Midsize Sedans 2.0

lilengineerboy

I have had a similar experience, in fact oil changes on two of my three vehicles are free from dealerships because I had a major service (30k on one, 60k on another) performed there. If I had bought my cars at those dealerships, I would have gotten free oil changes as long as I owned the cars.

Yeah, the Accord has free oil changes for life, but given the are like 8000 miles apart, that doesn't really do a lot for me. The issue is the difference between going to the quick lube place and spending 35 minutes there, or the hassle of dropping the car off and picking it up at the dealer, or just putting it on ramps and enjoying a few minutes of wrenching with a tasty beverage of choice.

The Accord will go back to the dealer next week though, as the PDR guy is going to take a look at two door dings and a hood ding to see what he can do. The oil change is free but I am out $20 for the tire rotation, and we will see how the PDR guy makes out.

Honestly, and I know I am in the minority, I would rather just do it myself. It is on my time, its easy, I get to pick the parts, and it gives me a chance to bond with the car.

m6user

I can remember the early Hondas and how they would rust out completely on top of the fenders. I had a 1973 Toyota Corona. Piece of crap. Tinny and could never get the thing to idle right because to run the air conditioner had to have the idle set at about 2000 rpms when you were'nt using the air. I kept it for a year and had it in and out of the dealership so many times it made me dizzy.

It may have been a lemon but according to dealer mechanics....Toyotas were just not ready for primetime yet. Maybe you got lucky I don't know. But in general they were not the best products early on.

jd10013

No, it does not. But I know many people who THINK they have to have their cars serviced at dealerships to keep the warranty in force. That perception, and a general increase in service work by folks who want to keep their warranties in force, could help Ford get some of the extra cash they are seeking.

your confusing two different things backy. Ford only makes money off car sales. The dealership keeps the money from repair, warranty work. the dealership (even though it says ford on the sign) is privately owned.

and on a side note, it is against the law for any automobile manufacture to refuse warranty work because maintanence was not done there. its called the Magnuson-Moss Act and was passed back in the 70's

jeffyscott

The issue is the difference between going to the quick lube place and spending 35 minutes there, or the hassle of dropping the car off and picking it up at the dealer

If it is just an oil change, I can wait 30-45 minutes at the dealer. Well worth it to me, so that if there is a major problem with the engine while under warranty, there is no question as to who is responsible.

If there is also warranty work to be done, we get a free loaner for a day, paid for by Mazda or VW. Now that is an actual difference between midsize cars, I don't think all manufacturers are as liberal with their loaner/rental car policy during the warranty period.

jd10013

I have seen 2 articles now where Ford/Lincoln/Mercury dealers are concerned with revenue streams because there is so little warranty work as of late. Because of all the quality improvements, there aren't the warranty issues of yore, and the dealers have to find ways to be profitable though sales.

I would agree with that. It's probably one of the bigger problems facing the big three's dealers. I don't think it so much effects asian car companies, as they can simply raise prices in ways the domestics can't. but keep in mind, there are still a LOT of people who will not take their car anywhere but a dealership for anything. especially the first couple years. I wouldn't think warranty work is a huge percentage of the service depts revenue. A nice chunk I'm sure, but not anywhere near half or anything.

mickeyrom

Hi Backy,
I have a KIA and the only place I can have my coolant or tranny fluid changed is at a dealer. The owner's manual clearly states that certain kind of fluids are to be used and they are not available anywhere other than a certified dealer. I'm pretty sure that is just a money making scheme,but I cannot take a chance in case there is some related problem.

kdshapiro

I wouldn't think warranty work is a huge percentage of the service depts revenue. A nice chunk I'm sure, but not anywhere near half or anything.

I have started to bring my cars to independents for major services. Real warranty repair work (where you would have to pay for services the dealer is obligated to perform at no cost to you) for all cars I've owned, exce€pt for Nissan and to some extent Ford, has been virtually non-existent. My BMW went to the dealer because they charged $0.00 for all services the first few years.

backy

Yes, I should have said Ford dealers, as that was the original topic to which I replied.

Also, I never said that owners MUST take their cars to dealers for maintenance. I said that some owners have the perception (a mistaken one) that they must do so. Anyway, the point I was trying to make was that IMO longer warranties tend to cause owners to take their cars in for regular maintenance, and dealers get a big slice of that work, so there would be a benefit to revenues for the Ford dealers.

backy

So what that means is that you can have the fluid changed by anyone, but the places where you can buy that fluid are limited. There's no reason you (or a mechanic) could not purchase the fluid from the Kia dealer and either you do the work yourself, if you are so inclined and skilled, or have some other mechanic do it for you, using the Kia fluid.

