Dealer Profit Margin

Re: Dealer Profit Margin - I think we're very close.

I got a deal very like Max2Prius, last week through the Internet Manager at Walnut Creek Toyota. I think it is shaving it very close to the dealer's real price. Same car: 2008, package 2 - but with floor and cargo carpets. I paid $22,123. ($24,130 with tax & license out the door).

 

Hi Blue Baby,

Actually the 21,700 (23,770 out the door) included all the mats and cover. I guess I just got lucky.

 

First Post, as I just bought mine(08 -MG - Pkg #5).

There are man ways for dealerships to make money. If a trade-in is involved all bets are off.

Ways they make money.

1. Price of Car
2. Trade-in
3. Financing

Remember no dealer is EVER going to not make any money on sale unless they just need to absolutely sell that car to meet their quota. That is few and far between. Remember as gas prices go up, Toyota is selling more and more cars cause they get better mileage. Ask me how I know. I traded in my beautiful 05 Tacoma Double Cab TRD sport on Friday cause the gas mileage was just plain old killing me.

What did I actually pay for my car. I couldn't honestly tell you. After figuring what my truck was really worth and what they gave me for it. It looks like I wound up paying @24k for it. With Tax(5%)/Title/Registration that brought it up to 25k.

Also, keep in mind when your in the financiers office if you bought GAP insurance before and you haven't completed the loan on the previous vehicle you are owed money. The left over GAP from my truck paid for most of the GAP on the Prius.

I was actually looking for a pkg 3 or 4. Cause I didn't want the Nav (my MIO Digiwalker is better) but wanted the Bluetooth They didn't have one.

 

I was just quoted $22,988 + tax and fees for a 2008 Prius with Package 2 and a Floor/Cargo mat set. Understand this is my first offer and expect more to come from many other dealers.

The dealer included a $450 advertising fee and $10 gas fee.

I understand advertising is a part of doing business but why is there always fees added on to the "invoice price"? It just makes me mad!

 

There's no need to get mad -- just get the Consumer Reports detailed costs and negotiate beginning with his actual costs (which are reduced by holdback checks and other incentives). Then let him label his required profit any way he wants -- if they want to call it an advertising fee, a document fee, or an "extra overcharge fee", it really doesn't matter. Just call many dealers and go to the one who will give you the price closest to the actual cost and let them know you know the actual cost. Focus on the marginal cost of that car -- don't get sucked into talking about his general cost of doing business. And never talk about trade ins or financing during the conversation about the price of the car.

 

I got mine at 21,944 each whether i got one or two of them. additionally i also got a 400 graduate rebate for each car applied to the downpayment. so technically i got it for 21,544 but if you factor in their calculations it is actually more than that.

my pricing was a no bs pricing and if you call them right now, they will give you at that price too. i have been told that it is about $500 under invoice but i dont really care. it is the price that everybody is getting and i have never seen anyone get it for less than 21,500 for a package 2.

 

While shopping back in 2006 for my 2005 Prius and more recently, my 2008 Prius, I've noticed that most Toyota dealerships that I've visited are pretty no-nonsense when it comes to the Prius. Either you like the price or you don't. They don't budge very much on the price and it's usually only around a few hundred dollars difference from MSRP versus other cars I've inquired about.
My salesman where I originally bought the 2005 was pretty straight forward with my trade-in. I like my deals simple... he quoted me a price I liked (I asked twice and the 2nd offer was pretty decent - included some return customer rebates and what-not) and the trade was done.

 

You may be happy and prefer not to bother negotiating, but it's not a matter of nonsense or no-nonsense - the idea is to get the price with the least dealer profit. If you know his bottom line cost, you have the ammunition to shop around and see who is willing to take the least profit. If you paid within a few hundred dollars of MSRP, you paid more than you had to. Uttimately, you can find a dealer that is motivated to make the sale with less profit rather than lose the sale.

 

I am towards the end of my negotiating process with various dealers for a new Prius and I believe I am going to end up with a good price but in the process I got the following response from a dealer when I emailed all of the dealers with the lowest bit that I received.

"I'm sure that (Name of the sales person and Dealership) do not appreciate the fact that you've shared their confidential quote with all the Toyota dealers in West Michigan. We understand that customers feel they need to shop for their best deal. However, when a customer breaches confidentiality they lose all credibility with the dealer. Think of it this way, how would you feel if all the West Michigan dealers got together when they received your fax and decided to quote MSRP with no discount offered? I'm sure you would feel betrayed."

I did email the dealer that gave me the lowest bid informing him of what I did and I even included the exact wording from the email I sent to all of the other dealers. The dealers who quoted me higher prices did not know this.

I believe I have been up front and honest with all involved. What are your thought on this?

Have I stepped over a line here? or is this dealer just trying to guilt trip me?

Any input would be great.

Matthew

P.S. The dealer at the end of the email gave me a counter offer. All be it for a lower package I do not want.

 

Mathew, that dealer was wrong on so many levels! I would avoid a dealer like that if I were you. I am an attorney and a consumer advocate -- so here are the facts.

First, if dealers got together and conspired to offer you only MSRP, they would be acting illegally. Our anti-trust laws clearly prohibit such price fixing and they would be subject to serious penalties. I am sure that he knows that.

Second, what you did was perfectly fair and rational. You have a right to shop around and use other dealer quotes as a means of negotiating -- it is normal and expected that a consumer would do that. In fact, it is a smart thing to do if you want a good price.

Third, there is no "confidentiality" attached to dealer price quotes. You have free speech rights and you never signed any agreement to refrain from repeating the dealer's offer. His claim is ridiculous and his analogy to dealer price fixing is nonsensical.

Fourth, the dealer's invoice cost and any incentives that reduce his costs further, are public information. Every dealer knows what every other dealer's costs are. A dealer's price is not a secret by any means. In fact, the sales tax and excise tax paid on new car sales make the price paid a matter of public record that anyone can see.

Find a better dealer. Mine was extremely nice to me while giving me exactly the price I asked for. The price was far from MSRP and very close to invoice minus holdback.

You have absolutely nothing to feel bad about -- the dealer is shameless for trying to make you feel like you did something wrong.