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Comments
Every sales manager I've ever talked to has said that you can't just give a customer a good deal. You have to make them FEEL that its a good deal.
When I started this job, I just used to quote my best price right away. How many people bought? 0%!
They just didn't believe me, or used my price at another dealer. What's the solution? I actually have to play the same stupid game as every other salesperson, and be vague. Its pretty frustrating...
Jason
The main thing I learned? In the car business, reformers starve. Those who practice the tried and true methods get paid.
will make sure that they are clean...positioned
correctly, or replaced because they are defective.
You said:
"Every sales manager I've ever talked to has said that you can't just give a customer a good deal. You have to make them FEEL that it's a good deal."
Are you sure he didn't say:
"You can't give a customer a good deal but you have to make them FEEL that it's a good deal" ???
Per post #262: Is it really true that a dealer's goal is to sell a car at the lowest price possible? --That's great! Because, aside from wanting a pleasent buying experience, most customers do want a low price (yet one that gives dealers a fair profit margin).
While Dealers and customers do share common goals (one of which is "world peace"), I think that your comments sound a little like: "Can't we all just get along?" You know that it is a little more complicated than that.
Maybe I was a little naive for thinking people would believe me. I guess it was inexperience talking (been here since March).
The basic goal that consumers and dealers share is customers leaving the dealership in a new car. It is a much healthier outlook for me to NOT think of myself as a salesperson. I think of myself more as a broker, between the dealership and the customer.
About the "make them FEEL that it's a good deal" quote, I said it right the first time.
Jason
Ok to get to my point...Last night I went to look at a 2000 gls passat. It has a sunroof, monsoon sound, and cold weather package--I kept thinking to myself--why is this car still here--something must be wrong with it! Well sure enough--leave it to my dad to notice that there was acid rain damage all over the car--which of course the dealers said they had an "expert" in the back who could get that right off. Well this "expert" claimed this was the worst he had ever seen! He spent 30 min just buffing on square of the car and still was not able to get rid of it.
Well I know that this damage could happen anytime but I am not willing to spend a new car price when the car has it! So the dealer and I began negotiating the price. She began at 24,500--a quote she gave me over the phone b/f I saw the car. Well even after the discussion of the damage she still insisted that I was getting a good deal b/c the re sale value on these car is top. Well I agreed b/c I have seen it first hand but when I go to resell this car it will be more difficult b/c of the damage.
She asked me to give her a quote--I knew it was a stretch but I said 22,500--now in all honesty I feel this is a fair price! It would cost me at least 2,000 to repaint the car (which I wouldn't). Anyway she told me that I was looking at the wrong car--which highly insulted me--I know what these cars cost new, old, etc--I've been doing my research. I was prepared (already had loan approval) to buy that night and told her that--I know this car is cost them money just sitting on their lot!
Well I know I've rambled...please tell me what you think--was my quote too low or should I stick with that amount--I know that must have some kind of incentive to move this car afterall it may only have 85 miles but it is a 2000!
Ok dealer just called back with an offer--23,720--not including ttl--what do you think? Need to know ASAP!
Thanks,
Alys
Tell me this, what would you pay if they took care of the repainting? That's the only way I would look at this car if I were you.
Jason
Now I would be happy with the car regardless--once they worked on it the car did look better. And like I said this damage may happen anyway--don't get me wrong the car still looks great--however, I don't feel the price is a fair one. I would not ask them to repaint it b/c I know that it's going to get scratches--although I will do my best to make sure it doesn't happen. Therefore, maybe i'm wrong but I think they should just lower the price instead of going to the trouble of repainting it--I will be happy with the car as is. Although someone like me dad who has an eye for touch-ups and flaws may always have a problem with it.
Thanks for your input--would appreciate any more you have.
Alys
Thanks,
Alys
The only problem with your suggestion on pricing is that it looks like you're at the bottom line. Any further discounting would cause the dealer to lose money on the car, which is avoided like the plague. I only know about my own area, but I think pretty much everyone here wouldn't sell the car at a loss, taking the chance that someone else will buy it soon.