Also I question whether the ONLY place in the world you can get Kia OEM spec coolant or transmission fluid is from a Kia dealer, what with all the buying opps available through the Internet.

aviboy97

"My point, and I really was trying to keep it very simple, is that dealers make more profit(I guess I mean net profit) from backshop operations other than they do from new car sales."

You are correct. New car sales are not what keeps a store going. Parts and service are. Plus used car sales as well.

bhmr59

Don't discount the profit made on the sales of new cars. It has to be meaningful. Otherwise, why would dealerships like Towne or Fitz be engaging to such a large extent in internet sales?

lilengineerboy

Don't discount the profit made on the sales of new cars. It has to be meaningful. Otherwise, why would dealerships like Towne or Fitz be engaging to such a large extent in internet sales?

Its about volume. The super-dealers like Longo Toyota or the guy who helped bring the smart Car make it on volume. Razor thin margins, games with floor plans and hold back, financing and incentive programs all play into it.

If you are only making a few bucks on each car, you had better sell a lot of cars.

m6user

Don't discount the profit made on the sales of new cars. It has to be meaningful. Otherwise, why would dealerships like Towne or Fitz be engaging to such a large extent in internet sales?

You know it's just like home builders. Tract home builders do it on volume, a little bit on each home. While luxury custom builders do less volume but make a lot of profit on each one. It's a matter of marketing strategy. It also depends on your market which can sometime dictate your strategy.

bhmr59

I don't disagree about the volume sales aspect.

But don't both your posts indicate that dealers can make a good profit on the sales of new cars? (Someone posted earlier that the dealers don't make money-or make very little-on selling new cars.) My point was that dealers can and do make a good buck selling new cars.

m6user

Well, I guess it depends a little bit of what is the definition of a "good buck". It could be a very relative thing. There are always extremes in every business and I'm sure there are a few dealers that make good money(again, a fuzzy definition) on new car sales. The jist of the whole conversation was that on average dealers make a small portion of their overall profits on new car sales. I think somebody else said some dealers make no profit on new car sales and I would tend to believe that. They make it up on the service, parts, bodyshop, used cars, etc. As far as volume goes, there are lots of dealers that will not even come close to matching some of the volume dealers prices. They will simply tell you to forget it. It's not necessarily because they just won't match the price....they can't! The Townes of the world are getting some huge dealer money from Hyundai. Even still, I don't think even Towne makes much on each sale, they just make lots of sales.

Since the advent of the internet and the ability for the consumer to access invoice data and the expectation to pay that or less, dealers find it harder and harder to make much off new cars. I personally think that is part of the reason for all the rip offs you see and hear about in the service area.

bhmr59

m6user, I believe the invoice price is a ficticious price, as far as the actual price to the dealer. There's more involved than "hold-back."

Invoice information has been available from Edmunds for decades, before us ordinary people had access to the internet. Dealers invoices may or may not include he questionable "advertising fee" depending upon the dealer.

Volume alone cannot make up for $1500-$2000 below invoice (before rebates).

akirby

Advertising fees are not bogus - they're totally legitimate expenses that the dealer pays to Ford who then pays the local dealer associations. This is used to cover the regional ads you see on TV and hear on Radio (see your local whatever region Ford dealer). That does not cover the dealer's own advertising. It varies by vehicle and by region - that's why it can't be automatically included in the invoice pricing.

imidazol97

>Advertising fees are not bogus - they're totally legitimate expenses that the dealer pays to Ford ... that's why it can't be automatically included in the invoice pricing.

It's a legitimate business expense. That's why it should be a part of the dealer's gross profits. It shouldn't be added on as a customer pay fee on top of dealer gross profit. I don't pay an advertising fee when I buy frozen dinners at Krogers. Somehow dealers keep trying to come up with a way of adding on extra profit to their sale on top of their gross profit in the deal.

Same thing for shop fees on repair work. Pay for it in the gross. If you're not making enough net then increase the gross.

akirby

You're just hung up because it's a separate item on the invoice. If Ford simply added it to the base price of the vehicle then you'd still be paying it but you'd never know it.

They simply chose to finance it with vehicle sales as opposed to making it an arbitrary fee or negotiating it individually with each dealer.

Now if you want to talk about deceptive fees - look no further than the infamous "documentation fee" - that's 100% profit AND it's added AFTER the sale price has been negotiated.

aviboy97

I'm not saying dealers do not profit from new car sales, just not nearly as much as they do from parts and service.

