Isellhondas is right about this, the reconditioning lowers the value of the car in the eyes of the dealership. A car with such low mileage yet was in need of a rebuild was either a lemon or else it was abused, which is not a good sign, either way.
The car with a rebuild probably has more value than it would if it was inoperable, but it will have less value than a car that didn't need a rebuild in the first place.
Many private parties seem to think that a rebuild is a good thing ("Good as new!"), but I wouldn't touch it with a 10-foot pole because this makes it clear that the car has a poor operating history. I'd mention it in my private party ad and try to get a premium for it. But in the back of my mind, I would remember that the rebuild is actually a negative to an informed buyer.
Just because Customer A buys a car at full sticker doesn't mean that he paid the "market price."
No it doesn't, but lets be frank, the majority of sales will be within a certain range and those that buy for more (as well as those that buy for less) are the exceptions. It happens with almost every commodity. Trust me some one some where paid 10-15% more for that can of soup than you paid.
In his case, the "market" was irrelevant.
It is only irrelevant to the extent that he ignored the market. Again it is the same for any commodity.
If the consumer has no idea what he should pay, then how did supply and demand affect his purchase price?
The Law of Demand states that the higher the price the lower the demand, or the lower the price the higher the demand. Now the Law of Demand doesn't say how much he should pay, but how much he is willing to pay. In short as the price of something increases more and more people will opt out of buying said commodity. That one price where people will stop buying is different for different people.
For this one particular person he had a price he was willing to pay, it may have been higher than others but he has his limit. The dealership has a minimum price they are willing to accept (the Law of Supply). If the agreed upon price is higher than the dealerships minimum and lower than the buyers maximum you will have a sale. Hence the Laws of Supply and Demand are at work.
Now expand this across hundreds of dealers and tens of thousands of buyers and the aggregate sums determine the market price of the car. Of course some will pay more while others will pay less. This is how the market determines price.
He paid what he paid because he allowed himself to be misled,
Granted but 1.) he was willing to pay that particular price and 2.) without knowing that market price he will be misled regardless of if he knows the invoice price or not.
Again if you go by the common "wisdom" of going by the invoice price most people will either walk away without a new car or pay more than market. There will only be a lucky minority that will actually be in the ball park for the market price.
I had a friend once that was boasting how he got a car for $250 over invoice. I didn't have the heart to tell him the cars were going at under invoice. Many a year ago I had another friend who researched his car and determined a price of the car with the dealer getting a "fair profit". Of course this was the PT Cruiser when it first came out and dealerships were selling them at above sticker as fast as they would come in. Of course no one would negotiate with him.
You see what the market has dictated the price should be is very important and should be determined and then work from that. Nothing else really matters.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
The ultimate sales price will largely be determined by the negotiating abilities and knowledge level of the buyer.
yes and no. Good negotiation abilities will get a good price on a car even if the only knowledge that the negotiator has is the sticker price. A poor negotiator can get a good price if they are knowledgeable and knows what the price should be.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
No it doesn't, but lets be frank, the majority of sales will be within a certain range
And that range is enormous, which is why the "market price" point isn't helpful in determining what I should personally try to pay when buying a car. Just because Billy Bob may have paid sticker doesn't mean I need to.
Of course some will pay more while others will pay less. This is how the market determines price.
You haven't described a "price", you've described a "range". That range typically begins somewhere close to invoice (either somewhat above or below it, depending), because that amount is close to the minimum that the dealer needs to either make a profit or else to minimize its losses.
The dealer needs to sell a car at some price that is in the ballpark of invoice, less holdback and incentives, in order to breakeven on that particular car in inventory. If the dealer can get some buyers to pay more, than the dealer will try to get more, of course. But that doesn't necessarily mean that everyone must pay that premium.
A smart buyer will figure out whether this is one of the few rare cars where the premium is essential, or one of the majority where such a high price is unnecessary. Fortunately for the dealerships, most buyers aren't that smart...
Right. Most engine and transmission rebuilds are done poorly, and will never be as good as would a drivetrain installed by the factory. The job is too complicated and the quality of mechanics too uneven to expect most of them to have been performed well.
You haven't described a "price", you've described a "range".
I have described how the market determines the price. In most cases the price is within a certain range (just drive down the street and see how the price of Gas is different from one station to another).
That range typically begins somewhere close to invoice
I can for some cars for others its closer to sticker.
The dealer needs to sell a car at some price that is in the ballpark of invoice, less holdback and incentives, in order to breakeven on that particular car in inventory.
Its more than that and more complicated than that but I do not have the time or inclination to get into cost accounting theory.
because that amount is close to the minimum that the dealer needs to either make a profit or else to minimize its losses.
But you are forgetting something called the theory of the firm, that is to maximize profit. The dealer is out to make money and make as much as they possibly can. They are not going to try to sell you the car for their cost plus a tiny profit, especially if there is a line of customers outside their door willing to pay a lot more.
A smart buyer will figure out whether this is one of the few rare cars where the premium is essential, or one of the majority where such a high price is unnecessary.
No a smart buyer will find out what the market price for the car is. I am a smart buyer, I don't care one bit of what the invoice is, I don't care about holdbacks or incentives. Why? its meaningless. What I care about is how much is the car being sold for on the open market.
The smart buyer knows what the car sells for and what s/he can buy the car for. Not some made up number that doesn't take into consideration what the market place is doing.
Fortunately for the dealerships, most buyers aren't that smart...
I would bet that Isell can tell tons of stories of people that come in with "invoice less hold back less incentive plus a reasonable profit for the dealer" that was nowhere in line with what the cars were going for.
The best bet on getting a good price on a car is knowing what the market is for it.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I only signed the sales agreement and put down a grand deposit for the car. Other than that, I've signed nothing else, including financing, which I've gotten elsewhere. I was encouraged to go through their financing, being told honda might be able to do better than my employer's credit union rate of 6.5% for 60 month term, which I doubt. So I left that door open but didn't committ to anything.
Again depending on what that sales agreement says and the dealership you may or may not be able to include the trade in in the deal. It may have to be a seperate transaction.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
People don't write checks of percentages, they pay in dollar amounts. The difference between the high price and low price buyers often varies by hundreds or thousands of dollars, which is not a trivial amount of money to most people.
I don't care one bit of what the invoice is, I don't care about holdbacks or incentives. Why? its meaningless.
Knowing the seller's cost basis gives you an idea of what his floor price can be. That's highly relevant when buying a product which is available in large quantities and subject to deep discounting.
What I care about is how much is the car being sold for on the open market.
I don't particularly care what the "market" is paying, being that much of the "market" is generally ignorant and is overpaying. What I concern myself with is what price **I** can pay, which translates into giving up a low-margin deal (or as the salespeople describe it, a "mini".)
Local VW dealer put in both after sinking $2700 into it in EW company's insistence they try to fix problem first. They ended up having to put rebuilt engine (as they intially stated they might) after starting it up and it was obvious the repair was inadequate for the problem (oil pump failed). I was told that although they could not get too much info on the replacement used engine, it appeared very clean and had "significantly less than your 84K miles on it."
VW dealer or not, that doesn't change the fact that a reconditioned car is worth less than a car that didn't require reconditioning, for the reasons that I described.
Remember, though, that you don't need to convince me. The only person who matters is the person who is buying your car. If you can persuade a private party to pay more for a rebuild, then more power to you.
Fortunately for you, a lot of car shoppers don't realize that except for a classic car restoration, rebuilding is generally a bad thing. A dealer will discount it, and as a car buyer, I would personally pass on it.
