Why won't dealers discount below MSRP?

I also paid MSRP for my 2010 Prius but there were no fees or garbage add-ons. Of course some dealers will give $500 off MSRP and then charge you $500 in dealer fees. Either way, they get their money.

 

The question is why. Why do you want the MSRP lowered if you agree to worthless dealer add-ons that will push the price ABOVE the MSRP? Is it some sort of game of wanting the dealer to sell you the car for less than MSRP?

I would just pay the MSRP like everybody else

 

It is not demand, but supply that is keeping price high. There is not enough supply period. My dealer gets 1 or 2 cars in every two weeks. On the first day off the delivery truck, if you don't want to pay MSRP. they have no reason to sell that one car to you when they can afford to sit and wait for another buyer who is willing to pay for MSRP in the next two weeks. If they sell you the car immediately, they have no other 2010 Prius in the lot to sell for the next two weeks. So it is in their best interest to wait and see if a better customer comes along that will offer a higher price for their only car in the lot.

But there is a way to get a discount, a few of my dealers in town will only sell it at MSRP, but they will give you a $100 'referral' discount if you said somebody else sent you to them, or you sent yourself. The salesperson is basically taking a $100 lost on his comission to get you to buy the car so that his fellow salespeople don't get to make the sale to somebody else.

If they won't give you a price less than MSRP, then ask for other free incentives, like discount on extended warranty, maintenance contracts, future oil changes, free car washes, lower finance fees, etc. As long as you get money back from something else, it is still savings to you wallet.

The best negotiating tool you can have is to bring in written quotes from the other competitions, it doesnt have to be just in town, I told my dealer I got a lower offer from a dealer 160 miles away. I never planned to drive 2.5 hours to buy a car from that far, but my sales guy didn't know that. That kept my dealer from trying to charge me crazy 'dealer fees' and 'market adjustment values'. So I forced them to take the price back down $3000 to MSRP and got a few other freebies with my total package.

 

Remember too that some of this is regional. When I bought my TCH no one in WV had really heard of them and I got $500 off MSRP. Fitzmall was selling at that time at MSRP but in California they were getting $3000 over MSRP. All those are fair prices. Only a few people in WV wanted one and my dealer discounted. In California, people were on waiting lists as the cars trickled in. If you wanted to be firs, you had to pay for the priviledge. So in that case who is really greedy? The dealer for figuring out what the value of being first to own would be or perhaps the consumer who simply wanted bragging rights. If one is wrong then both are wrong in my opinion.

I would like a Camaro but I am willing to wait until they are discounted, not sold at a $5K premium. I want a Prius. I don't want it enough to pay over MSRP but I want it enough that I won't wait on my real preference a Prius V. I'm struggling paying this much for a Prius anyway when I could get a TCH which I've owned and liked for a substantial discount. The savings in the 38 mpg vrs 50 mpg is not all that much. The TCH right now is a better deal. But I want a Prius. I want the newest technomiogy. I have to pay a premium for that.

Right now, if someone is being asked a Premium, I would simply go out of town or perhaps even out of state as there are some coming in on the next two ships. They will go quickly but they are available. My dealer has 2 uncommitted ones coming in. I just can't call someone greedy when they have one of something and 10 people want it and they simply sell it to what the top bidder basically will pay. That's what's happening, it's just you don't stand side by side bidding on the car. You stop in one at a time and hear the offer. After a while the price will drop if no one bites.

I'm guessing the dealers if they really wanted to make money would simply NOT take orders but advertise that they have an allotment coming in and they will auction off the opportunity to buy them. Talking about an outcry. People would be ticked because they could not be promised a place in line but had to keep bidding on a car. I'm guessing they would get more than MSRP for all their cars that way, at least until the first few shipments take care of the folk that just has to have one.

 

If you are still negotiating price, then trade-in value shouldn't be discussed. Always negotiate your best offer first, then talk about trade-ins.

Tom

 

I just purchased my 2010 Prius IV NV (Blue Ribbon Metallic/Bisque) yesterday via a dealership in the Portland metro area. I have been speaking with several dealerships in the area over the past few weeks, 6 of which were asking MSRP and 2 that were asking prices over (by about $750-1500). Granted the Prius is in extremely high demand here in the Northwest, but I was only willing to work with MSRP or less so quickly narrowed my options down.

