The dealer doesn't determine the market, the private seller doesn't, the books don't and the appraiser doesn't.....the BUYER determines the fair market price. All the other guys are just reflections of what the buyer has decreed.
Assuming you ignore the economic principles of supply and demand, then sure I agree with you!! LOL.
It is true, a willing buyer will establish the market. However, when there is a surplus of willing buyers that exceed the supply of a product, the seller has the ability to influence the market, raising it until a point were an equalization occurs.
When you see a hot car that is sold for MSRP or even with an ADM it is the seller who is influencing the market price.
I truly believe that both buyers and sellers determine the market and current supply and demand conditions are what tips the scales of leverage to one or the other.
I'm not a dealer, but I have been lurking here for some time. This question has been asked before and the general consensus has been that foreign dealers are not too hot about ordering vehicles with specific options directly from the factory. They build several vehicles with varying degrees of options packages and then you get to choose what closest fits your wants. You can order one spec'd how you want, but I think it would be hard to find a dealer that would be willing to do it for you.
On the other hand, domestics are more willing to spec out a car to your wants and then order it rather than have you buy one already sitting on the lot.
Heck, when demand exceeded supply people paid ADM on PT Cruisers!
My reading here is that there's no supply problem. I guess the bigger question in how much do these guys want to get the cars off the lots. They might not be in as much of a hurry as you think but until you go talk to them you aren't going to know.
I remember years ago getting into a "what I have in it" discussion with a local dealer on of all things a Dodge Colt Vista. He was asking way over book and had a "I need to sell it for this much just to break even" story. Well, I can respect that but if you put that much into a car that can be bought much more cheaply somewhere else that's not good business.
2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
Most dealers order packages and colors they think will be most popular and sell fastest.
I fyou want a RAV4 optioned exactly as you want, and there's none in the area, then you can place a factory order with the dealer and wait about 2-3 months for the vehicle to arrive.
Yes a dealer prefers to sell what's in stock, but will place a factory order for you, with a non refundable deposit of course, if that's what you really want.
Very good point. Perhaps we can compromise and say that the buyer determines the "extent and limit of the gouge"? :P
And besides, in less we are talking about very exotic or very rare collectible cars, when is the supply REALLY short? It's just an artificial scarcity fueled by hype. When was there ever a new or used car shortage in America since 1950 or so?
The "shortage" is merely the pipeline being a little slow.
If you wait for a TRULY scarce item to "fill up" it won't happen, but a fake one will soon enough.
I was thinking that the buyer sets the market price in the BROAD range of things, over time---not in those "spikes" where there is peak demand. In the latter case, it's every man for himself.
The only NEW car maker that I ever witnessed being able to firmly set the market price over a long period of time was Ferrari.
I hope you realize the RAV4 can only have either 2 or 5 passengers! The rear seat does not split! if that's okay, also avoid the Sport RAV4. Why? Well those run flat tires are a one time use and are very expensive to replace (over $500).. and if you're traveling and you get a flat - be prepared to be camping in that spot for a few days while a Toyota dealer orders one, gets it in, then installs it for you. I'd suggest looking at the Nissan Rogue.
I'm looking to by a 2008 CX9 (15K miles) from a Pontiac Dealer. The car will have the balance of the factory warranty with it. However, I'm wondering if my local Mazda dealer will certify it after the sale so that I can get the added advantages of the certification.
Also, would my local Mazda dealer be able to add the rear DVD entertainment system after the sale from the Pontiac dealer.
I never heard of a vehicle being certified after it was sold but I might be wrong. Usually it's done only on units with specific mileage and age requirements, and sold by the same brand dealer.
Certification is also more than just a $100 inspection with added benefits. Usually the cost to a dealer to get a car certified and offered with extra warranty could be anywhere from $500 to a few thousand dollars depending on the plan and on the manufacturer. So if they do let you certify it after you buy it from Pontiac, the certification will cost you money.
