Just what is a good deal?

zueslewis

dealer cost, that is. If you want to run a thought up the flagpole and see who salutes, check out the real profit margin that consumers or dealers can't touch: The profit made when the manufacturer delivers the vehicle to the dealer.

On a Dodge Grand Caravan, for instance, that MSRPs at $25,500 and invoices at $23,900, Daimler Chrysler makes over $11,000 upon selling it to the dealer. The dealer, in turn, sells it to an Edmunds buyer at $300 over invoice, keeps the $600 in holdback and out of that $900, $750 or so is eaten up in commissions and overhead.

It's a great deal for the consumer and a REALLY GREAT DEAL for the manufacturer.

tboner

if the 11K the carmakers make on Caravans is akin to the 40% markups or the secret squirrel invoices some consumers think dealers have.

Ok, that lame joke is out there.

Of course dealers make money. They may or may not make it on new car sales. But they do make money.

But I have a hard time thinking any carmaker makes $11K NET on something they are selling for $25K-35K.

Maybe 15K is the cost to build the thing, but the carmakers have other costs too.

Not to mention pension funds that are seriously underfunded.

Ok, I'm rambling and just typing any thoughts that pop into my tired head, so don't try to find any logic or coherent thoughts in the above text, just freeflow thoughts out the fingers, LOL.

TB

bigorange30

Is there any way to really verify those numbers? Please correct me if that's not what you meant cfocfo.

caramo

My brother sent me a young couple (USAF) that just got stationed here. No credit to speak of, but enough positive that we were able to get them financed in spite of being brand spanking new in town, without even a permanent address yet. Nice to have found a finance company that cut them a break. Even better was having exactly what they were looking for in make, model, miles and price range.

This is the kind of deal that makes me happy about being in the car business. They got a very fair deal all the way around. (Sale price of vehicle was just a hair below wholesale book, rate was way better than what a lot of first time buyers get.)

And I finally get to send my brother a bird dog check :-) He's tried to send me a couple of customers, but things just didn't work out.

I'm leaving happy today. Late, but happy.

caramo

Even beat Edmunds TMV by about $1,200 for dealer sales. . . Just $300 over private party sale amount.

I guess I could have tried to squeeze a little more out of them, but. . . Nah. . . I like doing right by the men and women serving our country.

bigorange30

zueslewis

has been in its present form since 1996 (since the last big makeover) and it only costs (including overhead costs) $14-15K to produce one that MSRPs at $25K.

bigorange30

costs $15K to make and really costs the dealer $23.9K?

zueslewis

while I was at an F&I school in 1998 - that would require you to believe me.

A large group of us asked several questions of one of the design engineers, cost to manufacture being one of them. I assume, that since there has been 5 more models years on the same basic platform, manufacturing has gotten cheaper while prices have gone up, creating an even larger spread.

bigorange30

that since I don't know you, that's hard for me to do. How do you know that they were sharing ALL of the information with you? I don't believe dealers can stay in business on a $300/car average profit. Would you say that it is more than that?

jpvwaudi

Why is everybody so hung up on what a dealer or manufacturer makes on a car?

I paid 1.25 for a 20oz bottle of Coke today. How much did Mr. Wa Wa make off of me? IDGAF.

I paid 8.00 to have a cheesteak and chips delivered for lunch today. How much did Jack's make off of me? IDGAF.

Every week, my wife and I spend about 80 bucks on groceries, and I'm not about to [non-permissible content removed] to Mr. Shop-Rite that I could've bought that London Broil for 10 cents less per pound at the Pathmark. IDGAF.

Ask your electric company.....no, the cable people why they feel they are entitled to make a profit on the service they provide.

Ask yourselves this question......if I put up half the effort to research the things I pay for every day, ie....credit card interest rate, car insurance, long distance, mortgage rate, newspaper delivery, EZ-Pass......would I really care if I paid an extra hundred for the car I just bought?

