Dealer wins Round 1 (Live & Learn)

$1,000 or more.

But when a Stealership marks a new model up $10,000 or more that is just gouging. Shall I name some vehicles they have done this with recently?

 

I NEVER, EVER trade-in vehicles to a dealership. I have always had MUCH success selling on craigslist and auto trader. You will get more money buy doing so AND the negotiation scales tip in your favor. Is there any particular reason why you do not wish to try to sell your vehicle outright?

KBB values are a sham! There is a big difference between it and the NADA's (i don't mean the consumer version either) retail, trade, and loan values. In addition, you have to consider real money value as well. If it is a hot car with a higher residual value, you will get top dollar by selling it on the open market.

Scott

 

I almost can't believe I'm defending dealers now, but I'm sure they can give a better/bigger picture answer than me.

Some of that "profit" is eaten up by having to pay for overhead like rent, facilities, cleaning, salaries, taxes, fees (say for a business license), upkeep, insurance, interest on financing, the coffee and donuts in the showroom and waiting area, advertising, marketing and so on. None of these things are free and they'll make a LOT less profit on some vehicles than others.

US auto sales have been in the crapper for awhile (see http://www.autoblog.com/category/by-the-numbers/). Some of the above costs are fixed costs or ones that can't be reduced that much. Hence, many car dealers (mainly for American cars) around here have gone out of business. This is well before GM and Chrysler started slashing dealers.

Besides that, they've got inventory risk on all the cars they have on hand from both a financing and depreciation point of view.

That said, charging above MSRP is just wrong, IMHO and people ought to vote w/their feet and not buy from those dealers.

 

Ditto. Don't trade in. Every time I've tried, the value has been REALLY low. I've sold two cars privately and got a LOT more than the dealer would give me even though it was a pain in the butt.

In practice, I've found that KBB values are too high while Edmunds and (consumer) NADA tend to be too low.

On a side note, when trying to price a car for sale or when I receive emails at work w/someone trying to sell a car, I'm sometimes astounded by what people are asking. Some people are asking for VERY high values on their cars, sometimes above KBB private party. I just have to laugh sometimes.

 

Yes some is eaten up but you forgot they also get hold backs and other incentives from the manufactures.

 

Yes, I know about holdbacks but there are no incentives on the 2010 Prius to non-military members at the moment. Yes, they normally should pass those savings onto the consumer. That's how dealers can still make the holdback if they sell a car at invoice minus incentives.

 

What are the incentives to military members?

 

I have a business relationship with a lawyer in the western suburbs that makes his living sueing car dealers. I am sure he makes a good living at it. However, there are thousands of lawyers who make their living on other areas of the law. He is the only one I know that specializes in this small area of the law. Must say there is a lot of work for him but also says not so much work that other lawyers are practicing in that area also.

 

Bingo cwerdna! I agree with charging over MSRP. We will not do it. Our owner refused to do it on used Prii last year when everyone around us was.

By the time the dealer is done paying out all the bills, he probably clears $300-$400. But, keep in mind, he had to put up $25,000 to earn that 300 bucks. Not bad, he made about 1.25%. So, you tell me, would you put up literally millions of dollars to earn a couple of thousand per month? Some months, it would just be easier to invest the money and you will get a bigger return.

Hopefully, you will see why when a car is in hot demand, the dealers won't discount them. Charging over MSRP is wrong. But, at MSRP, it is covering the losses from when we had to sell a slow moving product below invoice.

 

I think that paying MSRP for a new vehicle is fine as long as MSRP is “reasonable”… meaning that the manufacturer actually priced the car fairly (whatever that means). My upcoming 2010 purchase will be the third Toyota from the same sales person/sales manager team. I paid $500 off the 2005 Prius during a time when they were selling at MSRP and $1800 off the Highlander when they were selling them for $500-$1000 off. I’ve gone into the current deal with I’ll pay MSRP + reasonable add on’s (meaning what the car comes with from the factory, if I am not ordering it from scratch). I’m not claiming to be an expert negotiator but I research the hell out of any big ticket item I purchase and approach the seller with a non-combative approach and I think that MSRP is fair at this point of the sales cycle.
I read a lot of discontent with car sales staff and I just wonder if the person going into the dealership has done their homework on the current pricing and availability beforehand. Now, if my dealership won’t give me a fair price on my excellent trade in- then I’ll go totally ape s#%t on them (kidding). But whatever the outcome, there’s always another salesperson and another dealer to work with. If I didn’t have a great relationship with my salesperson, I’d contact someone like Dianne (who I don’t know- but Dianne I might be calling you soon!).
I’d just make it a straight transaction without all the stress. Service after the sale is another story….. I’ve lost it at the cashier’s desk several times and I think my picture is on a wall somewhere labeled “crazy customer” don’t mess with him! :target:

 

We send buyer to other stores all the time, literally. One of our very common statements is 'It appears that you will not be happy and completely satisfied here with this offer. Possibly you might be happier at xxx Toyota across town?' This serves several purposes.