As for the DVD player, your dealer might be able to install it, but some factory DVD systems also require the changing of some components in the head unit and the dashboard, and are expensive compared to the aftermarket units, especially when ordered after the fact so you might want to call your dealer and find out the cost. You can pick up headrest mounted units nowadays for as little as $300/each.
Some things aren't negotiable and acquisition fees are one of those things. Everyone pays this.
I thought so too, but what if the bank or finance company waives the fee but the dealer lists it in his quote?
I received 4 quotes for a 2009 Toyota Matrix. 3 of them did not mention the acquisition fee so it was either waived or absorbed or rolled into the lease price. The fourth, and highest, quote listed the acquisition fee as a extra due at signing. The others required about $240 plus the first month's lease at signing.
Banks don't waive acquisition fees. Most dealers roll the acq fee into the cap cost. Ask to see a complete breakdown of the lease from the dealers you are getting a quote from.
Chrysler ads here on Edmunds tout their Employee price ++ program but they do not explain exactly what it is. All it says is "see the dealer" for details. I understand the ++ part to be the traditional rebate (which is available on Edmunds) and special financing. There is no info on the EP part of this though.
So my question is how much does the EP discount from MSRP or invoice and is this something I subtract from the published MSRP or is the EP factored in to come up with a new MSRP? For example, if a PT Cruiser is listed on the Chrysler site with a MSRP of $20,700 and an invoice of $19,500 is that the prices before EP or after?
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
About 6 months ago I went to a dealer for a test drive and ended up not buying a new car. Just recently I went back to the dealer to check out the new model year and tried to meet with the same salesperson, but they were busy so they passed me off to a new person. Alright fine I thought, if I end up buying they'll split the commission. Well at the end of that visit I made arrangements to come back and test drive a different model, we set the time and when we returned the 2nd salesperson was busy with another customer, so I got passed off to a 3rd salesperson for the drive and started talking price but wasn't ready to buy just yet. Now I'm not sure who to deal with.
I was trying to do the right thing by going back to the salesperson we saw 6 months ago, but at this point I've been bounced around so much - can I just email the internet sales department and negotiate through email like I am with other dealers in the area?
Does anyone have an idea as to how a Chrysler or GM bankruptcy would effect dealers? What I am asking is, if a dealer is still able to sell the cars on their lots after a bankruptcy by an automaker, would the prices go up or down, or stay the same? I'm thinking that since the dealer has to pay the automaker for the cars, that generally the prices and process wouldn't be too different from now, unless they were stuck with a lot of cars. Thoughts anyone?
You are correct. I did not mention the individual chapters. Also, you are not including the government coming in and unwindind the automakers vs a formal bankruptcy - which according to the rumors, could be a possibility. We could guess all day as to what could happen to Detroit - GM goes 11, Chrysler 7, Ford 11, sell-offs, etc. I think in most cases dealers would be debtors of the failed automaker, and be pushed to return some funds to the trustee, which would stress the dealers pockets and some would close due to it - more likely in a 7 but still possible in an 11 as reorg doesn't mean everyone gets to stay with the "new" co. In the end, I don't think it really matters that I didn't specific which, for forum purposes at least. Besides, I think it would be interesting to see comments from everyone on both.
True, I agree with you. Which is why I ask my question, since some dealers would either "liquidate" their inventory themselves, return the cars to the maker, or have it be done via a court auction.
This brings us back to the question - does anyone have an idea of the effect of bankruptcy on dealer prices? I know its a broad question, but maybe some dealer employees have heard things, or a dealer has gone down already in your area and you've seen the result. I'm interested to see the comments on this.
I am sure this will be no different than other retailers. During these processes a trustee or appointed 3rd party is in charge of the liquidation of the merchandise. Their objective is to maximize cash for the creditors. Don't expect rock bottom prices.
I was following the Circuit City liquidation and most people commented that there were really no "deals" to be had.
Prices may go down after 30-60-90 days, but you choices are limited to what is available and don't expect any breaks from a non-existent service department if something breaks!