I was able to find 2 dealerships that were offering prices under MSRP if purchased through the Costco Auto Buyer Program. The discounts were not huge, generally $250-750 under MSRP which was fantastic. The dealerships that participated were fantastic to work with and were quick to provide the Costco fleet pricing, in one case even over the phone.

In the end I did not purchase my Prius through the Costco program, the big factor was the dealerships that participated were quoting low figures on my trade in. If you were buying the car without a trade in or selling yours privately first, I think this would be a great option. I however did find a great dealership that was able to give me pricing at MSRP and a good deal on my trade in (was $2150 more than the highest trade in offer of the two dealerships participating in the Costco program). May be an option for some, but do be cautious of getting a good value on your trade in.

 

DeanFL you are awesome. The one thing that's tough to take is when people ask us to make nothing on a vehicle. If you've never worked pure commission sales, you won't understand. People do this for a living and like any other profession should be rewarded for giving great service.

Sometimes when people act like they don't care about you and how your company does, it's really hard to want to care about giving them good service. Just a part of the job, but sometimes it gets really tiring...

Some guys are in it for the quick sale, but others are there to assist with service, etc after the sale shouldn't they be paid for their service to you?

 

I'm here in support of capitalism and dealer profits so don't read me wrong. What you are describing sound more like a "tip" rather than a "commission". Just because I pay a dealer enough to make a profit does not always mean I am getting good service. I don't like restruarants that add the tip to the bill and then give lousy service.

A knowledgable and helpful sales person should be rewarded. Unfortunately many don't know their product and are not all that friendly, just pushy.

 

Don't be too anxious to sign the dotted line. After test-driving a 2010 Prius at a dealership in Littleton, CO, where the price was MSRP plus $399 dealer fee, I called a competitor further from my home in Aurora, CO, who quoted the same exact cost. Since there was no incentive to drive across town, I arrived in the parking lot of the first dealer ready to place a reservation when the second called my cell phone to check in. I explained there was no incentive for me to do business with them since the price was exactly the same. One minute later I was driving across town for $500 off MSRP!

 

wvgasguy, I agree that bad service shouldn't be rewarded. I used to be in the hotel/food service industry before I began retail sales. I think that my thoughts on customer service are quite different from the average salesperson. Anyway, I can't believe DenverKam was able to get $500 off MSRP. Are you sure it wasn't $500 off of the additional dealer markup over the MSRP? If not, great job!

 

i think its to prevent ppl like me who will not pay more than other ppl deal

 

It depends on exactly where you are. I passed on $600 below MSRP (no adds except mats, which I want anyway) for a plain IV last night. I will go back on Monday and ask for $1000 off on a solar IV (which increases their take despite my additional $400 discount) - unless they have a killer sales day today, I'd be willing to bet they will write it up.

 

what is dealer inventory tax? is it require?

 

Could you be more specific? Is a dealer trying to add that to MSRP? If so, it's just another name for mark up. What's next? Dealer mortgage interest fee? How about coffee & doughnuts fee?

 

I think it depends on geography, and also how many cars you are to receive. The profit margin in a II is pretty slim as compared to its previous counterpart. Same goes for the equivalent to the II and IV. The V's got a better markup but the demand's way higher, and the production's pretty low ... I always say "vote with your wallet" but there are many components to a car deal. Trade value, financing rate, etc. Your dealer may offer a pricing concession to you and then lose interest in fighting to keep the deal together if you pull the trade out of the negotiations. That's the best way to test the "wow I got the best deal, all this $$ discounted" waters.

 

its on my purchase agreement. its not on yours?

 

Sounds fishy, like another way to disguise a markup. Not on any deal I have seen locally, IN & IL. Check around in case it's a TX regulation, but I seriously doubt it in which case I'd walk if they insist on it. Depends on how bad you want the car, there will be more later...

 

It looks like most people missed the point in the original post.
The dealer technically discounted the price because they added extra value to the trade-in. They were willing to do that, but they were not willing to subtract the same amount from the price of the Prius even though the net would be about the same.

It wasn't about how much money they were making, it was about not taking a discount off of the Prius. Why would this make any difference if they make the same amount of profit in the end?

 

Nope (also note I'm in CA, not TX).

Out of curiosity, how much is it?

 

If dealer inventory tax is just their own dealer charges they made up to pad the price, I wonder if it is illegal because they called it a "tax" and it isn't a government fee owed by the buyer?