Today, dealers blow out inventory ( many deals at invoice or below) because if that dealer meets or exceeds their sales objective set by the manufacturer, they get bonus money which can total tens of thousands of dollars. If a dealer does not hit their objective, they get nothing. So, you can see why it would make sense for dealers to occasionally go a thousand or two below invoice. The temporary loss is far out weighed by the potential gain.

aviboy97

Unfortunately, the manufacturer makes you pay the advertising fee / assessment fee. They charge it to the car. Think of it as built in cost of the vehicle.

FYI, it is not the dealers that add the advertising fee's to the invoice. It's the manufacturer. You are very wrong if you think it is built in profit for the dealer. The dealer makes NOTHING off of it.

m6user

Invoice information has been available from Edmunds for decades, before us ordinary people had access to the internet

I never heard of Edmunds before I started accessing the internet and even then I didn't access Edmunds or sites like it right away. So I don't think it's been that long since the "average person" began using that data to their advantage. If you're talking decades how many is that? I guess at the most not even two full decades. I certainly wasn't on the internet twenty years ago.

Anyway, nobody said that the invoice is the bottom line for the dealers. Most of us are pretty aware of holdbacks, dealer incentives, volume discounts, etc. etc. Most of these extra incentive from the manufacturer are based on volume so it is up to the dealer to determine what strategy to employ. High volume low margins, low volume high margins or somewhere in between.

As I said in a recent post, Autonation, about 600 dealerships and the largest dealer group in the US, makes twice as much gross profit on repairs/part than it does from new car sales. Nobody is saying dealers don't make a "good buck" (whatever that is) from new car sales but just that it is not their largest source of profit.

I could discuss this more but I think we're edging towards getting a slap on the wrist from our hosts for straying off topic. There probably is a forum to discuss items like this but I'm not sure what it would be called. Cheers.

aviboy97

"I believe the invoice price is a ficticious price, as far as the actual price to the dealer. There's more involved than "hold-back." "

The invoice is real. The dealer really pays what the invoice states, less hold back. The dealer does not get hold back if the car has been in inventory over 90 days, in most cases. The hold back was designed to pay for interest payed by the dealer on floor plans. Hold back is not always profit.

Where dealers make their money on new car sales is the "bonus" money they make from reaching a sales objective set by the manufacturer, which is a lot of money. That is why dealers can profit from selling cars below invoice. Now, that is a gamble. If the dealer does not reach his objective, he makes NOTHING, and all those below invoice deals really really hurt, and the month becomes a loss.

Like it or not, the car business is, yes, a BUSINESS. Every business is in business to MAKE MONEY. Last I checked, we are a capitalist society. Am I right?

If a dealer is showing you a good deal, and you are saving money, you should be happy right? Why is it always about what the dealer makes? I have never understood that. Why do so many care?

Only if there were web sites that showed what mortgage brokers really made, or how real estate agents get paid, broken down to the last penny. Those people make HUNDREDS OF THOUSANDS ON US!!!! How about "lawyers.com" and we can see how badly lawyers makes STUPID money on the needy, yet, no one knows how much they really make at our expense. Car dealers make not even 1% of that, and yet we all like to bash car dealers. Makes no sense.

imidazol97

>You are very wrong if you think it is built in profit for the dealer. The dealer makes NOTHING off of it.

Please read my posts more carefully in the future. I did NOT say that it's extra profit. I did say it should be a part of the gross profit for the dealer. If you buy a mattress from a mattress factory type store, do they add an advertising fee onto the purchase contract? No they include it in the price they ask/negotiate as part of their expenses.

Back to midsized sedans.

akirby

If you buy a mattress from a mattress factory type store, do they add an advertising fee onto the purchase contract? No they include it in the price they ask/negotiate as part of their expenses.

Car dealers don't add an advertising fee, either. It's part of the ACTUAL dealer invoice and MSRP. It's NOT a fee that's added to a purchase contract. The problem is that the online dealer invoices provided by Edmunds, KBB, etc. don't include this fee. In other words, the Edmunds/KBB dealer invoices are not accurate.

andrelaplume

I felt the need to make a post somewhere. Back in 2002 I opted away from Ford and toward Toyota. I was tired of numerous trips to the Ford dealership for odd little problems, whether covered under warranty or not. From a dollars perspective, the Fords were cheaper up front. Again the constant trips to the dealer just were a nusisance and at the time I could afford the extra $$$$ for a new Camry. Well, I had NO trips to the dealer other than oil changes and fluid changes for the first 6 years. This year though the camry started to show some wear. Some sort of mechanism in my door that would not allow the keyles entry to work...$425. A sensor...$130 and now a valve job....$1700. Suffice to say I am thankfull I spent the $630 for the 7/75K extended warranty. These repairs have cost me nothing. Of course most would have skipped the valve job, I guess its normal over time for a puff of blew smoke out the tailpipe......but I was disapointed on a Toyota with only 65K miles. Yes the car has been maintained. I also think these valve issues are related to Toyotas much like Chryslers (at least the older ones). Our 95 Rav had the same problem. I never had that problem on our old Topaz and Mystique.