The difference between the high price and low price buyers often varies by hundreds or thousands of dollars,
For the majority of people the difference in price for most cars is a few hundred dollars, thats a few percentage difference. Its relatable to paying 82 cents for a can of soup at the Piggly Wiggly and 80 cents at Kroger.
The ones that pay thousands more are the uneducated ones that should have done their research and found out what the cars sells for.
Knowing the seller's cost basis gives you an idea of what his floor price can be.
No it won't, you may think it does but it doesn't. You may think it does but if there is a line of people out the door that is willing to pay $1000 more your not going to get that "floor price". In other words if I can sell it later on today for $18K why sell it to you now for $17K?
I don't particularly care what the "market" is paying,
Fine either you offer to little and don't get the new car, offer to much and pay to much or you get lucky and hit on that market figure and get your car for a good price.
What I concern myself with is what price **I** can pay
and that would be market.
I can guarantee you that if I research the market prices for any particular car I can get it at your price or lower. And usually at the first dealer.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
For the majority of people the difference in price for most cars is a few hundred dollars
Based upon what I see, I'd say that you're off by a very wide margin. If the gap was so narrow, dealerships could fire the commissioned salespeople, and get $10 per hour cashiers to process cars out the door.
You may think it does but if there is a line of people out the door that is willing to pay $1000 more your not going to get that "floor price". In other words if I can sell it later on today for $18K why sell it to you now for $17K?
This "line out of the door" you've described rarely exists. Most dealers are flush with inventory on most items, so this isn't generally an issue. You can't use exceptions to the rule to describe the rule.
Fine either you offer to little and don't get the new car, offer to much and pay to much or you get lucky and hit on that market figure and get your car for a good price.
That's the point -- there is no "market figure" when the market is so broad, and when the market is generally so uninformed. I won't use uninformed buyers as a basis for figuring out what I should pay.
I can guarantee you that if I research the market prices for any particular car I can get it at your price or lower.
That's highly presumptuous. If you are determined to ignore the dealer's costs in doing your research, I'd sy that it's likely that the situation is the opposite of what you have described, as you are making a practice of ignoring imporant information.
Based upon what I see, I'd say that you're off by a very wide margin.
No I am pretty much on. The wide varity of prices you see stem from the uninformed buyer which you by your very nature admit pays to much much of the time.
Most dealers are flush with inventory on most items, so this isn't generally an issue.
Thats why most cars sell at under sticker. But the question is how much under sticker are they going for. Just because they are flush with inventory does not mean that they have a hard time selling that inventory.
That's the point -- there is no "market figure"
Wait, you say I can't use exceptions to the rule to describe the rule, but you can? There is a market price for almost every car, If I took the selling price of every like car (same make model and options) I would bet that the majority would be within 1 or 2 % of a central figure.
I won't use uninformed buyers as a basis for figuring out what I should pay.
Nor do I, the great thing about the 21st century is that there is more and more informed buyers out there. But that doesn't change the fact that it would be hard to buy a car for less that what it would cost on the open market.
That's highly presumptuous.
No not really as I have proven it many times in my own purchases.
If you are determined to ignore the dealer's costs in doing your research, I'd sy that it's likely that the situation is the opposite of what you have described, as you are making a practice of ignoring imporant information.
But thats just it, its not important information. what the dealer paid for it is really meaningless when it comes to what they sell it for. What is meaningful is what they can get for the car. Plus it is far easier to find the selling prices than it is to determine the total cost for the dealer.
Case in point is that it doesn't matter what the Chevy dealer paid for that brand new Z06. What matters is that it is selling faster than they make them at prices that exceed MSRP in many markets.
Ok thats an extreme example but it illustrates my point.
Tell me when you buy that can of soup do you find out how much the Piggly Wiggley paid for it? No you pay that amount because you know that thats the going rate for that can of soup.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
VW dealer or not, that doesn't change the fact that a reconditioned car is worth less than a car that didn't require reconditioning, for the reasons that I described.
I agree. I would pay NOWHERE near book for that car.
If the seller was so confident in the quality of the reworked, why sell it? At least, that would be my question, especially for a troublesome make like VW.
My point is if your questioning why someone is getting rid of a car that has a rebuilt engine why don't you question why someone else is getting rid of any car.
The question that was put forth was "If the seller was so confident in the quality of the reworked, why sell it?" Well I can also ask, if the seller is so confident it the mechanical condition of his car why sell it?
But you answered the question of "If the seller was so confident in the quality of the reworked, why sell it?" Maybe because their situation has changed or they just got tired of the car.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
When I see a car with 80k miles with a new transmission and a new engine for sale, I see someone who is trying to dump their problems on me. I am sure that I am not going to pay anything near book for that vehicle.
I wish we could literally destroy any and all "guides" not willing to buy the car for what they "say" a given car is worth.
My favorite line when it comes to a trade in that someone "booked on KBB for XX$$" is:
"Why didn't you click on the SELL button and have them pick it up???"
The reality is, most, if not ALL cars (even my beloved Toyota) are softer than "book". For all the car guys on here, when's the last non-collector/rare/unique car that you saw actually fetch full wholesale book?
It's not an issue of dealers trying to "steal" the car either (at least in full). When you consider that nowadays EVERYONE has access to wholesale information, how else can a dealer turn a fair profit ($500 even?) if they aren't below book? Everyone "knows", and it's darn near impossible to start negotiations at retail. Cars we have on our lot that we are the closest to book in are usually the ones that either have an old-age spiff, or are the ones that get sent to auction to become some other dealers headache :P .
That VW is at minimum 30% below wholesale. If I were penciling a deal on it, I'd probably hit it even lower than that, just to try and protect myself.
You know snake, we've had our differences, but I'm with you 100% here (on this at least lol):
"But thats just it, its not important information. what the dealer paid for it is really meaningless when it comes to what they sell it for. What is meaningful is what they can get for the car. Plus it is far easier to find the selling prices than it is to determine the total cost for the dealer."
Let's say we won a Ferrari in a raffle, and own it for $1.00.
Someone comes by, knows we won it for $1.00, and offers $2.00 because that's 100% more than what we own it for.
What we own something for is 100% irrelevant. I have to admit, I'm a little surprised that we agree on that, but we do .
We (the dealership) CAN sell any car for $1.00. We aren't GOING to, but we COULD. Market is what we sell everything for. It's why we have addendums OVER sticker on our Prius's and FJ's and why we sell our Tacoma's at invoice.
You can argue with us all you want, but just because you know what invoice on an FJ is, doesn't mean we'll sell it to you for that, no matter how "informed" you are.
I once again agree with snake :surprise: , it's literally a couple hundred bucks. Occasional we'll catch a "lay down" and it'll be more, but generally, that's the spread, like vehicle to like vehicle.
A reporter is looking to interview people who are considering using a home equity loan to make a vehicle purchase. Please provide your daytime contact info to jfallon@edmunds.com no later than Friday, November 10, 2006.
MODERATOR /ADMINISTRATOR Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name. 2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h) Review your vehicle
The reality is, most, if not ALL cars (even my beloved Toyota) are softer than "book". For all the car guys on here, when's the last non-collector/rare/unique car that you saw actually fetch full wholesale book?
Market is what we sell everything for.
T, two interesting comments from you, one after the other. So, what you’re saying is that the Market only determines the retail, but not the wholesale price. How convenient for you! The wholesale book, in the East coast it would be the Black Book, represents the average price of what the cars sold at Dealer only auctions. This is what dealers that know the market pay to other dealers for used cars. If that doesn’t represent the true Market value of the car, I don’t know what would. So, why are dealers who are willing to pay market prices at auctions, saying that ALL cars are softer than book?
The answer is that with invoice prices readily available, dealer can no longer take advantage of customers on the new car sales, so they do it on used ones.
