The average selling price is an average. Half paid more but half paid less. The only reasonable use of an average selling price is for a buyer to make sure they pay much less. Certainly a dealer would be happy if everyone paid average or more than average. A sure way to increase dealer profit.
I signed a Buyer's Order to purchase a new car from a dealership at 0.9% financing. The dealership has reneged on that financing deal. They claim, after signing a Buyer's Order with me, they can't offer me their manufacturer financing (0.9%) at my price; they can only offer 1.9% if I want the price we agreed to. Do I have any rights to get the dealership to live up to the agreement?
BACKGROUND NOTE: After very little negotiation, I was offered what appears to be a highly competitive price on a new car. After agreeing to buy the car at that price for cash, the salesman then changed what he offered; he could now ONLY sell me the car at that price if I financed it at 0.9% (the rate the manufacturer is currently offering.) If I didn't want to finance, the cash price would be $429 higher than what we had agreed to. I agreed to the lower price at 0.9% financing. I never met with the dealership manager or the finance person. The Buyer's Order I signed did not indicate whether the deal was cash or would be financed, it only stated the agreed price.
The following morning the dealership's finance person informed me they won't do 0.9% financing at the price that had been agreed to. They would only do 1.9% financing at that price. The 1.9% offer comes from a different lending institution- not the manufacturer.
The dealership claims my salesperson mistakenly gave me a $1,000 rebate/incentive/"whatever" PLUS 0.9% financing, when he should have offered one OR the other, NOT BOTH.
While very apologetic over this "mistake", the dealership will not stand behind the deal that was agreed to and that I have a signed Buyer's Order for. Can someone decipher what happened here and do I have any rights to get the car at the price and financing that was agreed to? Have you ever heard of a dealership not allowing the buyer to use their manufacturer's financing rates?
Silly comment. An average means, by definition, only half do better than the average. My guess is most folks who read Edmunds do better.
My point about computing an estimate of the dealer's cost is to develop some sense of a good price, which includes cost and a dealer profit. I never suggested a person will be able to buy at dealer cost.
If, for example, I compute the dealer cost at $30,000 and the dealer offers to sell at $36,000, I now know that is a bad deal. If, on the other hand, the dealer offers to sell at $31,000 I know that is a fair starting point. I also know I can likely deal with that dealer.
Really having an idea of the dealers cost will almost always result in a better deal. It will also save time by identifying those dealers who are best avoided.
Check the manufactures website to see if the special financing and cash incentive can be combined. Usually they cannot.
A buyers order is not a contract. Even more applicable is it did not list the finance rate only the price. Seems to me you have choices. Accept the higher rate or insist the dealer honors your verbal agreement or you walk away or you can make a counter offer.
Before you do analyze the dealers cost as described in my prior posts. That will give you a general idea of how much wiggle room the dealer really has and if the dealer can absorb the $1,000.
As an added bonus, if you find the price you negotiated is not so great you now have an opportunity to rethink the purchase.
This might turn out to be a case where the dealer was too smug and underestimated the buyer. Probably best to view this as nothing more than a dealer counter offer. At the risk of upsetting the dealers who lurk on this forum, it is almost always good to recognize you control the deal, not the dealer.
Actually that not a strict definition of average. Half below/half above is a definition of median. Median and average can diverge by significant ways, when there is a cluster of data way above median that pulls the average.
The comment was a joke, but it's not so silly. Somehow majority of the population believes they are better than average drivers, which we know is mathematical impossibility.
And average selling price does not mean half purchases are less as you noted. I neglected statistics for discussion purposes to make a point
The point of my series of comments is to suggest if folks do their homework they can achieve a fair deal for both them and the dealer. The car buying process can be simple and painless if done well.
I'm done arguing with you people why historical data is important. You clearly dont get it. If you think cost has anything to do with it, please try and buy a Porsche close to cost anytime in the last 2 years. You cant. That may be an extreme example, although Porsche sells a lot of cars. Can you explain why knowing costs wont help you at Porsche, but helps you at Dodge? You cant. The only thing is that Dodge cant sell their cars, so their sale prices land closer to your 'cost' calculation, and it makes you think your theory is valid. Dealers will sell for below cost, cost, barely above cost, or at close to MSRP depending on how well the cars are selling vs how many they are getting. Thats all that matters, for every brand. Also, this thread went on for 54 pages until I mentioned standard deviation, and now everyone here thinks theyre a math wizard trying to explain what average means and why they want to be below. Once again, paying below average is nice, but how far below average you should pay is a mystery, UNLESS you look at the several historical price paid providers, which usually include the standard deviation.