• It keeps the discussion polite.
• It very often sends a 'bad' sale to a competitor, ( ). It can't be emphasized enough about how posiitive this can be. If the sale is a bad one then we benefit by not taking it and we benefit by the other store having to take it.
• It often avoids getting smacked around on the CSI survey. ( maybe the other store will get beat up on CSI by that customer )

 

I have no problem with a dealer making a profit on a vehicle they sell. I do however take issue with them gouging customers. The term price gouging refers to the phenomenon of sharply rising prices of items in (often temporary) high demand. MSRP already has a built in profit margin for the dealer and a markup without added options is gouging, pure and simple.

 

Since you work at a Stealership then you know that they make more money from service than from selling cars. Selling cars is just what bring in the customers. Besides to profits in selling is all about volume, but it is the service department that does the real fleecing of customers.

Believe me, if I could buy a car directly from the manufacture and bypass the Stealership, I would.

 

No, I wouldn't classify you as a bad customer for wanting a discount. And I know the exact type of customer he is talking about. It is the type that you can never make happy. The one that after everything is negotiated and terms agreed upon, they keep asking for 3 years worth of oil changes, a free set of mats, "Now throw in the kitchen sink" type. This is after agree to sell the car for little to no profit. The one who takes your offer, and shops it at 10 other stores. Once he has the lowest price, then he makes a second set of phone calls saying, "Well x dealer beat your deal by $100. Make it worth my while to buy it from you." And if you beat it, he will take the number back to the first dealer and see what they say. Those are the types of customers that I refuse to deal with. Your CSI (customer satisfaction index) suffers because they will always think you ripped them off. And since CSI is tied directly into my commission percentage, that one sale at a $75 commission can literally cost me hundred's of dollars in residual. I simply say, that is the best the dealer is willing to do on the price. Non confrontational, but gets the message across.

And I agree 100% that no dealer should be selling them above MSRP. Manufacturer's suggested retail price. It is what Toyota thinks the vehicle should sell for. If Toyota wanted them sold for more, they would have adjusted the bottom price on the sticker. The only problem I had with your previous statements was assuming all dealers and salespeople only have their best interests in mind. That is 100% false. The stereotype is warranted based on years past, and your own observations, but that is all it is. A stereotype. Hopefully you can find a decent salesperson and dealership with which to do business eventually.

 

Lie about state taxes & fees and refuse to promptly deliver a title reinforces the stereotype. If my poor survey really cost someone a couple of hundred dollars then perhaps I cam closer to even than I thought. If the salesman got screwed & lost money over the dealership's policies then maybe he complained to his boss & the owner agreed to eat it.

If the Service Dept is so profitable why are the dealers closing? Of all the dealers that closed or lost the franchise only 1 is staying open as a used car lot.

If the dealers are stuck with slow moving inventory perhaps they should stand up to the manufacturer and refuse to buy the junk.

 

There is another issue that you don't acknowledge at all in your complaint. What if that dealer didn't want to sell that vehicle that day or that week. If it's his only one or two how does he conduct business and book additional orders if the customers can't see, touch drive one?

Well then just put a 'Not for Sale' sign in the window, right?

Until somebody comes in and says - this is the truth....'How much will it take for you to take that 'Not for Sale' sign out of the window?' Should the store refuse to sell to this highly motivated buyer?

 

A customer offering a higher price than the window sticker is not the same as a Stealership gouging the price up from the start. If someone wants to offer and pay more than MSRP then fine, I have no issue with that. But jacking $3,000 or more to the window sticker prior to customers even seeing the vehicle is a different story.

 

On edmunds.com, if I lookup a 2010 Prius II w/the 95120 zip code, and click on incentives after going thru all the pricing stuff, I receive this:

Not a biggie but it's better than nothing for those who serve. (A big thank you to those who do!)