"So, why are dealers who are willing to pay market prices at auctions, saying that ALL cars are softer than book?"
If you want me to pay auction value for a trade-in, let's pull the Manheim(actual auction sales) and GO!
The problem with your logic is that indeed dealers do pay market at auction, but "market" and "book" are two COMPLETELY different things. I had a Tahoe as a trade in the other day. FOUR of them had sold at auction (per Manheim) for almost 10k$ less than what KBB suggested trade-in was.
All I'm saying is, just because someone says it's worth something, doesn't mean anything until they'll actually BUY it for that. No dealer FORCES anyone to trade something in. We offer a service (buying your vehicle without you having to pay to recondition, wash, advertise, warranty, etc.) If you think it's really worth more, by all means GO FOR IT (private sale). Deals without trades go much easier and faster 99% of the time anyway...
And if by "taking advantage" you really mean selling for a profit then ya :P we "take advantage" every time we can... it's called a BUSINESS.
I've never shyed away from saying I want to make every penny I possibly can on every transaction. It's probably why I don't work for a non-profit organization.
If it amounts to an amount as little as that, then you must do a lot of "minis", because I'm paying prices that only generate minimum commission to your brethren (and sisters).
Of course, this $200 comment of yours is waaaaaay off the mark. If the difference between the lowest and highest priced buyers was that small, they'd just pay you a low wage ala Best Buy, because that's all your services would be worth to the dealership.
I'm seeing spreads well beyond $200. The price of my last car purchase was about $1500 under the Edmunds TMV, and anywhere between $500-2000 less than what I saw being claimed on various forums. My calculator tells me that those numbers are several times higher than $200.
The dealerships don't hire commissioned salespeople to get just $50, $100 or $200, you only stay on the payroll because you manage to get some people to pay a whole lot more than that.
And they don't really need you to sell Priuses, which sell themselves. What they really need you for is to convince Corolla buyers that they have no choice but to pay Camry prices, that their nice trade-in isn't worth all that much, or that the monthly payment is more important than the price, interest rate or term of the loan.
"If it amounts to an amount as little as that, then you must do a lot of "minis", because I'm paying prices that only generate minimum commission to your brethren (and sisters)."
Good thing everyone is just like you . Some people will only buy cars if they think they're stealing them... and that's fine.
It DOES amount to less than a thousand dollar spread on average though, and if you really can't fathom that, try this:
How much markup does a Corolla have?
My calculator tells me you probably bought an overpriced domestic :P
You can try as hard as you want, but you usually won't be able to "inform" your way into a $1500 better deal than the "average" negotiater. Sorry, but usually it'd be a couple hundred bucks at most. That holds true for most of the volume cars out there, where the average markup is 10% or less. Let's see, 10% of X$, less the TMV discount = ???
Of COURSE dealerships keep us around to make as much money as possible... did that really need to be pointed out? If you don't think it takes a salesman to sell a Prius at $3995 over sticker, maybe you should try it sometime. I bet it pays better than what you do :P
We take mini's a LOT these days. It's more a product of shrinking margains and public information than it is an indication of your intelligence though (or negotiating skill).
Again, just because you know what invoice is on an FJ, doesn't mean you'll be getting it for close to that... I'll make plenty of money on you, as long as you want a car I have a strong market on.
Some people will only buy cars if they think they're stealing them.
The check I wrote was large enough to assure me that I wasn't stealing anything. But the guy who sold it only made a mini. (And no, it wasn't a Corolla.)
You can try as hard as you want, but you usually won't be able to "inform" your way into a $1500 better deal than the "average" negotiater.
Then I guess that I must be the exception to the rule. Maybe Edmunds was wrong, and the posters on those forums were overstating what they paid?
Of COURSE dealerships keep us around to make as much money as possible.
Right. And if the only value that you added was $100 here and $200 there, you would be replaced by kids whose last jobs were at Cold Stone Creamery and Hot Dog on a Stick, because it wouldn't be worth paying you a generous split if you added so little to the value of a transaction.
I'll make plenty of money on you, as long as you want a car I have a strong market on.
And when considering all of the makes and models on the market today, cars that command such a premium can be counted on perhaps both hands, with perhaps a couple of spare toes as required.
The vast majority of cars can be purchased for far less. But of course, it is your job to try to get more. I don't blame you for making the effort, but I hope that you enjoy my mini, because that's all you're going to get.
Most engine and transmission rebuilds are done poorly, and will never be as good as would a drivetrain installed by the factory.
I disagree. As I said in post 1014 I got far better service from 2 rebuilt transmissions than I did from the original factory installed transmissions and I know several people who can say the same thing. You just have to go to good shops.
The job is too complicated and the quality of mechanics too uneven to expect most of them to have been performed well.
I agree that rebuilding engines and transmissions is beyond the competence level of the average mechanic. That's why this type of work is done in specialized rebuild shops and the better ones have trained people just like the original factories have. I would never go to the national chains to have transmission work done but I have gone to a locally owned shop that has a very good reputation for the work they do. I'm sure all cities have similar shops. Word of mouth is the best way to find them.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
Big difference except a good used engine could actually be better than a sloppy rebuilt.
How would you know you got a good used engine. Most junk yards in my area will guarantee all items for 30/60 days. The problem is, you can spend lots of hours installing and re-installing junk from junk yards. Anybody who wants any real quality would never install a used engine from a junk yard. I know I wouldn't, it's just too risky. The only people I know who did/do this are kids, they usually have lots of energy and time to waste.
I'll buy a rebuilt engine or tranny that comes with a warranty from a known good rebuild shop any day vs. "a good used engine" from a junk yard or any other "good source".
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
"Then I guess that I must be the exception to the rule. Maybe Edmunds was wrong, and the posters on those forums were overstating what they paid?"
Nupe. Almost every non-high-end vehicle (i.e. what the majority of the U.S. drives) here on Edmunds is usually only a matter of 3-5% over invoice. Of course there are exceptions, but generally, have a look.
If it wasn't one of those Corolla's with all the "generous" profit splits you seem to think they usually accompany, what DID you buy? I bet it'll be pretty obvious why you did better than TMV once you share
I'm glad you think all you paid was a mini. Perhaps you did (sometimes it's true). Most likely, you'll at minimum be returning to the dealer for service/warranty work (hint: we make $$$ on that), maybe you financed ($$$), maybe you bought a warranty ($$$), or maybe because of the experience you might refer a friend who (with his/her "mini"), will do the same ($$$). Just because you buy the car for a "mini" doesn't mean the transaction just ends there.
You should also consider individual/dealership goals. Personally, if I never took a "mini", it'd be almost impossible to hit my own personal objectives (20+). Sometimes we'll take a deal just because of it. Allocation may even be rididng on us selling a few more 06 Tundra's to get more 07's. Will we take a skinny deal sometimes? Sure. But is it more than a couple hundred bucks spread on the average car usually? Nupe.
Enjoy your "mini".
Dealerships are a lot like Vegas. We may lose a little here and there, but in the end, the house always wins .
tj....trades are a whole different animal. A trade-in is worth whatever any dealer is willing to pay for it. That said, I see pretty big swings in trade value from one dealer to the next.
I do think some people get married to KBB or NADA. But, I've seen dealer WEB sites with "value your trade" areas. They usually redirect to KBB. When the buyer with the trade walks into the showroom, after being directed to the dealer's WEB site to expect KBB, and an offer substantially less than that, rightfully or wrongfully, they're going to be upset.
On new car purchases, I agree with everyone else, the market is going to dictate what any brand/model will sell for. Most dealers know, within a few hundred, what their competition will sell for. We've seen plenty of stories where either the dealership lets a customer walk, or the customer does, indeed, walk over a deal....for many different reasons.
