual sales data from a particular dealership from knowing what that dealership paid for that vehicle. Just imagine how much fun it would be to buy and sell appliances using this methodolgy.

While I have no problem with a dealership making a profit off of our transaction, I do have a problem with them trying to hide how much profit they are making off of me.

For me, how much profit a company wants to make off of me is just part of the criteria I try to apply when making a large purchasing decision.

Really, that is a strange thought.

[MCaesar]

What the dealer pays for a car is irrelevant to me.

What matters is what is the lowest price any dealer will sell the car

and

Is the car worth that price.

That is it. Everything else doesn't amount to a hill of beans. Whether the dealer makes $2,000 or $20,000, what can I buy the car for?

[da BoMM]

Being in the profit making business myself, I'm not sure everyone needs to know how much profit I/we/you make.

Sometimes we sell at a loss just to take care of a customer, and we know that we'll make it up on a higher profit sale.

Going into every transaction needing to know the profit margin (gross or net?) would mean you want everyone to flat line all profit transactions -- the world is not that FAIR.

[smokey0810]

No matter what, for every jackass who goes into the dealer with this idea they are going to get the car for a "break" the dealer always has the upper hand, and there are 5 more people standing in line to buy the car if you don't. The real money is in your trade. They give you $1,000 for it, the turn around, clean it up, and sell it for $5,000. $4,000 profit (give or take). They don't make that much off new cars, it's all in the used....

[MCaesar]

Being in the profit making business myself, I'm not sure everyone needs to know how much profit I/we/you make.

Sometimes we sell at a loss just to take care of a customer, and we know that we'll make it up on a higher profit sale.

Going into every transaction needing to know the profit margin (gross or net?) would mean you want everyone to flat line all profit transactions -- the world is not that FAIR.

I agree

Do you ask the guy at the gas station how much he paid for his gallon ethyl?

[MCaesar]

No matter what, for every jackass who goes into the dealer with this idea they are going to get the car for a "break" the dealer always has the upper hand, and there are 5 more people standing in line to buy the car if you don't. The real money is in your trade. They give you $1,000 for it, the turn around, clean it up, and sell it for $5,000. $4,000 profit (give or take). They don't make that much off new cars, it's all in the used....

When I worked at a dealer in the 80s we would average about $1,500 on a new Honda on the new car sale. We would make about $2,000 on trades. But by far where we made the most money was in the SERVICE DEPARTMENT!

Whatever we made on the sale we would make more than double on service over the life of the car.

[nick_danger]

When it comes right down to it, my thoughts on car dealerships is this: they will be extinct one day. It's only a matter of years - most likely a couple decades - that we'll be able to go online and virtually build a car, then the robots will build it, paint it, and ship it to your door. From robots to you in 24 hours. Manufacturers will cut out the dealers completely and they will be free to charge whatever the market will tolerate. No haggling, no deals, just your check book and the manufacturer. At least with a dealer, you have a CHANCE to buy a car for under MSRP. I've got no special love for dealers, but at least they are human and succumb to persuasion. Damned robots...

[IDSmoker]

Going into every transaction needing to know the profit margin (gross or net?) would mean you want everyone to flat line all profit transactions -- the world is not that FAIR.
The key to a good transaction is one where both the buyer and seller are satisfied. I fully expect that a business I buy from will make enough profit from our transaction to satisfy their business needs. If they don't, then they won't be in business the next time I want to make a similiar purchase.

I thought that this was self-evident, but since it apparently isn't, perhaps this will help clarify my position...

I really don't worry too much about whether a company is making 4% or 5% profit off of a sale to me (unless I happen to know that their competitor is offering the sale at less profit), but I do worry if they are making 40% or 50% profit!

Is profit a concern in every transaction I conduct? No, of course not. When I buy a new computer I know that the profit margins are so close these days, due to current free-market conditions, that I focus on other criteria to help make my buying decision.

As far as gas is concerned, the profit margin for most local gas stations, at least on the gas itself, is also really tight. While the companies that sell the gas to the stations are making obscene profits (measured in the billions last year) there doesn't seem to be much to recommend one of them over any of the others.