Add it up.

bigorange30

Is that allowed by edmunds member agreement condsidering it says:

"You may not submit Postings that are indecent, profane (including masked profanity)"

We all care if a company makes an insane amount of money off of us especially for a product we pay so much for. If we could buy a car for $20 K that we now pay $30K for and have the manufacturer still make money, what would you think. Public companies especially have to disclose what profits they make but only the total ones not profits made on the individual unit. They don't even disclose the all of their details to their employees or even salesmen. That's how things like ENRON can happen. Some of that is even legal.

If it is a product that sells for a low price (food, stuff at Wal-Mart etc.) we don't care that much because it doesn't amount to much and is hidden on numerous items we buy. I don't care what McDonald's makes off of me.

My point is that we don't know what they make and shouldn't pretend to know. Only the CEO and at least one Accountant know the real story of any company. That's why Jeffrey Skilling and Andy Fastow have been in the hotseat from Enron.

Another question I have is "Is a dealership part of the corporation that is the manufacturer or are they stand alone companies?"

tboner

For the most part are franchises, not owned by the carmaker. I know Ford for instance, tried to buy and run a bunch of dealerships, but found they weren't too good at it.

I don't want to really get into the dealers profit margins or the manufacturers, but just wanted to offer the point that the cost to build the car is only one of many costs a carmaker has.

There is engineering, warranty, marketing, certifications, yada yada yada.

I hope carmakers do make money, otherwise they won't keep building cars. Same with dealerships, if they don't turn a profit, the close their doors.

Ask the owners of Daewoos about service right now.

TB

masspector

What a thread....haven't we heard all of this before?

Bigorange, don't let these guys get you down. They are great guys and do a good service providing info from the other side. What you have said is not too hard for most shoppers to understand or agree with. In fact the majority of retail operates on the principles you have laid out.

1) Retail price listed on the shelf (or car).
2) Sale price advertised or listed on shelf.
3) 30 day price guarantee.
4) Price match competitors prices.

While all new cars are different and will sell at different prices, it is not hard to see that a car would have a base price and each option would have its price. Kinda like the invoice and option pricing that you see at edmunds. You add it all up and that is the price you sell to joe, or mary, or bob. Get it?

A few of the car guys have argued that this will not work. Let me paint a dirrefernt scenario:

The dealer checks his competitors pricing and advertises a rock bottom low price on the car. Customer comes to check car and then shops around. The dealer with the posted price has the lowest price and guarantees that if another dealer is less he will meet that price. Customer buys from dealer with posted price. See how this works? Some will buy from the higher priced dealers if it is more conveinent or has a better salesman, but price buyers will soon figure out that the guy with the posted price is the lowest and buy from him.

Posters here are right, if the advertised price is higher than the market, that dealer will probably not get sales, but if the advertised price is at or below market they should get their share of the sales.

I do not think that the way cars are sold will change in my lifetime, as another poster also said, but it is not outside the realm of possibility to see what bigorange is trying to say. Just because it is that way now does not mean it cannot change. It is all in perception and what car buying consumers are willing to do.

As far as a good deal or value goes. The car I want at $25,000 may be a good deal, but the same car at $20,000 is a much better deal and value IMHO.

zueslewis

Between the cheesesteak, Wawa and ezpass references, you sound like you're my next-door neighbor.

autohunter1

Being a USAF man myself and a auto negotiator or broker if you want to call it for alot of my troops selling a person a auto $300 over private party is not doing them a favor considering you as a dealer only paid wholesale for that vehicle and from what I see at the dealer auctions and what dealers offer my clients for trades. On average a dealer only pays anywhere from 1000-3000 under trade value. From what I see you made atleast a couple thousand if not more and you put your client 300 in the whole. You and I both know that most smart used car buyers won't buy a auto over private party usually somewhere in the middle of trade or private party values and a dealer sure won't pay over wholesale for it. Let me know if I am wrong here. It hasn't been the first time everyone makes mistakes ! But If you really did sale them $300 over private part I feel I have a valid point.

cliffy1

Its a good deal when the value of the product to the consumer exceeds the transaction cost. There is no other definition.

artgpo

The question I would ask is: For every "informed" buyer getting a car for $300 over invoice, how many others walk away from the dealership having helped the owner make his monthly yacht payment? How many customers walk in and say "What can I get for $350 a month?". Does that not make the staff salivate? What about the service department's generous profits.