Someone mentioned there are some car brands/models that command MSRP (or higher). That's not the vast majority. I can think of several off the top of my head right now. Some have been on the market for awhile, and you still won't get a discount (Mini, Scion come to mind...New Beetle, PT Cruiser, solstice/sky, when they first hit the streets). If you you're in the market for a BMW 3 series (new twin turbo), Audi, Porsche....you're going to pay well above invoice. Dealers just don't have the financial incentives (except for model year end) to move close to invoice on those brands.
I bought my BMW 330i for ~$1,500 over invoice. Felt like it was the best deal I had seen. But, it was the end of the '06 model year. It was a major redesign in '06...then, the '07's got a major engine upgrade. I know that I can't touch an '07 for anything less than MSRP around me, at least for the time being.
Now, if it's a Chevy, Honda, Ford, Toyota (excepting the FJ, maybe hybrids), etc. I would say a near invoice deal is very doable, less any incentives.
Dealers aren't in the business to lose money. I think we all understand that. Knowing the market helps tremendously, though.
Again, depends on the market in your particular area.
It DOES amount to less than a thousand dollar spread on average though, and if you really can't fathom that, try this:
If you look at every like car sold over a long time period you will get thousands of dollars difference. This is because somewhere, sometime someone will walk in and pay sticker for the car. And somewhere, someone, sometime will get the once in the lifetime never to be repeated in the history of the universe deal.
But I would hazard to guess that 80% of the sales will be within a few hundred dollars of a midpoint.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I wasn't the one who said that. There are a lot of good shops and machine shops who know how to do a quality rebuild. I definatly agree with you on the national chains.
Yes, Manheim is a good place to look. I would ignore the high and low numbers and go down the middle.
Tahoes, Explorers and a lot of other cars are very soft right now. They go at auction for thousands of dollars below what the books say. People just don't want to hear this but we really don't want their trade that we know is going to be hard or impossible to sell.
Same applies to cars with high miles. Yes, the book may say to deduct 1000.00 for the high miles but it usually isn't enough. Very few people will buy a high miler.
Whoever said ALL cars are softer than book is wrong. I can think of a few Hondas that we will be happy to pay OVER book for! Again, it's the market that determines value!
Dealerships are a lot like Vegas. We may lose a little here and there, but in the end, the house always wins
T
I agree with you again. I think this is twice within a week. I'm gonna have to stop this, but I've never had a problem giving credit where credit is do.
I really enjoy listening to people tell their tales about how they ALWAYS beat up dealers. I have to think, if dealers are beaten up so bad and so often, how do they stay in business as long as they do? A lot in my area have been around for 15, 20, 30 years and longer. They must have cast iron bodies and more money than brains.
When I buy, I'm just glad to get out of there with most of my wallet in tact. I know they are going to make money, I just don't want them to make it all from me.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
I really enjoy listening to people tell their tales about how they ALWAYS beat up dealers.
People like to be smart, people like to think they are smart, people want other people to think they are smart. One way to show yourself and the world how smart you are is to show how you beat someone at their own game. Of course you don't have to beat someone at their own game, just convince yourself and others that you did.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
So, what's your commission on a deal done near invoice, with no trade, no rebates, no incentives, no dealer-installed options and no F&I profit?
you'll at minimum be returning to the dealer for service/warranty work
In this case, this dealership has a good service department and it's convenient to me, so yes, I do go there for some of my service. But I'd go there, even if I hadn't bought the car there, as the warranty is good at any dealership.
maybe you financed ($$$)
No, cash purchase. I wouldn't advise that anyone finance through a dealership, unless the dealer can beat a bank or credit union by a wide margin.
maybe you bought a warranty ($$$)
No, sorry. The F&I guy didn't add a dime in value to the transaction.
maybe because of the experience you might refer a friend who (with his/her "mini"), will do the same.
A lot of maybes from you, but again, no. And the salesperson who sold me the car is long gone from the dealership.
Personally, if I never took a "mini", it'd be almost impossible to hit my own personal objectives
So you're implying that some of your deals are minis, and others aren't. That comment doesn't jive with your other comment, as we all know that the price difference between a mini and a regular commission is a whole lot more than $200.
Come now, don't kid a kidder. If the only thing that you could generate were mini deals, you'd be out looking for a new job, because even a newbie salesperson can do that. And in any case, your comments on the Sales thread make it clear that you have too much of a competitive streak to not try for more.
just because YOU didn't do any of those things doesn't mean the rest of the general public wont...
to base everything upon what YOU do is just plain silly. salespeople see more people coming in to buy cars and get a better idea of what kind of people are out there, and what their buying styles are.
and i think people here are not saying that the range is $200 - but its been mentioned that its within $1000 - which with most cars out there - is a very accurate assumption...
but what do i know, i only sold cars for two years and saw a multitude of buyers coming in to buy similar cars and the prices they paid...
to base everything upon what YOU do is just plain silly.
I'm not doing that at all. In fact, I'm pointing out the opposite -- if people do their homework and learn to negotiate, they will save a lot more than just $200. The spread is far wider than TJW is telling us, he's just trying to discourage car buyers from believing that negotiating skills will do them any good.
but its been mentioned that its within $1000
OK, let's say for the sake of argument that the spread is $1,000. Isn't $1,000 a lot more than $200?
Let's consider how long it takes for the average car buyer to earn this $1,000. For someone earning the median wage in the US, it's going to take a couple of weeks worth of work to earn that amount, and probably a lot longer to save that amount. (Considering the savings rate in this country is negative, they may never save it at all.) I'd say that it's worthwhile for car buyers to do their homework, learn how to negotiate, and save themselves that $1,000, $1,500 or whatever that amount happens to be.
you're response to tj was about you - he was saying maybe because he sees many different types of buyers in a day. different things are important to different people. some people are happy to walk in, pick a car, pay sticker, and move on with their lives. just because you don't agree doesn't make it wrong. some people wanna come in and haggle ever penny in every aspect of car buying. thats fine too. most people fall in the middle, and end up paying maybe a difference of $1000 from lowest to highest in that middle range. thats whats being said here...
and depending where that $1000 range falls, it can still, quite possibly, be only a mini for the salesperson.
most sales are only minis, and many times, we count on used car sales to help make a little more on our commissions. thankfully, some manufacturers also offer spins for certain cars, where a salesperson has an opportunity to make a little more money.
and in the end, even if a person knows how to negotiate - the dealer doesn't need to sell you car for what you think is the lowest price if he/she knows they can sell it for more...which in the end, comes down to the market value.
I agree on both counts. Sure, there's going to be exceptions to the rule. I can see where there will be someone come in for a "laydown", 3 pounder, 4 pounder (or whatever the nomenclature you use). But, for the most part, I do believe an informed buyer is going to be within a few hunrdred within the "middle".
Probably the dealership's motivation, or the buyer's motivation on any particular day, has more to do where you fall from that "middle" range.
Fact is, the SM or GM set the price they're willing to sell at on a particular day/hour, not the sales person. Motivators like bonus (lack thereof), units sold, showroom traffic, on a given day will affect where you fall on either side of the middle. Throw in the salesperson's "sales" job on management to get a deal done can be thrown in the mix, too.
We all know what invoice is. We all know what incentives and hold back will be. We all know what the market for any particular model is in our area. All that's pretty easy to find out.
Dealerships will let a customer walk if they can't make some money. Buyers will walk if they can't get a reasonable deal.
Even though I have friends in the biz, I don't expect them to lose money on me. I do expect a good deal, though.
thene....nice post. Kind of sums it all up in one "neat package".