Here's the first part of the article that deals with the dealerships's inventory: Bankruptcy fears rattle dealers Retailers get ready for GM and Chrysler filings
Jamie LaReau and Bradford Wernle Automotive News April 20, 2009 - 12:01 am ET
DETROIT — The growing likelihood that General Motors and Chrysler LLC will land in Bankruptcy Court has sent a wave of fear through U.S. auto dealers.
Many GM and Chrysler dealers are protecting themselves by cutting inventory and factory orders. GM and Chrysler desperately need orders, but dealers are holding back because the automakers are in such bad shape.
Dealers also are speeding up reimbursement requests to the automakers on warranty work and cash rebates for fear that the money could be tied up in court. And some are spending advertising money from the factories for the same reason.
"We're SOL if GM goes BK," said Chevrolet dealer Larry Dimmitt.
Dimmitt, who owns Dimmitt Chevrolet in Clearwater, Fla., ordered some GM vehicles in February because he wanted the cash incentives of up to $1,250 per vehicle. Now he regrets it.
Dimmitt said he thought the market would open up but "it hasn't — it's gotten worse."
He estimates his days' supply is five to six months at his current sales rate of about 15 a month. He has stopped ordering new vehicles from GM.
As of April 13 Dimmitt had sold only seven new vehicles this month. He was hoping for 20 sales by midmonth. Early in this decade, he said, he would sell about 65 new vehicles by midmonth.
If a manufacturer files for Chapter 11 protection from creditors, the value of inventory will plummet. With an automaker in Bankruptcy Court, floorplan lenders want their dealer customers to have minimal inventory to reduce their risk.
I agree with you Golic. A third party would step in and sell off assets.
My opinion:
Say that GM/Chrysler/Ford goes chapter 7 bankrupt, and a third party is appointed to sell off assets. I think any unsold cars on dealers' lots would remain there, and the dealers would have to swallow the losses in values on them since they already purchased them.
Any inventory not sold to dealers from the factory would probably be liquidated via auto auctions or another method. I'd expect heavily discounted pricing to offset limited after sales servicing support for these vehicles. I wouldn't be surprised if you'd see up to 50% off factory sticker prices.
The people buying up these units, maybe even in bulk could be corporate, or municipal fleet departments who do their own in house servicing anyways, and don't need too much of dealer service support. You'd see a lot going to rental companies, as they'd get their return on the small investment back fairly quickly, and maybe some dealers with liquid assets would pick up some here and there to sell on their lots. I wouldn't even be surprised if some small used car dealers pick up a few leftover new units too from the auctions. Also you'd see a few liquidator type places pop up and sell any units to the public too that they would have picked up in bulk at the auctions.
>I was following the Circuit City liquidation and most people commented that there were really no "deals" to be had.
The companies employed to liquidate often bring in their own and other merchanise. They are in business to make money, not to save the end buyer money.
If GM goes bankrupt everything will be resolved quickly. Other than some dealerships closing everything will look the same to consumers. No big sell off of cars or anything like that. The changes will be swift at the corporate level and the work force will be reorganized. The service and warranty work will continue seamlessly and cars will be on the lots for sale. GM is not Circuit City. This would be a very special bankruptcy -- unprecedented with intense federal oversight. My opinion.
Probably accurate. This is going to be such a fast bankruptcy that it will be like that old "fastest gun in the West" joke. You won't even see GM's hands move.
Well they're bleeding money so fast it's either that or the whole thing collapses. Despite what the free market utopians might think, having huge industrial and financial institutions crash into a smoldering heap overnight is just not a good idea. It's not the academic economist or think tank pundits who lose their jobs. This is one time I actually believe in the "domino theory".
There are two types of Bankruptcy's. Voluntary - When the Company files on its own. And Involuntary - when a creditor(s) who meet certain thresholds can force a company into Bankruptcy.
My guess is with the money lent by the US Government came with the stipulation that allowed the US to force it into BK if certain covenants were not adhered to or met.
Keep Ford out of your BK discussion, when the smoke clears we will be standing tall leading the world market. Allan Mullaley is a genius and his way forward plan is right on schedule.