Jason
Please let me know your honest opinion--are there incentives right now on Passats--I would think there would be with it being the end of the year.
Invoice for a car like what you described is $25,176.
Jason
Have you been to other dealers? I have spoken to several in the last few days--their opening offers are $300-500 over invoice for a 2001. Also, see post #259 for another 2001 example.
The 2000 Pass-acid isn't worth it. Re-read #272, my buddy ffxvw knows a thing or two about selling cars. My advice: look into a 2001--at another dealer.
"Uhh, well, that's a nice Passat ya got there, but even though Wholesale is $14,500 your car is worth $12,000 since it's a total repaint"
Bear this in mind too. A car with excessive paintwork can be worth a LOT less come trade-in time!
Bill
I'll keep it simple. My dealer is out of 2001 GLX Sedans +/- AWD. He is willing to let me have first dibs on a 2001.5 Passat of my choice, if I put a $500 deposit down.
No pricing or availability is forthcoming for at least a few months but I really want to get this car. I drove the 2001 and absolutely loved it. I have been driving the same Toyota 4Runner for 10 1/2 years and am ready for a new car. I am, however, not the greatest car freak in the world; i.e.-I'm not one to get on waiting lists for hot new cars and pay over MSRP (ideally, I like to keep it to invoice+$500-$700).
My question: How do I best play this opportunity? I will be paying cash for the car and I have the money set aside for this new purchase. How can I consummate a deal that is fair to me and fair to the dealer. VW states the 2001.5 will list at ~$300 more than the 2001. I would like to have some negotiating room on price, given the inevitable slowdown in the economy, dec. car sales, ease of this all-cash transaction.
Enlightened ones, would you kindly enlighten me? All recommendations/opinions are welcome (ie, am I nuts for pre-arranging delivery without any pricing information).
Thanks in advance,
Gregg
Information on pricing at all, but if that is true
I would suggest that they are referring to the Base Price of the car and not individual options...Sunroof/alloy wheels, etc.
If you are planning on paying $500-$700 over on this car; you are probably being overly optimistic. I have not checked today, but I think
Edmund's TMV on Passat is still about $1000 over,
and that is for a car in it's 3rd model year. And
if You go back to the Home page and click on the
Most Wanted list VW really dominates it.
There are several posts, 100 or more that go back
a month or more regarding this subject. Basically
though at the end of the day, the market rules the
price.
I am delighted that you are so enthusiastic about
this car, but being the first on your block to have one in your driveway, and getting an over invoice price do not usually go hand in hand.
We do not mark up cars, and I think that you will
need to find a dealer in your area that follows the same philosophy, and then wait to see how this car is received...don't get on a waiting list unless you have an agreement with the dealer regarding the price. And the cash payment is moot...the dealer does not care; he will have to
pay the same tax on your purchase whether you pay
cash or finance.
I try to post here new and relevant VW info, and as soon as I get it...I will post it. I do have the color codes if you are interested in them. I can fax them to you, as I have to dozens of other Town Hall memebers.
Hope this has been helpful...
Your thoughts?
Jason
1./ Is the holdback for VW 2% or 3%? (I've seen both -- primarily 2%.)
2./ Are the Destination Charge & the Floorplan Interest fee included in the Invoice price that you typically see on online car pricing sites?
3./ And finally, anyone if VW will continue to offer the low financing rates?
Many Thanks,
Cab
2. Sometimes...sometimes not...However both are
included in the ACTUAL invoice.
Destination= $525
PortPrep/Reserve= $117
3. Continue to check Edmunds.com under Dealer
Incentives & Rates
I think that the A6 Avant has about 2" MORE rear legroom, but actually a few cubic feet LESS cargo space than the Passat. With the seats folded down, the Passat still has the overall edge. Technically, I think that the Passat has the second largest cargo space for a wagon--apparently, only the Mercedes E320 exceeds it.
Or is your interest in a BIG car more about safety? I would consider any of these models to be very safe. Are you set on AWD--both the Saab and the FWD Passat have solid traction control...