To everyone who weighed in on my questions about selling the car I will add this and hopefully end the discussion on it for good.
1)Thank you for your wisdom and experience and willingness to share it with me, and others. WIthout that I'd have had no one to bounce this off of.
2)First and formmost, I am selling the car because I am a social worker who spends large amounts of time in questionable neighborhoods. I cannot be without my car for repeated repairs for days at a time and paying for a rental to boot. The past two times my car has broken down I have not been in exactly "ideal" situations. Even if former problems have supposedly been fixed....I still don't trust the car...it is just that simple
3)I have darn near religously maintained the car (through the dealer) and still, have ended up replacing major components....Whether the car is a true lemon or I've just had bad luck is anyone's guess. But since I bought the car used with 31K miles from the dealer who has serviced the car about 95% of the time, I'd venture to say it reflects more poorly on them (the former owner and dealer) than me, though I clearly bear the brunt of the inconvenience and resale depreciation all on my own (how lucky!).
4)I've asked opinions of others regarding selling the car because I don't want someone else to be stuck with a "bad" car and I truly want to be frank about the car...I thought that was obvious by my questions, but I am guessing not.
5)So let it be said, I am not a used car expert nor have I ever sold one privately before. All I know is that I am not willing to extend my safety and trust toward this particular car any longer. Maybe, as the dealer said on my last drive out of the service compartment, "You're probably all clear now, you've already replace all of the major components...what else is there?" could be true. But the last time I was stuck in the car it was 10PM at night with 2 children in the car nearly 2 hours from my home on 95...I simply don't feel comfortable hoping my car's good nature will kick back in.
Thanks again, and I didn't mean to start anything. I will slink back into my untenable situation of trying to sell this little monster and leave everyone to move on to more important matters!
Don't slink! We love questions like yours. We tend to get a lot of repeat questions (I owe $15K on my car and it's only worth $6K. Should I trade in now?), and yours is refreshing and thought-provoking.
We'd love to help you along the process as you decide how to advertise & price the vehicle, and most importantly, we'd like to hear how your story turns out. Stick around! I don't think anyone resents your questions/comments in the least.
MODERATOR /ADMINISTRATOR Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name. 2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h) Review your vehicle
Comments
AND...what the market will bear...
-thene
The car with a rebuild probably has more value than it would if it was inoperable, but it will have less value than a car that didn't need a rebuild in the first place.
Many private parties seem to think that a rebuild is a good thing ("Good as new!"), but I wouldn't touch it with a 10-foot pole because this makes it clear that the car has a poor operating history. I'd mention it in my private party ad and try to get a premium for it. But in the back of my mind, I would remember that the rebuild is actually a negative to an informed buyer.
The quality of rebuild can vary widely!
No it doesn't, but lets be frank, the majority of sales will be within a certain range and those that buy for more (as well as those that buy for less) are the exceptions. It happens with almost every commodity. Trust me some one some where paid 10-15% more for that can of soup than you paid.
In his case, the "market" was irrelevant.
It is only irrelevant to the extent that he ignored the market. Again it is the same for any commodity.
If the consumer has no idea what he should pay, then how did supply and demand affect his purchase price?
The Law of Demand states that the higher the price the lower the demand, or the lower the price the higher the demand. Now the Law of Demand doesn't say how much he should pay, but how much he is willing to pay. In short as the price of something increases more and more people will opt out of buying said commodity. That one price where people will stop buying is different for different people.
For this one particular person he had a price he was willing to pay, it may have been higher than others but he has his limit. The dealership has a minimum price they are willing to accept (the Law of Supply). If the agreed upon price is higher than the dealerships minimum and lower than the buyers maximum you will have a sale. Hence the Laws of Supply and Demand are at work.
Now expand this across hundreds of dealers and tens of thousands of buyers and the aggregate sums determine the market price of the car. Of course some will pay more while others will pay less. This is how the market determines price.
He paid what he paid because he allowed himself to be misled,
Granted but 1.) he was willing to pay that particular price and 2.) without knowing that market price he will be misled regardless of if he knows the invoice price or not.
Again if you go by the common "wisdom" of going by the invoice price most people will either walk away without a new car or pay more than market. There will only be a lucky minority that will actually be in the ball park for the market price.
I had a friend once that was boasting how he got a car for $250 over invoice. I didn't have the heart to tell him the cars were going at under invoice. Many a year ago I had another friend who researched his car and determined a price of the car with the dealer getting a "fair profit". Of course this was the PT Cruiser when it first came out and dealerships were selling them at above sticker as fast as they would come in. Of course no one would negotiate with him.
You see what the market has dictated the price should be is very important and should be determined and then work from that. Nothing else really matters.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
yes and no. Good negotiation abilities will get a good price on a car even if the only knowledge that the negotiator has is the sticker price. A poor negotiator can get a good price if they are knowledgeable and knows what the price should be.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
And that range is enormous, which is why the "market price" point isn't helpful in determining what I should personally try to pay when buying a car. Just because Billy Bob may have paid sticker doesn't mean I need to.
Of course some will pay more while others will pay less. This is how the market determines price.
You haven't described a "price", you've described a "range". That range typically begins somewhere close to invoice (either somewhat above or below it, depending), because that amount is close to the minimum that the dealer needs to either make a profit or else to minimize its losses.
The dealer needs to sell a car at some price that is in the ballpark of invoice, less holdback and incentives, in order to breakeven on that particular car in inventory. If the dealer can get some buyers to pay more, than the dealer will try to get more, of course. But that doesn't necessarily mean that everyone must pay that premium.
A smart buyer will figure out whether this is one of the few rare cars where the premium is essential, or one of the majority where such a high price is unnecessary. Fortunately for the dealerships, most buyers aren't that smart...
As a percentage it really is not that enormous.
You haven't described a "price", you've described a "range".
I have described how the market determines the price. In most cases the price is within a certain range (just drive down the street and see how the price of Gas is different from one station to another).
That range typically begins somewhere close to invoice
I can for some cars for others its closer to sticker.
The dealer needs to sell a car at some price that is in the ballpark of invoice, less holdback and incentives, in order to breakeven on that particular car in inventory.
Its more than that and more complicated than that but I do not have the time or inclination to get into cost accounting theory.
because that amount is close to the minimum that the dealer needs to either make a profit or else to minimize its losses.
But you are forgetting something called the theory of the firm, that is to maximize profit. The dealer is out to make money and make as much as they possibly can. They are not going to try to sell you the car for their cost plus a tiny profit, especially if there is a line of customers outside their door willing to pay a lot more.
A smart buyer will figure out whether this is one of the few rare cars where the premium is essential, or one of the majority where such a high price is unnecessary.
No a smart buyer will find out what the market price for the car is. I am a smart buyer, I don't care one bit of what the invoice is, I don't care about holdbacks or incentives. Why? its meaningless. What I care about is how much is the car being sold for on the open market.
The smart buyer knows what the car sells for and what s/he can buy the car for. Not some made up number that doesn't take into consideration what the market place is doing.
Fortunately for the dealerships, most buyers aren't that smart...
I would bet that Isell can tell tons of stories of people that come in with "invoice less hold back less incentive plus a reasonable profit for the dealer" that was nowhere in line with what the cars were going for.
The best bet on getting a good price on a car is knowing what the market is for it.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I only signed the sales agreement and put down a grand deposit for the car. Other than that, I've signed nothing else, including financing, which I've gotten elsewhere. I was encouraged to go through their financing, being told honda might be able to do better than my employer's credit union rate of 6.5% for 60 month term, which I doubt. So I left that door open but didn't committ to anything.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
People don't write checks of percentages, they pay in dollar amounts. The difference between the high price and low price buyers often varies by hundreds or thousands of dollars, which is not a trivial amount of money to most people.