Also, to the guy that got caught up in the dealership mistake at 0.9% and 1.9%. In most states, that mistake COULD be turned around and you can be forced to give the car back. The contract usually says the terms, and that if they cant get you financed at those terms, you promise to give the car back. Thats usually reserved for people with bad credit. However, in this case you have good credit, but there STILL isn't a bank willing to give you 0.9% on that car. It's a glitch in the system and contract, but its there. You apparently do not have good enough credit to get 0.9% from most banks... probably nobody could.. the only bank that WOULD have done it (the manufactures) wont do it either because you took their rebate money. The contract doesnt say what bank is supposed to take your loan or why. So in the end, they cant get you financed, and your contract says youll return the car in that case.
My recommendation is to tell them to fix it themselves and eat the difference (they can do that very easily, its called a 'buy down' of your rate). OR, they make your rate 1.9% but reduce the price of the car exactly enough to make the payment the same. In that case, its 100% fair to you, and actually IN your favor if you were to pay off the car early.
Or, return the car. They wont want you to do that, because by now it has miles on it, and it wasted everyones time also. Tell them to eat the difference.
Check the math though, the difference is probably not $1000 unless the finance amount was about $50k+. Dont let them do any fuzzy math, but also dont get mad at them when they only reduce the price by $454 to keep the payment the same.
Glad to here your take on my situation. I'm going through your posts on dealers' costs, but honestly,I don't have any better sense for how much wiggle room if any the dealer has on the $1,000.
I am trying to decide: should I go with what my dealer has currently offered (the price I agreed to but at 1.99% financing, not 0.9%), or walk away. I'm torn because the price that they gave and then changed the financing rate after the fact, appears to be an extremely good price (from what I can gather). The next closest "out the door" number I got from one other dealer was $690 higher, and a different dealer I called after my deal fell apart said "he can't even touch the number I got, that it sounds "too good to be true" and he didn't even offer a counter because he said he couldn't even come close.
So - at the end of the day, although its a bitter pill to swallow, to my inexperienced eye it looks like I could get the car for much less from my dealer even though he's reneging on the agreed upon deal. And.....as my dealer keeps pointing out, I could just take the financing at the higher rate and just pay it all off after the first month or two.
Oh yeah - the dealership is making a gesture to do something for us for all this aggregation. They're willing to sell us an extended service plan that retails for $2,500 for their cost of $1,500. Can't seem to get past the feeling that I'm being scammed.
Good grief. This is one of the few customer types I try to avoid. "The Grinder"
.9% vs 1.9%? You gotta' be kidding me! Have you done the math to see how much you are wishing to chisel out of the deal? Insignificant!
"The dealership claims my salesperson mistakenly gave me a $1,000 rebate/incentive/"whatever" PLUS 0.9% financing, when he should have offered one OR the other, NOT BOTH. "
Probably true. A mistake by a newbie salesman. You always get one or the other; not both. Put a crowbar in your walet and pay the salesman their due.
Only a salesman can say that difference between 0.9% and 1.9% is insignificant. It amounts to over 100% in terms of financing cost. I'm not talking total cost, just financing. For 20 thousand dollar 5-year loan is $500 over the lifetime (I refuse to talk in monthtly payment terms, as you'd like to so I see only $9). Basically paying $1000 in financing, instead of less than $500.
Grinder? I bet that if somebody promised you a small $200 commission and then gave you only $100 you'd be a grinder yourself. It was small at the first place, so the reduction is insignificant.... Wow, we all are dealing with big bucks and you are arguing about $100! Same argument, same money.
Now, the story of exclusive $1000 rebate OR financing is actually very likely and it might have been an honest newbe mistake. However fact that they were telling him/her that cash price is higher than financed price makes me suspecious that there is much more to the story than meets the eye. I bet they were playing the game to death and mixing/matching stuff just to meet some number and later it unravelled. Perhaps even some bait and switch was going on.
I congratulate you the attitude and self-satisfaction. You are obviously a great fit to those big dealerships I so much like to avoid - and probably one of the contributors to why I avoid them.
Karhill, I have tried to explain MARKET FORCES many times but somehow some never seem to understand. I'll try again...
It really makes no difference what a dealer may have paid for a car. the price a dealer will accept has everything to do with supply and demand.
There would be no reason to cheap sell a car that's in short supply and high demand. On the other hand, if his lot is overstuffed with, say, Civic LX's and parking is scarce, several truckloads more are in transit etc, then, of course, any skinny deal that makes a profit will be accepted.