This is America, the land of free enterprise. Who has a problem with a company making a fair profit? If you sell an item on eBay that cost you $4.00 for $40.00 are you being unfair? Okay, gasoline costing the refiner $.20 a gallon and selling for $2.00 is a bit extreme but we doing have an Oil White House these days......

I digressed.

autohunter1

I don't agree on a used car because unfortunetly in todays society Edmunds, NADA, and KBB hold great power in peoples minds when they go out to buy a car! A good deal is being able to sell your vehicle a month later and not being upside down on it. I am talking used here. New you really can't get away from being upside down on because of automatic depreciation. There is only a FEW exceptions when a person would buy over private party. 1. Eager and can't wait 2. a dealer sold it to them trying to maximize profits 3. They simply didn't do there homework and has no idea how to buy a car.
Let me know if I am wrong. I love to be educated. Thanks!

autohunter1

That's the key FAIR PROFIT. A dealer can still make a fair profit and sell a person a used auto at or under private party values. Both you and I know that!

zueslewis

..."What about the service department's generous profits".......

You're joking, right?? If you need proof to understand how a dealership service department DOESN'T turn the owner into a millionaire, I'll break it down for you.

cliffy1

Since when does being upside down have anything to do with the value of a car to a particular consumer? KBB, Edmunds and the rest don't set prices. They tell you what they think but if enough people disagree, either on the high or low side, they become irrelevant. The value of any car is what somebody is willing to pay for it. The amount that somebody is willing to pay for it is determined by the simple economic question of "does the value to me exceed the cost?"

cliffy1

Have you ever given any consideration to the possibility that if more people were willing to pay a larger profit, dealers would have less motivation to "screw" those who don't ask the same questions you do? I'm not saying it would happen, but I just want to know if that thought ever crossed your mind.

autohunter1

Service departments. #1 I would never take my auto to any franchised service department UNLESS it was still under warranty for the simple reason I know some mechanics that will service my vehicle with the same parts for about half the price and guareentee their work every time. One of them is a ex professional race car mechanic. And when I say professional I mean INDY professional. I know its a gamble but I have never had a problem yet! Now finding a GOOD one is the hard part. Word of mouth is everything!

autohunter1

Your obviously a car salesmen no offense and I have nothing against you guys making a FAIR profit. But when it comes to buying a used car you and I both know that those books I referred to earlier has alot of power. I would never pay over private party on a vehicle. Dealer or not and never have. Only uneducated people would. Sad to say.

thel

4. Dealer knows that car can be sold easily for over private party (like on a high demand car) so he/she/they hold out for more.

manamal

The last two cars I purchased were with large down payments (~1/3 down). Neither car will ever be upside down because of that....I guess that means I got a good deal. Yay!!!!! I guess all deals are good for cash buyers.

Seriously, being upsidedown is a function of depreciation (purachase-resale price, and downpayment.

I like cliffy's definition. I only add that it is a good deal if I feel good about it.

autohunter1

If you would of done your homework you could of bought that car at or under private party and still put all that cash down. If you paid over private party and you put all that cash down your still loosing money when you go to sell it down the road unless you get over private party on it. That's just commen sense. I feel you made a bad move!

autohunter1

Of course they do and that is why they have such a bad reputation. I will also buy a used car private party before I would ever consider a dealer. Bottom line!

tblazer503

would you also not take anything under trade-in?? that is pretty generic. I would think that if you found a car with all the options, the right color, no miles, outstandingly clean.... you know.. the perfect car... you would pay more than private. of you can not, and come back the next week and find it gone, or not.