The site I referred to learn more about determining a fair price for a new car (http://www.carbuyingtips.com/) suggested that a 5% profit over actual dealer cost was fair.
Does this seem in the right ballpark?
Secondly, he does not include the destination charges, administrative fees, advertising fees, etc. as part of the dealer's cost.
Does this also seem fair?
Thank you,
Cab Vinton
I like the idea that any additional fees added in should be covered by a fair dealer profit margin, and should not be "passed along" to the customer--because, all too often, such fees are arbitrary. A recent post mentioned an attempted charge of a $700 "environmental fee" (as if the dealer was out planting trees to counteract the "emissions" of his dirty business!). The 5% logic continues by suggesting that destination fees are similarly arbitrary (i.e. not directly related to the delivery of an individual vehicle)--AND, in any case, all additions are fully covered by the FAIR 5% margin.
Any dealer, who readily acknowledges this line of reasoning is fine in my book. Unfortunately, most will refuse to discuss the transaction in these terms. Or, as soon as they do, they quickly switch to another tactic: "supply and demand." The key problem with this argument: The dealer--who has a credibility problem from the get-go--is asking you to take his word for it! This idea of "supply and demand" is seldom supported by real evidence, and in almost every case, it is possible to find what you want if you simply look around a bit. Of course, this requires patience.
A lot of people buy a car without doing much research. Or, they do reserch to decide on the car, and then forget to shop around.
While it is an attractive scenario from the consumer standpoint, there are very few Passats that anyone would sell for this kind of figure, making this structure unrealistic.
Jason
I don't think that the argument is that *all* of these fees are arbitrary. But the fact is that:
1) Some of them are.
2) It makes sense that all fees be pre-included within the "price," because to separate them out would be to put them on the same level as state tax and dmv fees.
Destination costs and port prep fees are "dealer costs" associated with the dealer acquiring the vehicle to sell to the consumer--why shouldn't they impact the dealer's bottom line?
and looking at the same thing...
when you get the invoice I will call you and we
can talk it through...
Its not like the gallon of milk you buy at the grocery store doesn't include these things (shipping, advertisement, etc). Its just that the grocery store doesn't tell you.
Jason
I think you may be one of the few dealers who wishes the process were "clearer." I always assumed that dealers loved the fact that they have a built-in, hidden profit margin (the holdback), and are able to charge all kinds of "official sounding" fees to pad out their profits even further.
Someone tried to charge my friend a "security fee" when he was negotiating for a Honda Prelude, because "Honda's are often stolen." Think about that one. Who was the fee going to--the U.S. Department of Stolen Honda Recovery?!
And holdback may be profit to the guys in the suits upstairs, but to us guys on the floor, its just one more obstacle to overcome. The official word on that, is that holdback goes to pay the roughly $400K operating expenses (e.g. lights, power, rent, heat/AC, water, car storage, accounting staff, etc. etc.). It sounds like a reasonable theory to me, which is also why that can't get touched for negotiating purposes.
*shrug*
I'm not an acoountant, though, so I have no idea of the operating expenses.
Jason
LOL
Jason
ball bearings all the way out here...Come on...
email me with your fax, and I'll fax you an invoice so that you'll be able to talk about the
real deal...Your reluctance to do this so far is
curious...Are you concerned that you will find me
to be a likable old chap?
As for your likability...I intend to become drinking buddies with all of my local VW salesman, which means that I need to be careful about making them jealous by getting all chummy with other salesmen on the internet
ffxvw--since you are not an accountant, I won't trust your assessment of whether holdback is negotiable or not. For instance, if you pre-order a car and pick it up immediately, most of the holdback money "allocated" for this vehicle goes straight into the dealer's pocket. That's just one example of why holdback money is fair game for negotiation. And then, there are additional factory to dealer incentives based on quotas that can line dealer pockets further. Any fair discussion of profit margins would have to include disclosure of these additional profits.