For what its worth....

backy

I never heard of Edmunds before I started accessing the internet...

There's a link on Edmunds.com re Edmund's 40th anniversary--not all of those years on the Internet, of course. (Congrats, Edmunds!) I started using their pricing books long ago--as far back as the '70s. I never actually bought one, though--I used the books at libraries or stole a quick look at the grocery store. It was good info then, and even better now since it's so widely available to everyone and updated much more frequently than the books could ever be.

I recall these books weren't very small, nor very large--I would call them mid-sized. (Sorry, very weak attempt to get back on topic.)

aviboy97

My apologies.

I know, in Mazda's case, that is what happens. It is already billed to the invoice, and is included (just like destination fee) on the price you see on the window sticker.

akirby

It is already billed to the invoice, and is included (just like destination fee) on the price you see on the window sticker.

And that's the case for the other mfrs. The problem is the advertising fee and other fees (fuel, etc.) are not included in the online published dealer invoices. They can't be because they vary from vehicle to vehicle and by geographic location. So dealer invoice on a Ford Focus in Michigan might be slightly different than the same vehicle in Georgia.

The bottom line is the actual dealer invoice and MSRP includes the advertising fee - it's NOT a fee that is ADDED ON by anyone. The online published dealer invoice numbers are simply not accurate.

m6user

Now that you mention it I did see and sometimes look at those books(ditto on the grocery store) but I think the ones I remember were from Kelly Blue Books or something similar. I might have looked at an Edmunds...not sure.

Part of the reason is that the first brand new vehicle I bought was in 1987. I bought about 20 vehicles before then but they were all used cars/trucks/motorcycles for which knowing the invoice price wasn't really a player for me. I can't remember exactly when I started on the internet but I think it was around 1993 or 94.

backy

Ah, see what you missed out on--those books had used car/truck pricing also, similar to what Edmunds.com offers today. No motorcycles though, from what I recall.

2002slt

I think I have one of those lying around from 1986 when I bought my first new car. I think I still paid just a little under sticker, though.

m6user

My dad had a good buddy that owned a used car lot and I got a lot of info from him via my dad. Got a few cars from the guy too and never got a lemon. One time I came home on leave from overseas for a month and my dad bought a car from him, let me drive it while I was home on leave and sold it after I left. 1966 Dodge Polara 2dr. with the pushbutton auto on the dash. Think he bought and sold it for $300....quite the deal.

urnews

1966 Dodge Polara 2dr. with the pushbutton auto on the dash.

Time may have diminished your memory of the Dodge. I owned a 1966 Dodge Monaco, a upscale Polara, and it had a conventional shift level on the column for the automatic transmission.

According to an entry about the TorqueFlite transmissions in Wikipedia: "The buttons were replaced by conventional steering column- or floor-mounted shift levers in all automatic Chrysler-built vehicles for the 1965 model year." Maybe the Dodge you drove for a month was a 1964.

jd10013

Volume alone cannot make up for $1500-$2000 below invoice (before rebates).

why do you think ford, GM, and Chrysler are literally hemorageing money, to the tune of 10's of billions a year? if a dealership is selling a car below the invoice price it's almost always because they're getting money from the manufacture. A rebate they arn't telling you about.

m6user

You're most probably right and it would make sense since that took place in 1970. A 1966 model would have been at least a few hundred dollars more expensive. Since I only drove it a month, it's difficult to remember. Plus a GI home on leave had other things on his mind if you know what I mean.

Thanks for the research.

bhmr59

We subscribed to Edmund's paper back books back in the early 1980's or late 70's.

The were two different editions: domestic cars, and "foreign cars."

bhmr59

When I went to buy locally a little over 3 years ago, the dealer wanted way too much money. He offered to "split the difference between MSRP & invoice and couldn't wait to show me the invoice.