But, if a "real jerk" with a chip on his/her shoulder comes in, they may be walked anyway. I know I would much rather have lost a sale than have a customer leave unhappy as those types usually do and risk the bad survey they seem to love to give.
My take here is a sloppy store and poor training for that salesperson.
I sort of agree that the interest difference doesn't amount to that much...it's not a house being financed for 30 years but since it's such a major concern to the buyer, the store should suck it up and buy the rate down.
Oh, blackbelt, have to say you are sounding a bit like a salesperson from a typical store.
There would be no reason to cheap sell a car that's in short supply and high demand.
I understand your point very well. BUT (you knew there was a "but" coming, right?)
The situation that you are describing, "short supply and high demand", is NOT the normal situation. Yes, it does occur, and when it does, then the customer is not going to be able to negotiate a good deal. I have found myself in that situation a couple of times, and I simply walked away.
Much more often the situation is such that the customer can control the buying process. I'm sure all of the car salesmen in this forum wish that weren't true, but wishing does not make it so.
Jerks are everywhere, customers who think the world owes them and everybody is out to get them and salesple who hate their customers or think of them as illiterate morons. As you said, it is best to walk away on each side of the deal.
The proverbial "hot" car... Yeah, I'm sure that if it is trully hot there is no reason to discount it or the discount would be minimal. If sales targets are met and there is no more supply, why let the money walk out, right? But how many "hot" cars are out there at any given moment? 1% of units, 5% of model names, no more. There may be time when nothing is really hot - just recall November 2008... In more normal times, when sales/supply figures are realistic to the current deman is probably just OK, lukewarm. No reason to pay up. Perhaps no reason to lose money, either. Just regular business. Part of the customer's job is to separate hype from reality. If we were to believe salesmen, Aztek was a glaring success
Actually, there are probably more hot cars in short supply than you may expect out there.
A customer may be very happy paying MSRP or close to that and considering that to be a "good" deal...for them! They simply paid what it took to buy the car they really wanted and are happy with.
Others will walk away and "settle" for something that may fall short of their first choice content that THEY got a "good deal".
Yes,the customer can control the buying process up to a point but after all of the dealing is done they will STILL pay the prevailing market value for the cars they buy.
Yes,the customer can control the buying process up to a point but after all of the dealing is done they will STILL pay the prevailing market value for the cars they buy.
We may just have to agree to disagree, because I disagree quite strongly with your statement above.
Let's take one of the hottest selling cars in America, the Honda Accord. Go over to the Prices Paid forum for the Accord, and you will see that smart buyers, reading here and applying what they have read, will wait until the end of the month and offer $1,000 under invoice, and most likely have their offer accepted.
Those buyers who have not done their homework, or only part of their homework, will not do so well. There are still many articles available online telling them that they should offer $200 over invoice, and bargain upwards from there. Many buyers will do that, and think they "did good". Other buyers, the better informed, will save $1,000 to $1,500.
Many people embelish their deals by not telling what they paid on top. Mop&glo, warranties, dealer fees. They don't tell you what the trade offer was. There are many ways to beautify your deal by focusing on one single number. For example, Florida dealers charge huge fees, $700 is not uncommon. So you have to be "$700 under invoice", to just be at invoice.
I'm not saying all these people are liars, but I just don't believe that every story of "$1000 under invoice" is credible. Some are, some are not for reasons spelled above.
"buy the rate down"? Ya, ok..right. Let's now dig into the finance guy's pay! More grinding!
Look..You think you can do better? Go get your own financing. As a salesperson, I prefer you bring in a check so I don't have to chase you for the BS stips I need further delaying my pay.
Oh, blackbelt, have to say you are sounding a bit like a salesperson from a typical store.
You bet..and still making the money most sales people either don't or can't.
People never change..the consumer is no smarter now than they were 20 years ago; although they have this wonderful false sense of security from the internet where they NOW believe they are well armed with knowledge & power. LMAO.
Blackbelt.. you DO come off as an industry idiot, and this is from one high volume salesperson to another.
That dealership in the 0.9% and 1.9% example made a damn mistake.. not the customer. And they discovered it AFTER the customer left. If they had discovered it before the customer signed, that would be one thing and they could have the uncomfortable conversation as to why they have to revise their offer (totally fair).
But once the customer leaves with signed paperwork, thats not a grinder, thats a MISTAKE.