I don't care one bit of what the invoice is, I don't care about holdbacks or incentives. Why? its meaningless.
Knowing the seller's cost basis gives you an idea of what his floor price can be. That's highly relevant when buying a product which is available in large quantities and subject to deep discounting.
What I care about is how much is the car being sold for on the open market.
I don't particularly care what the "market" is paying, being that much of the "market" is generally ignorant and is overpaying. What I concern myself with is what price **I** can pay, which translates into giving up a low-margin deal (or as the salespeople describe it, a "mini".)
Remember, though, that you don't need to convince me. The only person who matters is the person who is buying your car. If you can persuade a private party to pay more for a rebuild, then more power to you.
Fortunately for you, a lot of car shoppers don't realize that except for a classic car restoration, rebuilding is generally a bad thing. A dealer will discount it, and as a car buyer, I would personally pass on it.
For the majority of people the difference in price for most cars is a few hundred dollars, thats a few percentage difference. Its relatable to paying 82 cents for a can of soup at the Piggly Wiggly and 80 cents at Kroger.
The ones that pay thousands more are the uneducated ones that should have done their research and found out what the cars sells for.
Knowing the seller's cost basis gives you an idea of what his floor price can be.
No it won't, you may think it does but it doesn't. You may think it does but if there is a line of people out the door that is willing to pay $1000 more your not going to get that "floor price". In other words if I can sell it later on today for $18K why sell it to you now for $17K?
I don't particularly care what the "market" is paying,
Fine either you offer to little and don't get the new car, offer to much and pay to much or you get lucky and hit on that market figure and get your car for a good price.
What I concern myself with is what price **I** can pay
and that would be market.
I can guarantee you that if I research the market prices for any particular car I can get it at your price or lower. And usually at the first dealer.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Big difference except a good used engine could actually be better than a sloppy rebuilt.
If it is, indeed, a VW remanufactured engine it was probably done right.
If the engine was, in fact used, there is no telling how many miles were on it!
Based upon what I see, I'd say that you're off by a very wide margin. If the gap was so narrow, dealerships could fire the commissioned salespeople, and get $10 per hour cashiers to process cars out the door.
You may think it does but if there is a line of people out the door that is willing to pay $1000 more your not going to get that "floor price". In other words if I can sell it later on today for $18K why sell it to you now for $17K?
This "line out of the door" you've described rarely exists. Most dealers are flush with inventory on most items, so this isn't generally an issue. You can't use exceptions to the rule to describe the rule.
Fine either you offer to little and don't get the new car, offer to much and pay to much or you get lucky and hit on that market figure and get your car for a good price.
That's the point -- there is no "market figure" when the market is so broad, and when the market is generally so uninformed. I won't use uninformed buyers as a basis for figuring out what I should pay.
I can guarantee you that if I research the market prices for any particular car I can get it at your price or lower.
That's highly presumptuous. If you are determined to ignore the dealer's costs in doing your research, I'd sy that it's likely that the situation is the opposite of what you have described, as you are making a practice of ignoring imporant information.
No I am pretty much on. The wide varity of prices you see stem from the uninformed buyer which you by your very nature admit pays to much much of the time.
Most dealers are flush with inventory on most items, so this isn't generally an issue.
Thats why most cars sell at under sticker. But the question is how much under sticker are they going for. Just because they are flush with inventory does not mean that they have a hard time selling that inventory.
That's the point -- there is no "market figure"
Wait, you say I can't use exceptions to the rule to describe the rule, but you can? There is a market price for almost every car, If I took the selling price of every like car (same make model and options) I would bet that the majority would be within 1 or 2 % of a central figure.
I won't use uninformed buyers as a basis for figuring out what I should pay.
Nor do I, the great thing about the 21st century is that there is more and more informed buyers out there. But that doesn't change the fact that it would be hard to buy a car for less that what it would cost on the open market.
That's highly presumptuous.
No not really as I have proven it many times in my own purchases.
If you are determined to ignore the dealer's costs in doing your research, I'd sy that it's likely that the situation is the opposite of what you have described, as you are making a practice of ignoring imporant information.
But thats just it, its not important information. what the dealer paid for it is really meaningless when it comes to what they sell it for. What is meaningful is what they can get for the car. Plus it is far easier to find the selling prices than it is to determine the total cost for the dealer.
Case in point is that it doesn't matter what the Chevy dealer paid for that brand new Z06. What matters is that it is selling faster than they make them at prices that exceed MSRP in many markets.
Ok thats an extreme example but it illustrates my point.
Tell me when you buy that can of soup do you find out how much the Piggly Wiggley paid for it? No you pay that amount because you know that thats the going rate for that can of soup.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I agree. I would pay NOWHERE near book for that car.
If the seller was so confident in the quality of the reworked, why sell it? At least, that would be my question, especially for a troublesome make like VW.
Makes one wonder.
Why sell any car if it is working well.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Situations change or they just get tired of the car.
The question that was put forth was "If the seller was so confident in the quality of the reworked, why sell it?" Well I can also ask, if the seller is so confident it the mechanical condition of his car why sell it?
But you answered the question of "If the seller was so confident in the quality of the reworked, why sell it?" Maybe because their situation has changed or they just got tired of the car.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
When I see a car with 80k miles with a new transmission and a new engine for sale, I see someone who is trying to dump their problems on me. I am sure that I am not going to pay anything near book for that vehicle.
Even a VW can do better than that!
My favorite line when it comes to a trade in that someone "booked on KBB for XX$$" is:
"Why didn't you click on the SELL button and have them pick it up???"
The reality is, most, if not ALL cars (even my beloved Toyota) are softer than "book". For all the car guys on here, when's the last non-collector/rare/unique car that you saw actually fetch full wholesale book?
It's not an issue of dealers trying to "steal" the car either (at least in full). When you consider that nowadays EVERYONE has access to wholesale information, how else can a dealer turn a fair profit ($500 even?) if they aren't below book? Everyone "knows", and it's darn near impossible to start negotiations at retail. Cars we have on our lot that we are the closest to book in are usually the ones that either have an old-age spiff, or are the ones that get sent to auction to become some other dealers headache :P .
That VW is at minimum 30% below wholesale. If I were penciling a deal on it, I'd probably hit it even lower than that, just to try and protect myself.
T
"But thats just it, its not important information. what the dealer paid for it is really meaningless when it comes to what they sell it for. What is meaningful is what they can get for the car. Plus it is far easier to find the selling prices than it is to determine the total cost for the dealer."
Let's say we won a Ferrari in a raffle, and own it for $1.00.
Someone comes by, knows we won it for $1.00, and offers $2.00 because that's 100% more than what we own it for.
What we own something for is 100% irrelevant. I have to admit, I'm a little surprised that we agree on that, but we do
We (the dealership) CAN sell any car for $1.00. We aren't GOING to, but we COULD. Market is what we sell everything for. It's why we have addendums OVER sticker on our Prius's and FJ's and why we sell our Tacoma's at invoice.
You can argue with us all you want, but just because you know what invoice on an FJ is, doesn't mean we'll sell it to you for that, no matter how "informed" you are.
I once again agree with snake :surprise: , it's literally a couple hundred bucks. Occasional we'll catch a "lay down" and it'll be more, but generally, that's the spread, like vehicle to like vehicle.
T
Please provide your daytime contact info to jfallon@edmunds.com no later than Friday, November 10, 2006.
MODERATOR /ADMINISTRATOR
Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name.
2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
Review your vehicle
We find work that needs to be done that the owners aren't even aware of.
Market is what we sell everything for.
T, two interesting comments from you, one after the other. So, what you’re saying is that the Market only determines the retail, but not the wholesale price. How convenient for you!