Personally, I do my own work, I pay myself less than minimum wage, and guarantee my work to myself.... In fact, I give myself a lifetime guarantee that the brakes work!

autohunter1

You have dealer retail and private party. You have MRSP and invoice on new. So question is you guys are telling me that you would pay MRSP or dealer retail as long as you FEEL you got a good deal. You must have money to blow! Or your seriously in debt!

autohunter1

took 4 months to find but I got it for only 200 above trade value! If you have patience you will find the perfect car and save youself money!

autohunter1

I agree with you 100%. Fixing your own car if you know what your doing...is the best way to go. I would build my own house to if I had the expertise to do it. That is a no brainer!

cliffy1

Try finding a 1998 Supra with low miles for what Edmunds calls TMV. You'll be laughed off the lot. They CAN be wrong.

bigorange30

I don't let them get me down. That's why I'm still here. I realize that anytime someone comes up with an idea that's novel and innovative, they get highly criticized and are told it won't work. People thought the Wright Brothers were crazy trying to make a machine fly but look where we are today. There are thousands of other examples that I won't cite. They don't like it that someone outside of their business my actually have a decent idea of how to improve their profits and their reputation at the same time.

I also want car manufacturers to make money because I know they won't make cars if they don't.

Cliffy: You are now saying what I suggested that all these car salesmen didn't like. Pay a little higher price and let every one pay the same price and everyone will be happy. Consumers could be made to think that they were not actually paying more if it was a gradual increase.

Honda is fairly well known for sticking to their price. Look at what they are doing on their Odyssey and Pilot. They don't dicker and you pay MSRP. They are making good money and Ford is losing money if you look at what they tell the public.

autohunter1

Of course they can be wrong but if I was looking for a High End supra I wouldn't look on a dealers lot. That would be last resort. And that is why so many dealers hates internet sites like Autotrader.com! You sound like a jumpy buyer to me and dealers love it.

autohunter1

Bought a 03 Odyssey EX for 25,350 and the van was in stock (Not a factory order buy). MRSP was $28100. Point is every car is negotiatable unless it just hit the market THEN your really going to have a hard time. It all boils down to how hard headed you are with the dealer and what they are willing to do. I even got them to through in a few things! So ANYONE that says they will pay a higher price just because they are happy with the vehicle is just plain throwing away their money!

manamal

I bought new....find me a private party that sells new. I looked into 2yo camry or accord's, but they did not depreciate enough to make it worth while (30K miles for 2K off new).

The thing is, on my Camry, I do not think you could have saved me much money. The deal was already $200 into hold-back. And, tt was an extremely low-pressure deal. Perhaps the F & I person who handled the deal could comment.

Maybe with inexperienced buyers or used car buyers, you could add value.

(Hey, if you could have gotten me a good 2000 Accord LX with under 30K miles for 13,000, I would have been interested).

caramo

Autohunter may fail to see the value in this, but the time and effort saved by going through a dealer as opposed to a private party was of value to this customer.

a.) We promptly arranged reasonable financing
b.) We inspected/reconditioned the vehicle

Could the customer have done this on their own? Sure, but racking up daily rental charges on a vehicle would have quickly negated any cost savings from buying from a private party.

autohunter1

How much did you pay for your Camry? And was there any incentives or rebates at the time? Let me know and I'll tell you if you got a good deal or not. Include what the MRSP and Invoice was with options. Now I never said I could by new private party. I have been talking about used and yes I agree on some models there is not a big difference from buying new and used price wise. Yes I do help alot of experienced buyers they just don't want the hassle of doing it themselves and that is why they hire me. Plus I can check over 100 dealerships in one day for the lowest prices out to be had. Can you do that? Possibly but it would take you awhile. I get dealers fighting for the best price and it always works even on high end vehicles.

bobst

Do you enjoy the car buying experience as it is?