I wrote out exactly what that guy can do. Either force the dealership to pay for it (which 90% of them would do), or keep driving the car until they make you bring it back. If bringing it back is unacceptable to him because its rare or he likes it, then that will probably shine through when talking to them and he'll end up having to just pay the 1.9%. In reality, it seems like he still got a good deal, just not as good as the mistake looked. But even if he returns the car, in the end hell just go elsewhere to get the 1.9% that upset him in the first place.
If he plays it right, and the dealership cares about customer service and opinion, the dealership will pay for their mistake. Otherwise, he just takes the deal he would of taken anyway because it was the best in town either way.
I like your answer. 2 years ago, a friend went into the local Lincoln dealer, where, by the way, he had leased a string of Lincolns since 1994. This was his 6th in a row - he liked it and decided to buy it out since the lease on a replacement was not so appealing this time. The dealer made him a great deal on the buyout price, he inked the deal, and drove off. (I was there and witnessed).
Two days later, the salesman called and told him they had "made an error", and he owed them $5,000 more. Distraught, he called me for my opinion, which was similar to yours above. He also called his lawyer, who I believe, gave him bad advice - that he should just pay the money.
@nvbanker.. that's a different situation in my opinion. He decided to buy out his lease, which is a transaction with the bank more than the dealership. At my dealership we do these all the time, and unless the customer finances, or buys a warranty, or makes their car a CPO, we do the entire lease->buyout for without any compensation at all, even though it takes 1 to 2 people an hour. A customer could also call the finance company and do the entire buyout over phone/mail with that bank, but often its easier to come to a dealership.
In your friends case, most likely the amount he paid the dealership (which they were just giving to the bank right away) was simply not enough to payoff the lease payment.
So, he could continue and stick to the contract, at which point he would probably have $5k still outstanding due on his lease. In most states, I would assume you cant buy a car from a bank and leave a $5k balance. Which then simply nullifies the entire transaction since you cant buy a car (even if its your car youre leasing) if its not paid off.
In the first example the dealership made a mistake and accidentally underpaid themselves.
In this example, the dealership made a math mistake and accidentally underpaid your friends lease bank account with his savings bank account.
Also, after leasing cars since 1994, he probably didn't want to actually screw the dealership when they were doing him a favor helping him buyout his lease.
I'm pretty big on sticking it to large companies when they leave themselves vulnerable, but in this case I would of probably paid it and understood it was fair.
Blackbelt.. you DO come off as an industry idiot, and this is from one high volume salesperson to another.
Call it the way you see it my friend.
I see these types of consumers far too often..they lie more than any sales person I've met to date. I love how they threaten with "their" attorney..Right! Like they have one on retainer? Please.
Guess what happens when "they" threaten with "their" attorney?
Mega dealerships DO have attorneys on retainer who are more than happy to litigate Mr. Littleman into oblivion.
Welcome to how life really works. Your comments remind me of the customer who wants a "LOW mile Honda Accord, no older than 4 years old and is willing to pay no more than $5,000"
As a customer, I cannot agree consumers are no smarter now then they were twenty years ago. Certainly there are still too many badly educated consumers who are a salesman's dream. On the other hand there are certainly many educated consumers who are very well armed with knowledge, which is power during any negotiation. For example:
Today, a consumer has ready access to invoice pricing, dealer holdback, and to some extent manufacturer to dealer incentives.
Today, consumers have knowledge of dealer reserve and other finance tools dealer F&I managers employ to boost dealer profit. Consumers today know the real value and potential profit for both the dealer and F&I manager of the many F&I products.
Interestingly, a recent article in an F&I magazine revealed F&I profit represents, in many cases, up to two thirds of total dealer profit. Real good knowledge for the consumer.
Today, consumers have knowledge of the various tactics and word tracks used by automobile sales people to nudge the buyer.
Today consumers have various car buying sites like True Car and Car Woo from which they can glean interesting knowledge on prices dealers are willing to sell at with no real negotiation. As a bit of advice to anyone reading this forum, a smart consumer will view those prices as the dealer initial offer rather than any number thrown at them by the sales person.
Today consumers understand the four square sheet so prevalent years ago. Do dealers still use the four square sheet? I have not seen one for more than a decade.
This information was not readily available twenty or more years ago. Any consumer with such knowledge is certainly well armed when they enter the car buying arena to duel with the professional sales people.
How does knowing that 2/3s of a dealerships profit comes from F&I department help a customer? For one, that number seems a bit off. You'd have to have the dream team of F&I, yet somehow have horrible front end gross. And thats of course ignoring the parts and service department, only looking at sales.. But even if true, so what? Will you not buy something because thats wear the profit is?