Chryslers hopes hinge on weather or not the creditors they have will take stock as repayment for the debt. If they do then they may live to fight another day. If not then it may be the beggining of the end for them.
Everyone has an opinion on what's happening with Chrysler, Fiat, the government and their creditors. In the end, we won't know what happens until it happens. Remember originally the government said they had till April 30 to get the additional bailout money, not declare bankruptcy. So, something must have happened along the way. Also, the governement has asked GM and Chrsyler to prepare to file for bankruptcy, not actually file. This is to help things un-wind and happen quickly, if bankruptcy is what has to happen. Lastly, all of these parties, including the analysts making predictions, are using the press as a way to gain leverage, so until it happens, its all just noise. In the end, its about those of us who are still interested in the cars, and those poeple that depend on that industry. Capitalism without failure, is religion without sin.
Everyone has an opinion on what's happening with Chrysler, Fiat, the government and their creditors. In the end, we won't know what happens until it happens.
Exactly.
Everyone asks me if I'm worried as I sell Chryslers. I tell them that until we're told to take the Chrysler logo off the wall then it's business as usual.
Walmart to buy chrysler !! One model of each car at the store. [ subcompact-compact-sm suv-med suv] Purchase with options on a computer. Standard and deluxe. Safe reliable vehicles with ASE certified mechanics to do warranty - parts- repairs. Could it work?
General Motors may announce early next week that its Pontiac brand will be eliminated, said a source familiar with the company's plans. The announcement will be made as part of an updated viability plan to the U.S. auto task force, the source said. A second source indicated earlier this week that GM was considering phasing out the brand instead of sticking with the current plan to have it continue as a niche marque. GM, surviving with $15.4 billion in U.S. government loans, had planned to keep Pontiac along with mainstream brands Buick, GMC, Chevrolet and Cadillac. Saturn, Hummer and Saab are up for sale. Reports that GM is contemplating killing Pontiac surfaced today in Australia, where GM builds the Pontiac G8 sedan. ...
Everyone has an opinion on what's happening with Chrysler, Fiat, the government and their creditors. In the end, we won't know what happens until it happens.
You're no fun! :P
I bet you like to go to nursery schools before Christmas and tell the kids, there is no such thing as Santa Claus.
Comments
It is true, a willing buyer will establish the market. However, when there is a surplus of willing buyers that exceed the supply of a product, the seller has the ability to influence the market, raising it until a point were an equalization occurs.
When you see a hot car that is sold for MSRP or even with an ADM it is the seller who is influencing the market price.
I truly believe that both buyers and sellers determine the market and current supply and demand conditions are what tips the scales of leverage to one or the other.
On the other hand, domestics are more willing to spec out a car to your wants and then order it rather than have you buy one already sitting on the lot.
Heck, when demand exceeded supply people paid ADM on PT Cruisers!
My reading here is that there's no supply problem. I guess the bigger question in how much do these guys want to get the cars off the lots. They might not be in as much of a hurry as you think but until you go talk to them you aren't going to know.
I remember years ago getting into a "what I have in it" discussion with a local dealer on of all things a Dodge Colt Vista. He was asking way over book and had a "I need to sell it for this much just to break even" story. Well, I can respect that but if you put that much into a car that can be bought much more cheaply somewhere else that's not good business.
I fyou want a RAV4 optioned exactly as you want, and there's none in the area, then you can place a factory order with the dealer and wait about 2-3 months for the vehicle to arrive.
Yes a dealer prefers to sell what's in stock, but will place a factory order for you, with a non refundable deposit of course, if that's what you really want.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
And besides, in less we are talking about very exotic or very rare collectible cars, when is the supply REALLY short? It's just an artificial scarcity fueled by hype. When was there ever a new or used car shortage in America since 1950 or so?
The "shortage" is merely the pipeline being a little slow.
If you wait for a TRULY scarce item to "fill up" it won't happen, but a fake one will soon enough.
If you can't have exactly what you want NOW, like in this second NOW, or if you have to drive more than 15 miles to get it NOW.