If the answer is 'No', then I suggest you find a way to make it enjoyable. Some of us have done that, and now we are happier people. Maybe we don't get the best price, but I think we do OK. My wife and I are really looking forward to buying our next car.

Cars are wondeful inventions. We should enjoy buying them, and we should enjoy driving them.

autohunter1

No I don't see the value of paying someone $300 over what a car is really worth according to national book values. My point is this. On private party values you have different levels of condition on any vehicle. You have outstanding, clean, and so on. Just because a dealer has to pay someone to recondition it doesn't mean I need to go into the hole on the vehicle. The cost that a dealer buys these vehicles for and reconditioning cost and inspection cost finance cost and advertisment cost there is still alot of profit to be made under private party values. I know use to deal alot in the used car sector. And yes I always sold my autos for under private party because I wanted repeat customers and I wanted them telling there friends that they got a fair deal. Sorry I just can't agree with you.

bigorange30

but I can also see how I could enjoy it if I didn't have to go through the haggling and even if I paid a higher price as long as I didn't really know that I was paying higher. The enjoyment now comes through working the salesman down to as low of a price as he will go and then walking out only to have him call me back and lower the price again. The enjoyment comes at the time in thinking you got a good price. Then you want to kick yourself for settling too soon when you talk to someone else that got a even better deal. All I want to know is why do I have to walk out 2 or 3 times, string the salesman on for a few months and play these mind games for him to give me the same price that someone else got. I guess the other guy did that too.

andre1969

...Autohunter, let's backtrack a few years to November of 1999. Let's say I wanted a base 2000 Intrepid, with an extended warranty good to 5/100K (standard is 3/36K). MSRP on this car would've been $20,390 + $560 freight (+tax, tags, extended warranty, etc). At the time they were offering $1000 cash back or 0.9% financing.

What's the best deal you think you would've gotten?

bigorange30

Have you researched any QX4s lately? What kind of deal have you gotten on one? I am just wondering how much better of a deal I could have gotten through you then negotiating on my own. It doesn't really matter what options you got the deal on because I got prices several different ways.

powerman

I think I am going to side with the sales professionals on this one! A good deal is ANY deal that the buyer is happy with. If you have someone that is happy paying the sticker price and not dickering, they think they got a good deal.

If you have someone that does their homework at Edmunds and other sites and knows about the market value of the car and gets it for that price, they think they got a good deal.

Of course, you have some people that are never happy and constantly second-guess themselves and others. I don't think they EVER feel like they got a good deal.

I guess what I'm saying is - A good deal is different for everyone, and a sales professional that really knows his business will play to that.

Oh, and artgpo -- in your comment #271, you do realize don't you that the government (Fed, state, and local) makes more "profit" from that gallon of gas than the oil company?!

cliffy1

Thanks for the plug but I don't think this discussion is going anywhere. I'm out of this one.

zueslewis

who continues to advertise his services, although that's against Edmunds policies, another guy who changes his story with the wind and both know everything. How is this possible?

I'm out of this one until thoughts of what a good deal is surface back in the topic.

andre1969

...is that what constitutes a good deal is so damn simple that if we focused on it, we wouldn't get 300+ posts out of a conversations. Basically, a good deal is one where both the buyer and seller walk away without one feeling that the other could have at least used more vaseline ;-) How much more simple can it be?!

zueslewis

The customer has to feel like he/she was treated fairly and got a "bargain" (define using your own terms) on the new or used vehicle. The dealer has to make a fair profit, higher on some vehicles and lower on others and more than anything, a relationship has to result.

The new owner wants a place that will repair any problems that crop up, treat them with respect, etc, and the salesperson is hoping the customer is pleased enough with the deal where he'll send in referral business, a source the salesperson relies on.

If a car deal ends with either side or both raising cane about the deal, with bad feelings as a result, then the cheapest price on the new car and the best trade-in value possible won't make anyone feel better.