News flash, but 95% of a real estate agents profit comes from selling you that house. 90% of a farmers profit comes from selling you milk. Most of a bankers profit comes from signing you up for a mortgage you wanted anyway. And the list goes on... do you not want to buy something simply because someone supports an entire family and home from it?
True, the attorney thing is always funny because its often an empty threat, and also because most dealerships DO have an attorney, and the larger groups have their own in house team.
About customers lying.. its sorta true and sad. I've sold hundreds of cars a year for several years now, and very rarely lie if ever. I can't even think of an example. Often salespeople sell by OMISSION but not by lying. If a customer asked me a straight up question, I'd be an idiot to LIE. I don't.
However, customers lie often. One thing customers should realize is that when you're talking to one person in a dealership, several other people are listening. I'm personally known for being on my own phone call, talking to a customer, and noticing something funny said by another person on a phone call all the way on the other side of the showroom. We all listen to each other to compare style, tactics, and just to take note that someone is dealing with a customer while we arent. So the he said she said often gets caught at dealerships because someone was involved and listening. Thats why 'managers' come out in any difficult case, so theres two people. Two people to stop a mistake from happening, and two people to hear how the deal was closed.
And like mentioned before, we all know each other in the industry and know tactics very well, so don't make stuff up. Often times customers will come from visiting our competitor dealership and say something to me a certain way because they heard it said earlier and Ill say "Oh did you meet with Dan at Watsonville? Hes a nice guy. But I'm here to earn your business so I promise Ill take care of you. But ya, Dans a nice guy... maybe a little fast talking riiight " and theyre always shocked that I can tell who they talked to out of 10 salespeople in Watsonville (made up example town), from just the phrase they used. They forget Ive heard it once a week for 4 years.
They'll converge, though, when sample is large and standard deviation small, which is basically the case for new car actual transactions, for same model of course.
dino, agreed. I was just pointing out the differences b/w the two terms. The high volume cars will show a pretty tight variance within a given time period.
Of course used cars and the low volume special editions and exotics will not be as tight, especially used cars...
This may start a fire, but IMO, the market dictates what you can make as profit on anything that is sold. The secret is usually in the buy. I don't criticize anybody for making a profit - and if the customer is willing to pay your price, you haven't done anything immoral or unethical. He/She has no compulsion to buy it or pay your price, competition is rampant in most businesses, and especially the car business. No one is forcing them to pay your price if it's higher than the competition - if they don't care to shop, why is that our problem?
There is an underclass of entitlement thinkers who don't think anybody should profit from others - this thinking is Communistic and will sink a country or economy. Taxes are paid by profits from business. A business is entitled to make all the profit they can honestly. There is nothing obscene, immoral or unethical about an oil company making money. Start taking their profits away, and watch the supply of gasoline dry up. If there is no profit to be made, there will be no reason to go into business, ergo, no product made or sold. If a grocery store can't make a reasonable profit over their costs, they will close.
The consumer has the obligation not to "pay to much" if they care. The seller has no obligation not to "sell for too much". That's capitalism. I know liberals think that's evil. But it's not.
Agree with your post 100%, however most preachers, teachers, & engineers will not. In addition the economist won't either. When negotiating a buy or sell, it's no sin to win. Capitalism is great in the American business world.
I bought a Ford in May, an Acura in January, a vehicle in Febraury 2012, a vehicle in February 2011 and a total of seven since 2008. In all those buys I did not encounter a single four square sales approach. In fact, the last time I recall seeing a four square sheet was in 2003 at a Dodge dealer.
Perhaps I have been lucky. Or, more likely, I weed out the type of dealership which uses the four square during my initial research into dealer reviews and reputation.
Whatever, I suspect the four square, if it still works, is not effective on buyers who understand the process. After all, there are some dealerships and sales people who recognize the four square is actually an insult to some customers.
Every bit of knowledge is helpful to the buyer. Is this something you dispute?
A recent report by a major dealership group, AN, indicated an average back end profit of nearly $1,400 for each car sold. A different report mentioned the typical front end profit is about $700 for each vehicle sold.
In any case, the numbers are not really important. There are numerous articles about how dealers have turned to F&I profits to offset decreases in front end profit levels. Dealers have been forced to sell lower to compete in the new world of Internet car buying. At the same time dealers have ramped up their F&I sales to counter the profits lost on the front end.
It is quite obvious dealers make a significant profit after the vehicle is sold and the buyer is in the box. That is knowledge any consumer can use to prove the overall deal.