If you gotta wait a few days, or drive a bit to get it that means shortage.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
The only NEW car maker that I ever witnessed being able to firmly set the market price over a long period of time was Ferrari.
And those days are over, too.
by the way, the rear seats in the Rav4 do split.
Not where I live. My experience is that a dealer would rather be tied to an ant hill and covered in honey than order a car from the factory. :sick:
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
Also, would my local Mazda dealer be able to add the rear DVD entertainment system after the sale from the Pontiac dealer.
Certification is also more than just a $100 inspection with added benefits. Usually the cost to a dealer to get a car certified and offered with extra warranty could be anywhere from $500 to a few thousand dollars depending on the plan and on the manufacturer. So if they do let you certify it after you buy it from Pontiac, the certification will cost you money.
As for the DVD player, your dealer might be able to install it, but some factory DVD systems also require the changing of some components in the head unit and the dashboard, and are expensive compared to the aftermarket units, especially when ordered after the fact so you might want to call your dealer and find out the cost. You can pick up headrest mounted units nowadays for as little as $300/each.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
I thought so too, but what if the bank or finance company waives the fee but the dealer lists it in his quote?
I received 4 quotes for a 2009 Toyota Matrix. 3 of them did not mention the acquisition fee so it was either waived or absorbed or rolled into the lease price. The fourth, and highest, quote listed the acquisition fee as a extra due at signing. The others required about $240 plus the first month's lease at signing.
What do you think is going on?
Most dealers roll the acq fee into the cap cost.
Ask to see a complete breakdown of the lease from the dealers you are getting a quote from.
So my question is how much does the EP discount from MSRP or invoice and is this something I subtract from the published MSRP or is the EP factored in to come up with a new MSRP? For example, if a PT Cruiser is listed on the Chrysler site with a MSRP of $20,700 and an invoice of $19,500 is that the prices before EP or after?
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
I was trying to do the right thing by going back to the salesperson we saw 6 months ago, but at this point I've been bounced around so much - can I just email the internet sales department and negotiate through email like I am with other dealers in the area?
Yes, and if you want mention whoever you are the most comfortable with in the email.
I'm thinking that since the dealer has to pay the automaker for the cars, that generally the prices and process wouldn't be too different from now, unless they were stuck with a lot of cars. Thoughts anyone?
Which scenario are you envisioning? CH 11 is protection from creditors until re-organization can occur; CH 7 is complete liquidation of the company.
We could guess all day as to what could happen to Detroit - GM goes 11, Chrysler 7, Ford 11, sell-offs, etc.
I think in most cases dealers would be debtors of the failed automaker, and be pushed to return some funds to the trustee, which would stress the dealers pockets and some would close due to it - more likely in a 7 but still possible in an 11 as reorg doesn't mean everyone gets to stay with the "new" co.
In the end, I don't think it really matters that I didn't specific which, for forum purposes at least. Besides, I think it would be interesting to see comments from everyone on both.
This brings us back to the question - does anyone have an idea of the effect of bankruptcy on dealer prices?
I know its a broad question, but maybe some dealer employees have heard things, or a dealer has gone down already in your area and you've seen the result.
I'm interested to see the comments on this.
I was following the Circuit City liquidation and most people commented that there were really no "deals" to be had.
Prices may go down after 30-60-90 days, but you choices are limited to what is available and don't expect any breaks from a non-existent service department if something breaks!
Here's the first part of the article that deals with the dealerships's inventory:
Bankruptcy fears rattle dealers
Retailers get ready for GM and Chrysler filings
Jamie LaReau
and Bradford Wernle
Automotive News
April 20, 2009 - 12:01 am ET
DETROIT — The growing likelihood that General Motors and Chrysler LLC will land in Bankruptcy Court has sent a wave of fear through U.S. auto dealers.
Many GM and Chrysler dealers are protecting themselves by cutting inventory and factory orders. GM and Chrysler desperately need orders, but dealers are holding back because the automakers are in such bad shape.
Dealers also are speeding up reimbursement requests to the automakers on warranty work and cash rebates for fear that the money could be tied up in court. And some are spending advertising money from the factories for the same reason.