Holdback and other such incentives are meant to encourage sales. If a car is sitting on a lot (and eating up its holdback money) than I suggest that it isn't being offered at a reasonable price--and, in the factories assessment, the dealership is not "entitled" to the holdback incentive in this case.
It's all been very interesting & helpful to me, & hopefully to others as well.
Cheers!
Cab
Now the other side is the worst thing I've seen dealers do. They discount order cars like crazy, to try to get cars beyond their allocation. They then sell these cars off to the person who offers the most, leaving the person who ordered stuck in limbo. Its probably the most vile practice I've seen since I started. I think if we did it here, I would have quit the first time I saw it.
Jason
simply to provide you with the actual document in
an effort to prevent any further derisive remarks
that are so typical with your posts concerning
Dealer information.
I am gathering that maintaining your anonymity is
of greater importance than learning the facts.
On every invoice there are two columns...one is the *invoice* amount the other is the *retail*
amount. The Invoice amount includes the following
items that are due and payable by the dealer...
They are as follows:
Base Price of the car
Option costs on the car
Port Prep
Flooring Reserve
Any *appropriate ad fees*...some dealers are members of an area ad association; others are not. Here in Monterey we do not have this fee.
San Jose & San Francisco do. These fees can vary
from $75 to $100 for VW in No. Calif. I cannot
speak to these costs in LA, or in any other part
of the country. And finally,
Emission carges on specific cars
The *Retail* column includes:
Base Price of the car
Prices of the options
Destination
Emissions charges on specific cars
This is how Destination carries to both sides of the Invoice. The Dealer pays it and the customer pays it back. The same is true with the Emissions
charges. On those cars, 2.0L Jettas, for example I
pay an Invoice amount of $99 and the Retail amount
is $100. Destination is the same on both sides $525.
Bottom Line...A percentage amount over Invoice should be just that. 3%, 4%, or 5% of the Total
Amount the Dealer pays. It is important to note here that this figure represents the Dealers GROSS profit on that car. Subtracted from that amount is Federal Income tax, Cost of Sales, Overhead, including Employees Health Ins., 401K
contributions, Salaries for Admin. Staff, Electricity, Lease or mortgage paymnents on the
property and the list goes on, as it does for any
Privately owned business.
I hope this has helped clarify what is included in an Invoice.
out what *holdback* and how it applies to the
Edmund's discussion of this found at the Home Page. This explaination is succinct and accurate,
with the exception of the fact that it could go a little further in that it does not speak to the fact that although the complete rotation of a new
car inventory inside of 90 days is the absolute
goal, it is rarely achieved. Holdback covers those
90 days and obviously depreciates with everyday
from the date of the Invoice...1% of the 3% goes
away each month that the car is on the ground.
This is why Edmund's suggests that it is a less
than desirable negotiating instrument.
I think I can picture the invoice you describe quite clearly--and I understand, of course, that an invoice is a document created by the dealer that can be interpreted in many ways. You (as a dealer) are interpreting it one way, and I (as a consumer) will interpret it another way:
You say, "appropriate ad fees" are sometimes listed on the invoice, and I say, why should I pay for a dealer's advertising costs? The fact that he and his dealer pals decide to share advertising costs is one thing, but to pass along these costs directly to customers--as if it is "required"--is quite simply an attempt to justify a higher price for the vehicle. It makes sense that advertising costs should be paid out of dealer GROSS profits.
Your key misrepresentation, however, has to do with the "holdback." Holdback is not on the invoice--because it is a *hidden source of dealer GROSS profit. You claim the Invoice Price is the "Total Amount the Dealer Pays"--NOT TRUE, you've neglected to subtract the holdback money from the invoice amount. You claim that the percentage paid over invoice is the total dealer "GROSS profit"--NOT TRUE, you've neglected to add the holdback money into this gross profit.
Dealer Gross Profit = Holdback $ + $ over invoice + any add'l factory-to-dealer incentive $. From *this* lump sum, the dealer pays his bills, just like any other business--and derives his substantial NET profits.