There is no problem with a dealer earning a profit. After all , they are in the business of earning a profit. However, many of us believe the deceptive manner in which some dealers attempt to earn that profit is questionable.
Things like the use of the word fee in doc fee. Clearly the word fee was chosen to attach some semblance of validity to that charge. Clearly we all know this amount is nothing more than additional profit for the dealer. The selling price of anything includes all dealer cost and dealer profit. The doc fee is nothing more than a deceptive increase to that price.
Or the entire dealer reserve ploy. You know that one, when a buyer qualifies for a rate of 2 percent and the dealer attempts to write the contract at 4 percent.
Or charging a customer $2,500 for an extended service contract that costs the dealer about $900.
Or charging $600 for etch, when the dealer paid less than $100.
Are suggesting a car buyer should not be aware of such things? Are you suggesting such knowledge is not beneficial to the buyer?
I know such knowledge has saved me thousands. Personally, I have no concerns as to where the dealer finds profit. I negotiate a good price on a vehicle, choose my own financing, and simply say no to everything offered for sale in the box. Works every time.
On my most recent buy, for my daughter, the F&I person quotes me 1.9 percent. That was good. What was unique in my experience was he told me my daughter actual qualified for 1.8 percent. We accepted the 1.9 percent based on the overall deal.
Probably as important to the dealer was we wrote several glowing reviews for the dealership. We will also likely return for future buys.
I guess it is true some dealerships view the long term as important. So many seem like Blackbelt, only interested in instant profit. Thankfully such dealerships are easily identified and avoided.
Blackbelt, I can assure you when I buy a vehicle I certainly know more than you do about my purchase. I know so much more than you think I know. Fact is you would never know what I know. Fact is I would easily use your arrogance to get a better deal.
Example, not so long ago I bought a Nissan. I made an initial fair offer which was rejected by the tower. I was, of course, turned over to a more seasoned salesman, could have been you. After several hours, I played the time to go card.
At that time the dealership made a final offer. I delayed a bit to give the appearance I was confused. I then said OK.
I returned with the initial salesman to his office. A few minutes later the final paperwork was delivered. The greenpea looked at me a bit later and said they had sold me the vehicle for much less than I initially offered. I still smile when I think of that purchase.
Yes, sometimes the customer is smarter than you seasoned sales people think they are. LMAO!
Complete nonsense, classic mythology. 2008 downfall had nothing to do with "unrestrained capitalism", but quite the opposite. It all started with pressure to lend money for houses to people with no credit capacity (Community and Reinvestment Act) done by both Clinton and Bush Jr. administrations. Europeans are definitely not "unrestrained" capitalists, yet their banking and housing crisis was comparable. Moreover, the worst European housing crisis was in Spain, which was governed then by Zapatero, in comparison to whom Obama looks like a Tea Party founder.
I get preachers and teachers, but why engineers? I am one and I think capitalism is great. I think there is ample evidence that the worst happens when capitalism is "restrained" by well meaning "protect the poor and weak" regulations. They end up hurting those "protected" the most. In well-functioning capitalism, competition is best restraint to any excess from those supposedly immoral and sociopatic evil people. Lost reputation, competition, information, act as most effective deterrant for majority of the players. Excessive pricing or profits, abuses happen indeed, but are short lived. On the other hand, highly (excessively) regulated industries are ones where excess and abuse can fester for years. All you need to do is pay off the regulator, once that's out of the way, competition can't stop you, as it's not there (market is usually carved out into pieces by regulated entities and they agree not to encroach on each other's turf).
A lot of people agree that a car dealership should make a profit IF that profit is paid by someone other than themselves.
It is " entitlement thinking" to be sure and this is becoming more prevalent in this country.
Making a (gasp) profit isn't an evil thing. After spending two million dollars to open a modern dealership with it's massive overhead, profits have to be made.
Some liberals have a lot of trouble understand this basic concept.
Often salespeople sell by OMISSION but not by lying.
This is rationalization at its finest. What you are choosing to ignore, is that the result for the consumer is the same. What isn't the same, is your fallaciously clear conscience.
They don't get it because in their minds the only justification for any business existence is that it gives jobs to its employees. Moreover, those jobs HAVE TO pay well, in their mind, even if value of the product (work) is low. In their mind, owner/investor is already rich, so they don't really need any more money, if anything they should give away their existing wealth, not think about accumulating more by running a successful business. To share the wealth, or else they will share it on their behalf. Of course, they appoint themselves as share wealth distributors and with such great responsibility should come great compensation. Lots of pressure to get all those food stamps, welfare checks, regulations in place into the hands of those in need.