The answer is that with invoice prices readily available, dealer can no longer take advantage of customers on the new car sales, so they do it on used ones.
If you want me to pay auction value for a trade-in, let's pull the Manheim(actual auction sales) and GO!
The problem with your logic is that indeed dealers do pay market at auction, but "market" and "book" are two COMPLETELY different things. I had a Tahoe as a trade in the other day. FOUR of them had sold at auction (per Manheim) for almost 10k$ less than what KBB suggested trade-in was.
All I'm saying is, just because someone says it's worth something, doesn't mean anything until they'll actually BUY it for that. No dealer FORCES anyone to trade something in. We offer a service (buying your vehicle without you having to pay to recondition, wash, advertise, warranty, etc.) If you think it's really worth more, by all means GO FOR IT (private sale). Deals without trades go much easier and faster 99% of the time anyway...
And if by "taking advantage" you really mean selling for a profit then ya :P we "take advantage" every time we can... it's called a BUSINESS.
I've never shyed away from saying I want to make every penny I possibly can on every transaction. It's probably why I don't work for a non-profit organization.
T
If it amounts to an amount as little as that, then you must do a lot of "minis", because I'm paying prices that only generate minimum commission to your brethren (and sisters).
Of course, this $200 comment of yours is waaaaaay off the mark. If the difference between the lowest and highest priced buyers was that small, they'd just pay you a low wage ala Best Buy, because that's all your services would be worth to the dealership.
I'm seeing spreads well beyond $200. The price of my last car purchase was about $1500 under the Edmunds TMV, and anywhere between $500-2000 less than what I saw being claimed on various forums. My calculator tells me that those numbers are several times higher than $200.
The dealerships don't hire commissioned salespeople to get just $50, $100 or $200, you only stay on the payroll because you manage to get some people to pay a whole lot more than that.
And they don't really need you to sell Priuses, which sell themselves. What they really need you for is to convince Corolla buyers that they have no choice but to pay Camry prices, that their nice trade-in isn't worth all that much, or that the monthly payment is more important than the price, interest rate or term of the loan.
Good thing everyone is just like you
It DOES amount to less than a thousand dollar spread on average though, and if you really can't fathom that, try this:
How much markup does a Corolla have?
My calculator tells me you probably bought an overpriced domestic :P
You can try as hard as you want, but you usually won't be able to "inform" your way into a $1500 better deal than the "average" negotiater. Sorry, but usually it'd be a couple hundred bucks at most. That holds true for most of the volume cars out there, where the average markup is 10% or less. Let's see, 10% of X$, less the TMV discount = ???
Of COURSE dealerships keep us around to make as much money as possible... did that really need to be pointed out? If you don't think it takes a salesman to sell a Prius at $3995 over sticker, maybe you should try it sometime. I bet it pays better than what you do :P
We take mini's a LOT these days. It's more a product of shrinking margains and public information than it is an indication of your intelligence though (or negotiating skill).
Again, just because you know what invoice is on an FJ, doesn't mean you'll be getting it for close to that... I'll make plenty of money on you, as long as you want a car I have a strong market on.
T
The check I wrote was large enough to assure me that I wasn't stealing anything. But the guy who sold it only made a mini. (And no, it wasn't a Corolla.)
You can try as hard as you want, but you usually won't be able to "inform" your way into a $1500 better deal than the "average" negotiater.
Then I guess that I must be the exception to the rule. Maybe Edmunds was wrong, and the posters on those forums were overstating what they paid?
Of COURSE dealerships keep us around to make as much money as possible.
Right. And if the only value that you added was $100 here and $200 there, you would be replaced by kids whose last jobs were at Cold Stone Creamery and Hot Dog on a Stick, because it wouldn't be worth paying you a generous split if you added so little to the value of a transaction.
I'll make plenty of money on you, as long as you want a car I have a strong market on.
And when considering all of the makes and models on the market today, cars that command such a premium can be counted on perhaps both hands, with perhaps a couple of spare toes as required.
The vast majority of cars can be purchased for far less. But of course, it is your job to try to get more. I don't blame you for making the effort, but I hope that you enjoy my mini, because that's all you're going to get.
I disagree. As I said in post 1014 I got far better service from 2 rebuilt transmissions than I did from the original factory installed transmissions and I know several people who can say the same thing. You just have to go to good shops.
The job is too complicated and the quality of mechanics too uneven to expect most of them to have been performed well.
I agree that rebuilding engines and transmissions is beyond the competence level of the average mechanic. That's why this type of work is done in specialized rebuild shops and the better ones have trained people just like the original factories have. I would never go to the national chains to have transmission work done but I have gone to a locally owned shop that has a very good reputation for the work they do. I'm sure all cities have similar shops. Word of mouth is the best way to find them.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
How would you know you got a good used engine. Most junk yards in my area will guarantee all items for 30/60 days. The problem is, you can spend lots of hours installing and re-installing junk from junk yards. Anybody who wants any real quality would never install a used engine from a junk yard. I know I wouldn't, it's just too risky. The only people I know who did/do this are kids, they usually have lots of energy and time to waste.
I'll buy a rebuilt engine or tranny that comes with a warranty from a known good rebuild shop any day vs. "a good used engine" from a junk yard or any other "good source".
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
Nupe. Almost every non-high-end vehicle (i.e. what the majority of the U.S. drives) here on Edmunds is usually only a matter of 3-5% over invoice. Of course there are exceptions, but generally, have a look.
If it wasn't one of those Corolla's with all the "generous" profit splits you seem to think they usually accompany, what DID you buy? I bet it'll be pretty obvious why you did better than TMV once you share
I'm glad you think all you paid was a mini. Perhaps you did (sometimes it's true). Most likely, you'll at minimum be returning to the dealer for service/warranty work (hint: we make $$$ on that), maybe you financed ($$$), maybe you bought a warranty ($$$), or maybe because of the experience you might refer a friend who (with his/her "mini"), will do the same ($$$). Just because you buy the car for a "mini" doesn't mean the transaction just ends there.
You should also consider individual/dealership goals. Personally, if I never took a "mini", it'd be almost impossible to hit my own personal objectives (20+). Sometimes we'll take a deal just because of it. Allocation may even be rididng on us selling a few more 06 Tundra's to get more 07's. Will we take a skinny deal sometimes? Sure. But is it more than a couple hundred bucks spread on the average car usually? Nupe.
Enjoy your "mini".
Dealerships are a lot like Vegas. We may lose a little here and there, but in the end, the house always wins
T
I do think some people get married to KBB or NADA. But, I've seen dealer WEB sites with "value your trade" areas. They usually redirect to KBB. When the buyer with the trade walks into the showroom, after being directed to the dealer's WEB site to expect KBB, and an offer substantially less than that, rightfully or wrongfully, they're going to be upset.
On new car purchases, I agree with everyone else, the market is going to dictate what any brand/model will sell for. Most dealers know, within a few hundred, what their competition will sell for. We've seen plenty of stories where either the dealership lets a customer walk, or the customer does, indeed, walk over a deal....for many different reasons.
Someone mentioned there are some car brands/models that command MSRP (or higher). That's not the vast majority. I can think of several off the top of my head right now. Some have been on the market for awhile, and you still won't get a discount (Mini, Scion come to mind...New Beetle, PT Cruiser, solstice/sky, when they first hit the streets). If you you're in the market for a BMW 3 series (new twin turbo), Audi, Porsche....you're going to pay well above invoice. Dealers just don't have the financial incentives (except for model year end) to move close to invoice on those brands.