The amount of the holdback remaining may vary, depending on the vehicle's "lot age," but it still is gross profit, no matter how you slice it. Whether or not the consumer can actually grab a hold of this money isn't the point--but it can and should be used in any calculation of a fair price for the car and a fair profit for the dealer.
For any non-dealers who frequent this site...The dealer only wants you to think about one car (his) and one price (his). Instead, try to think about several cars on several lots, and calculate dealer profit at the same time you are comparing prices on the cars.
A FAIR PRICE with FAIR PROFIT = A Good Deal for BOTH parties.
First, go to Webster's and look up the word *deride*...
then go look in the mirror
I offered you the opportunity to see with your own
eyes an Invoice...you turned it down. WE DO NOT
CREATE INVOICES...IS THAT CLEAR? They come from VWOA. It is no different with GM, Ford, or MBZ.
Invoices to the Dealer come from the factory...They always have and they always will.
Should a customer pay for ad fees? We do with every other item that we purchase. It does not matter what the product is...the customer pays for
advertising...
And finally, if you do not agree with the Host's
explanation of *Holdback*; write to them and tell
the fine folks who run this site that their interpretation of it is not correct and they should change it...That you know what it is, and
they do not. Further, *holdback* is NOT subtracted
from an invoice...
Incentive Money is a totally different issue; that
is time sensitive, and not an everyday occurance; of that I have been quite clear.
And lastly, to all of the members who have been
following these posts...the very understanding of
the fact that you REFUSED to accept my offer of
direct communication and to see for yourself what
a REAL invoice looks like, and chose instead to
remain an anonymous troll speaks volumes...
I don't care who you are--but I do object to your arguments. You are not presenting "facts," you are arguing your dealer's perspective. I am not making this personal, but that is what you seem intent on doing.
No other product lists it's price, and *then* adds in advertising fees. In every other instance I can think of, advertising fees are invisible. What you are defending is the auto industry practice of "legitimizing" these costs, over and above the price, as if consumers, should feel honored to pay these fees *directly.* In this case, these business-related expenses are being passed directly to the customer, instead of coming out of your gross profits. Your entire industry (not individual dealerships) has CREATED this business practice of stucturing your invoices in this manner. These invoices are *created,* and create a practice. I object to this practice.
As for holdback money: the fact is that holdback money IS gross profit and incentive money IS gross profit. Holdback money IS attached to a particular vehicle and, as such, it can and should be subtracted from the invoice price if you are calculating a FAIR PRICE with FAIR PROFIT. The folks at Edmunds may not be saying this in so many words, but I think they would agree with this assessment of the "big picture."
*Base Price* of the car so that everyone paid for
them as opposed to the *open way* that it is done
now. We do not have these fees, but my customers
should pay $75 - $100 more...why? The *Creation*
of this structure is to due to the fact that each
region in the US handles it's advertising in a different way.
I do not believe that i can make this *holdback*
issue any clearer than I did yesterday, but let
me add this. Holdback, by design, is to offset
flooring expense...it is not side cash the dealer
gets from the Manufacturer with a wink. The fact
of the matter is that probably 99.9% of the dealers in this country, and it doesn't matter
what the brand, never have the luxury of that $$$
getting to their bottom line. You have to do the math, and understand what I said about the rotation of new car inventories...But, if you insist on using it as part of your negotiation
tools; be my guest.
Incentive Money is just that...It is an Incentive to the dealer to discount a particular model or
models in order to allow the dealer to further discount those cars, thus making the price more attractive...This occurs typically when inventories are heavy or sales are weak. The various manufacturer incentives are made public,
along with rebates, and are availble to the customer thru Edmund's, Intellichoice, and a variety of car magazines. I do not believe any Dealer got rich because of *incentive money*.
Now to the veracity of my posts...Everything that
I have posted here is the truth and are facts to the best of my experience and knowledge. My
willingness to participate here without the veil
of anonymity should be testament to that. I offered to FAX to you an actual VW invoice so that you would have the opportunity to discuss this with that in your hands so that we would be
on the same page...you declined...I cannot help it
if you do not like those facts...