Let's be careful not to veer into political conversation. Keep it on the topic of car dealers, please.
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Everyone? Obviously not.
Everyone here? Possibly.
The people who hang out here are going to be better informed. And a better informed buyer is going to make, on average, a better deal.
BACKGROUND NOTE: After very little negotiation, I was offered what appears to be a highly competitive price on a new car. After agreeing to buy the car at that price for cash, the salesman then changed what he offered; he could now ONLY sell me the car at that price if I financed it at 0.9% (the rate the manufacturer is currently offering.) If I didn't want to finance, the cash price would be $429 higher than what we had agreed to. I agreed to the lower price at 0.9% financing. I never met with the dealership manager or the finance person. The Buyer's Order I signed did not indicate whether the deal was cash or would be financed, it only stated the agreed price.
The following morning the dealership's finance person informed me they won't do 0.9% financing at the price that had been agreed to. They would only do 1.9% financing at that price. The 1.9% offer comes from a different lending institution- not the manufacturer.
The dealership claims my salesperson mistakenly gave me a $1,000 rebate/incentive/"whatever" PLUS 0.9% financing, when he should have offered one OR the other, NOT BOTH.
While very apologetic over this "mistake", the dealership will not stand behind the deal that was agreed to and that I have a signed Buyer's Order for. Can someone decipher what happened here and do I have any rights to get the car at the price and financing that was agreed to? Have you ever heard of a dealership not allowing the buyer to use their manufacturer's financing rates?
Any and all insight would be much appreciated.
My point about computing an estimate of the dealer's cost is to develop some sense of a good price, which includes cost and a dealer profit. I never suggested a person will be able to buy at dealer cost.
If, for example, I compute the dealer cost at $30,000 and the dealer offers to sell at $36,000, I now know that is a bad deal. If, on the other hand, the dealer offers to sell at $31,000 I know that is a fair starting point. I also know I can likely deal with that dealer.
Really having an idea of the dealers cost will almost always result in a better deal. It will also save time by identifying those dealers who are best avoided.
A buyers order is not a contract. Even more applicable is it did not list the finance rate only the price. Seems to me you have choices. Accept the higher rate or insist the dealer honors your verbal agreement or you walk away or you can make a counter offer.
Before you do analyze the dealers cost as described in my prior posts. That will give you a general idea of how much wiggle room the dealer really has and if the dealer can absorb the $1,000.
As an added bonus, if you find the price you negotiated is not so great you now have an opportunity to rethink the purchase.
This might turn out to be a case where the dealer was too smug and underestimated the buyer. Probably best to view this as nothing more than a dealer counter offer. At the risk of upsetting the dealers who lurk on this forum, it is almost always good to recognize you control the deal, not the dealer.
The comment was a joke, but it's not so silly. Somehow majority of the population believes they are better than average drivers, which we know is mathematical impossibility.
2018 430i Gran Coupe
And average selling price does not mean half purchases are less as you noted. I neglected statistics for discussion purposes to make a point
The point of my series of comments is to suggest if folks do their homework they can achieve a fair deal for both them and the dealer. The car buying process can be simple and painless if done well.
Also, to the guy that got caught up in the dealership mistake at 0.9% and 1.9%. In most states, that mistake COULD be turned around and you can be forced to give the car back. The contract usually says the terms, and that if they cant get you financed at those terms, you promise to give the car back. Thats usually reserved for people with bad credit. However, in this case you have good credit, but there STILL isn't a bank willing to give you 0.9% on that car. It's a glitch in the system and contract, but its there. You apparently do not have good enough credit to get 0.9% from most banks... probably nobody could.. the only bank that WOULD have done it (the manufactures) wont do it either because you took their rebate money. The contract doesnt say what bank is supposed to take your loan or why. So in the end, they cant get you financed, and your contract says youll return the car in that case.
My recommendation is to tell them to fix it themselves and eat the difference (they can do that very easily, its called a 'buy down' of your rate). OR, they make your rate 1.9% but reduce the price of the car exactly enough to make the payment the same. In that case, its 100% fair to you, and actually IN your favor if you were to pay off the car early.
Or, return the car. They wont want you to do that, because by now it has miles on it, and it wasted everyones time also. Tell them to eat the difference.
Check the math though, the difference is probably not $1000 unless the finance amount was about $50k+. Dont let them do any fuzzy math, but also dont get mad at them when they only reduce the price by $454 to keep the payment the same.