"We're SOL if GM goes BK," said Chevrolet dealer Larry Dimmitt.
Dimmitt, who owns Dimmitt Chevrolet in Clearwater, Fla., ordered some GM vehicles in February because he wanted the cash incentives of up to $1,250 per vehicle. Now he regrets it.
Dimmitt said he thought the market would open up but "it hasn't — it's gotten worse."
He estimates his days' supply is five to six months at his current sales rate of about 15 a month. He has stopped ordering new vehicles from GM.
As of April 13 Dimmitt had sold only seven new vehicles this month. He was hoping for 20 sales by midmonth. Early in this decade, he said, he would sell about 65 new vehicles by midmonth.
If a manufacturer files for Chapter 11 protection from creditors, the value of inventory will plummet. With an automaker in Bankruptcy Court, floorplan lenders want their dealer customers to have minimal inventory to reduce their risk.
My opinion:
Say that GM/Chrysler/Ford goes chapter 7 bankrupt, and a third party is appointed to sell off assets. I think any unsold cars on dealers' lots would remain there, and the dealers would have to swallow the losses in values on them since they already purchased them.
Any inventory not sold to dealers from the factory would probably be liquidated via auto auctions or another method. I'd expect heavily discounted pricing to offset limited after sales servicing support for these vehicles. I wouldn't be surprised if you'd see up to 50% off factory sticker prices.
The people buying up these units, maybe even in bulk could be corporate, or municipal fleet departments who do their own in house servicing anyways, and don't need too much of dealer service support. You'd see a lot going to rental companies, as they'd get their return on the small investment back fairly quickly, and maybe some dealers with liquid assets would pick up some here and there to sell on their lots. I wouldn't even be surprised if some small used car dealers pick up a few leftover new units too from the auctions. Also you'd see a few liquidator type places pop up and sell any units to the public too that they would have picked up in bulk at the auctions.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
The companies employed to liquidate often bring in their own and other merchanise. They are in business to make money, not to save the end buyer money.
2014 Malibu 2LT, 2015 Cruze 2LT,
Let's have a hand for the Waco Kid....
I don't understand why that is the President's decision to make. :confuse:
tidester, host
SUVs and Smart Shopper
My guess is with the money lent by the US Government came with the stipulation that allowed the US to force it into BK if certain covenants were not adhered to or met.
Remember originally the government said they had till April 30 to get the additional bailout money, not declare bankruptcy. So, something must have happened along the way.
Also, the governement has asked GM and Chrsyler to prepare to file for bankruptcy, not actually file. This is to help things un-wind and happen quickly, if bankruptcy is what has to happen.
Lastly, all of these parties, including the analysts making predictions, are using the press as a way to gain leverage, so until it happens, its all just noise.
In the end, its about those of us who are still interested in the cars, and those poeple that depend on that industry.
Capitalism without failure, is religion without sin.
I don't mind capitalism failing but if it has sinned, let the sinners get punished, not me. :P
I don't like this "we sinned, you go to hell" business.
Exactly.
Everyone asks me if I'm worried as I sell Chryslers. I tell them that until we're told to take the Chrysler logo off the wall then it's business as usual.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
(sob) I think I'm going to listen to my Ronnie and the Daytonas recording.
A second source indicated earlier this week that GM was considering phasing out the brand instead of sticking with the current plan to have it continue as a niche marque.
GM, surviving with $15.4 billion in U.S. government loans, had planned to keep Pontiac along with mainstream brands Buick, GMC, Chevrolet and Cadillac. Saturn, Hummer and Saab are up for sale.
Reports that GM is contemplating killing Pontiac surfaced today in Australia, where GM builds the Pontiac G8 sedan. ...
Everyone has an opinion on what's happening with Chrysler, Fiat, the government and their creditors. In the end, we won't know what happens until it happens.
You're no fun! :P
I bet you like to go to nursery schools before Christmas and tell the kids, there is no such thing as Santa Claus.
I assume you meant worrying