I bought my BMW 330i for ~$1,500 over invoice. Felt like it was the best deal I had seen. But, it was the end of the '06 model year. It was a major redesign in '06...then, the '07's got a major engine upgrade. I know that I can't touch an '07 for anything less than MSRP around me, at least for the time being.
Now, if it's a Chevy, Honda, Ford, Toyota (excepting the FJ, maybe hybrids), etc. I would say a near invoice deal is very doable, less any incentives.
Dealers aren't in the business to lose money. I think we all understand that. Knowing the market helps tremendously, though.
Again, depends on the market in your particular area.
If you look at every like car sold over a long time period you will get thousands of dollars difference. This is because somewhere, sometime someone will walk in and pay sticker for the car. And somewhere, someone, sometime will get the once in the lifetime never to be repeated in the history of the universe deal.
But I would hazard to guess that 80% of the sales will be within a few hundred dollars of a midpoint.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Tahoes, Explorers and a lot of other cars are very soft right now. They go at auction for thousands of dollars below what the books say. People just don't want to hear this but we really don't want their trade that we know is going to be hard or impossible to sell.
Same applies to cars with high miles. Yes, the book may say to deduct 1000.00 for the high miles but it usually isn't enough. Very few people will buy a high miler.
Whoever said ALL cars are softer than book is wrong. I can think of a few Hondas that we will be happy to pay OVER book for! Again, it's the market that determines value!
T
I agree with you again. I think this is twice within a week. I'm gonna have to stop this, but I've never had a problem giving credit where credit is do.
I really enjoy listening to people tell their tales about how they ALWAYS beat up dealers. I have to think, if dealers are beaten up so bad and so often, how do they stay in business as long as they do? A lot in my area have been around for 15, 20, 30 years and longer. They must have cast iron bodies and more money than brains.
When I buy, I'm just glad to get out of there with most of my wallet in tact. I know they are going to make money, I just don't want them to make it all from me.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
People like to be smart, people like to think they are smart, people want other people to think they are smart. One way to show yourself and the world how smart you are is to show how you beat someone at their own game. Of course you don't have to beat someone at their own game, just convince yourself and others that you did.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
So, what's your commission on a deal done near invoice, with no trade, no rebates, no incentives, no dealer-installed options and no F&I profit?
you'll at minimum be returning to the dealer for service/warranty work
In this case, this dealership has a good service department and it's convenient to me, so yes, I do go there for some of my service. But I'd go there, even if I hadn't bought the car there, as the warranty is good at any dealership.
maybe you financed ($$$)
No, cash purchase. I wouldn't advise that anyone finance through a dealership, unless the dealer can beat a bank or credit union by a wide margin.
maybe you bought a warranty ($$$)
No, sorry. The F&I guy didn't add a dime in value to the transaction.
maybe because of the experience you might refer a friend who (with his/her "mini"), will do the same.
A lot of maybes from you, but again, no. And the salesperson who sold me the car is long gone from the dealership.
Personally, if I never took a "mini", it'd be almost impossible to hit my own personal objectives
So you're implying that some of your deals are minis, and others aren't. That comment doesn't jive with your other comment, as we all know that the price difference between a mini and a regular commission is a whole lot more than $200.
Come now, don't kid a kidder. If the only thing that you could generate were mini deals, you'd be out looking for a new job, because even a newbie salesperson can do that. And in any case, your comments on the Sales thread make it clear that you have too much of a competitive streak to not try for more.
to base everything upon what YOU do is just plain silly. salespeople see more people coming in to buy cars and get a better idea of what kind of people are out there, and what their buying styles are.
and i think people here are not saying that the range is $200 - but its been mentioned that its within $1000 - which with most cars out there - is a very accurate assumption...
but what do i know, i only sold cars for two years and saw a multitude of buyers coming in to buy similar cars and the prices they paid...
-thene
I'm not doing that at all. In fact, I'm pointing out the opposite -- if people do their homework and learn to negotiate, they will save a lot more than just $200. The spread is far wider than TJW is telling us, he's just trying to discourage car buyers from believing that negotiating skills will do them any good.
but its been mentioned that its within $1000
OK, let's say for the sake of argument that the spread is $1,000. Isn't $1,000 a lot more than $200?
Let's consider how long it takes for the average car buyer to earn this $1,000. For someone earning the median wage in the US, it's going to take a couple of weeks worth of work to earn that amount, and probably a lot longer to save that amount. (Considering the savings rate in this country is negative, they may never save it at all.) I'd say that it's worthwhile for car buyers to do their homework, learn how to negotiate, and save themselves that $1,000, $1,500 or whatever that amount happens to be.
and depending where that $1000 range falls, it can still, quite possibly, be only a mini for the salesperson.
most sales are only minis, and many times, we count on used car sales to help make a little more on our commissions. thankfully, some manufacturers also offer spins for certain cars, where a salesperson has an opportunity to make a little more money.
and in the end, even if a person knows how to negotiate - the dealer doesn't need to sell you car for what you think is the lowest price if he/she knows they can sell it for more...which in the end, comes down to the market value.
what a nice neat little package that is
-thene
Probably the dealership's motivation, or the buyer's motivation on any particular day, has more to do where you fall from that "middle" range.
Fact is, the SM or GM set the price they're willing to sell at on a particular day/hour, not the sales person. Motivators like bonus (lack thereof), units sold, showroom traffic, on a given day will affect where you fall on either side of the middle. Throw in the salesperson's "sales" job on management to get a deal done can be thrown in the mix, too.
We all know what invoice is. We all know what incentives and hold back will be. We all know what the market for any particular model is in our area. All that's pretty easy to find out.
Dealerships will let a customer walk if they can't make some money. Buyers will walk if they can't get a reasonable deal.
Even though I have friends in the biz, I don't expect them to lose money on me. I do expect a good deal, though.
thene....nice post. Kind of sums it all up in one "neat package".
1)Thank you for your wisdom and experience and willingness to share it with me, and others. WIthout that I'd have had no one to bounce this off of.
2)First and formmost, I am selling the car because I am a social worker who spends large amounts of time in questionable neighborhoods. I cannot be without my car for repeated repairs for days at a time and paying for a rental to boot. The past two times my car has broken down I have not been in exactly "ideal" situations. Even if former problems have supposedly been fixed....I still don't trust the car...it is just that simple
3)I have darn near religously maintained the car (through the dealer) and still, have ended up replacing major components....Whether the car is a true lemon or I've just had bad luck is anyone's guess. But since I bought the car used with 31K miles from the dealer who has serviced the car about 95% of the time, I'd venture to say it reflects more poorly on them (the former owner and dealer) than me, though I clearly bear the brunt of the inconvenience and resale depreciation all on my own (how lucky!).
4)I've asked opinions of others regarding selling the car because I don't want someone else to be stuck with a "bad" car and I truly want to be frank about the car...I thought that was obvious by my questions, but I am guessing not.
5)So let it be said, I am not a used car expert nor have I ever sold one privately before. All I know is that I am not willing to extend my safety and trust toward this particular car any longer. Maybe, as the dealer said on my last drive out of the service compartment, "You're probably all clear now, you've already replace all of the major components...what else is there?" could be true. But the last time I was stuck in the car it was 10PM at night with 2 children in the car nearly 2 hours from my home on 95...I simply don't feel comfortable hoping my car's good nature will kick back in.
Thanks again, and I didn't mean to start anything. I will slink back into my untenable situation of trying to sell this little monster and leave everyone to move on to more important matters!
We'd love to help you along the process as you decide how to advertise & price the vehicle, and most importantly, we'd like to hear how your story turns out. Stick around! I don't think anyone resents your questions/comments in the least.
MODERATOR /ADMINISTRATOR
Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name.
2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
Review your vehicle