The markup from invoice to MSRP was $1100 or $1150 in April '05. He was willing to give me $500 off MSRP, but then "had to" add $500 adv fee. Yep, it showed on the invoice. Only thing is, he showed me a photo copy and everything was shown in standard type except the adv fee and obviously altered total invoice which was printed in bold face . So, the "invoice price", after the jerk offering splitting the difference between invoice & MSRP came out to MSRP! I was referred by a friend of mine who had recently leased a Mercury and had spoken with the salesman for about 7 weeks.

A week later I flew to Florida from CT, visited my parents for two days, and drove home in my new Sonata and saved $1500 after travel expenses. But this was before I knew about Towne Hyundai; and they don't show any adv BS on their invoice either.

bhmr59

Not everyone is buying Fords.

Ford will do what it has to do to survive...I I hope Ford does survive for the same of the US economy.

imidazol97

I'm confused because your response is about Fords. I'm not sure you meant to reply to my post. I need more caffeine this morning!!!

jeffyscott

Only if there were web sites that showed what mortgage brokers really made...Car dealers make not even 1% of that, and yet we all like to bash car dealers. Makes no sense.

The thing is, there also are not websites where mortgage brokers, etc. and their apologists constantly whine about how they make no money. Car dealers (meaning the owner not the sales people or other employees) seem to all be quite wealthy in my community, one way or another they are doing just fine.

m6user

Just saw a commercial on the Today show that stated that the rebate on the 2009 Sonata is now $2000. I assume this is nationwide since it was on the Today show. I reversed on my DVR to make sure I heard it correctly.

akirby

That is a dealer added fee and is not the same as the legitimate advertising fee that's already included in the dealer invoice price.

backy

HMA site hasn't been updated yet, but sometimes there are variations in the rebates by location so it bears checking there for what's applicable in your state. For example, last month some states had a $500 loyalty rebate on the Sonata and some didn't, and some had a $1500 rebate on the Elantra and others had $2000.

Edit: Ha, just noticed there's an ad just to the right here showing the new rebates on Hyundais, and when you click on it it shows the $2000 off on the Sonata (and still $1500 on the Elantra, which is interesting given how popular these are getting with fuel prices the way they are).

m6user

Yeah, I checked the Hyundai site as well. They seem to be at least 24-48hrs late updating sometimes. The military rebate expired 6/30 as well and they haven't replaced it with anything yet. I'm sure they will and I'm hoping it stays $1000 on the Sonata. If I can get a deal like Towne is giving I could get invoice-1900 discount-2000 rebate-1000 military rebate. That's close to $6000 off MSRP. I might just have to pull the trigger soon if these amounts stay applicable.

moocow1

Hyundai, Honda, and Kia sales are up nicely in this tough environment. Sonata's heading toward 200-250k per year territory at this rate as it hit almost 17k for June, definitely a top buy in my book for midsize sedans. I'd expect resale is going to improve as well.

aviboy97

Resale will not go up as long as they continue to sell new for thousands less then the top dogs.

If you get a new Sonata for $16,000, and it suffers the industry average 20% deprecation in its first year, you are looking at a car worth $12,800 after year one, when it had a window sticker of around $20,000. Almost 50% value gone from MSRP. That's not too good. Mazda has this problem with the Mazda6. Hopefully the new Mazda6 will reverse this trend, since it is considerably more money they the outgoing one. Heck, a 2007 Mazda3 s is worth more then a 2007 Mazda6 i, when the Mazda6 cost more new.

thegraduate

Is the 2.5L in the updated Fusion going to be the same engine that is in the new Mazda 6i ?

backy

Forget the percentages when it comes to depreciation--look at actual dollars. Depreciation percentages favor the more expensive cars. Who cares if the car you bought depreciates 35% (not 50%, btw) off MSRP in the first year if you paid nothing close to MSRP? If you did pay MSRP, then that could be a problem--in a number of ways!

thegraduate

Very true. The thing about it is that it gives people who pay less - or more - upfront, some vindication.

The depreciation amount in dollars was similar on the Toyota and the Ford my folks looked at, but the difference in price up front was drastic. Those buying the Toyota will say "I paid more, but I'll get more back." Those buying the Ford will say "I don't care that it depreciated as much as a more expensive car, I come out the same in the end, and had less up-front outlay."

By the way, my folks just purchased a 2008 Taurus. I know it is off topic, so I'll leave it at that; I just wanted to pass it along for those who'd been following the saga of my parents' car shopping. They finally made their decision and couldn't be happier. They got $5800 off sticker on a car with Leather, Convenience Package, and Sync. So far, they are LOVING Sync. I do too!