I am trying to decide: should I go with what my dealer has currently offered (the price I agreed to but at 1.99% financing, not 0.9%), or walk away. I'm torn because the price that they gave and then changed the financing rate after the fact, appears to be an extremely good price (from what I can gather). The next closest "out the door" number I got from one other dealer was $690 higher, and a different dealer I called after my deal fell apart said "he can't even touch the number I got, that it sounds "too good to be true" and he didn't even offer a counter because he said he couldn't even come close.
So - at the end of the day, although its a bitter pill to swallow, to my inexperienced eye it looks like I could get the car for much less from my dealer even though he's reneging on the agreed upon deal. And.....as my dealer keeps pointing out, I could just take the financing at the higher rate and just pay it all off after the first month or two.
Oh yeah - the dealership is making a gesture to do something for us for all this aggregation. They're willing to sell us an extended service plan that retails for $2,500 for their cost of $1,500. Can't seem to get past the feeling that I'm being scammed.
Your thoughts? Thanks.
This is one of the few customer types I try to avoid. "The Grinder"
.9% vs 1.9%? You gotta' be kidding me! Have you done the math to see how much you are wishing to chisel out of the deal? Insignificant!
"The dealership claims my salesperson mistakenly gave me a $1,000 rebate/incentive/"whatever" PLUS 0.9% financing, when he should have offered one OR the other, NOT BOTH. "
Probably true. A mistake by a newbie salesman. You always get one or the other; not both. Put a crowbar in your walet and pay the salesman their due.
Yep..and as a salesperson working at a large dealership, I realize YOU are not the only one with a checkbook in town. LMAO
I'm thrilled to broom you off the lot and take food off the other guy's table at (Down the Road Motors). Nexxxt!
Grinder? I bet that if somebody promised you a small $200 commission and then gave you only $100 you'd be a grinder yourself. It was small at the first place, so the reduction is insignificant.... Wow, we all are dealing with big bucks and you are arguing about $100! Same argument, same money.
Now, the story of exclusive $1000 rebate OR financing is actually very likely and it might have been an honest newbe mistake. However fact that they were telling him/her that cash price is higher than financed price makes me suspecious that there is much more to the story than meets the eye. I bet they were playing the game to death and mixing/matching stuff just to meet some number and later it unravelled. Perhaps even some bait and switch was going on.
2018 430i Gran Coupe
2018 430i Gran Coupe
It really makes no difference what a dealer may have paid for a car. the price a dealer will accept has everything to do with supply and demand.
There would be no reason to cheap sell a car that's in short supply and high demand. On the other hand, if his lot is overstuffed with, say, Civic LX's and parking is scarce, several truckloads more are in transit etc, then, of course,
any skinny deal that makes a profit will be accepted.
But, if a "real jerk" with a chip on his/her shoulder comes in, they may be walked anyway. I know I would much rather have lost a sale than have a customer leave unhappy as those types usually do and risk the bad survey they seem to love to give.
I sort of agree that the interest difference doesn't amount to that much...it's not a house being financed for 30 years but since it's such a major concern to the buyer, the store should suck it up and buy the rate down.
Oh, blackbelt, have to say you are sounding a bit like a salesperson from a typical store.
There would be no reason to cheap sell a car that's in short supply and high demand.
I understand your point very well. BUT (you knew there was a "but" coming, right?)
The situation that you are describing, "short supply and high demand", is NOT the normal situation. Yes, it does occur, and when it does, then the customer is not going to be able to negotiate a good deal. I have found myself in that situation a couple of times, and I simply walked away.
Much more often the situation is such that the customer can control the buying process. I'm sure all of the car salesmen in this forum wish that weren't true, but wishing does not make it so.
The proverbial "hot" car... Yeah, I'm sure that if it is trully hot there is no reason to discount it or the discount would be minimal. If sales targets are met and there is no more supply, why let the money walk out, right? But how many "hot" cars are out there at any given moment? 1% of units, 5% of model names, no more. There may be time when nothing is really hot - just recall November 2008... In more normal times, when sales/supply figures are realistic to the current deman is probably just OK, lukewarm. No reason to pay up. Perhaps no reason to lose money, either. Just regular business. Part of the customer's job is to separate hype from reality. If we were to believe salesmen, Aztek was a glaring success
2018 430i Gran Coupe
A customer may be very happy paying MSRP or close to that and considering that to be a "good" deal...for them! They simply paid what it took to buy the car they really wanted and are happy with.
Others will walk away and "settle" for something that may fall short of their first choice content that THEY got a "good deal".
Yes,the customer can control the buying process up to a point but after all of the dealing is done they will STILL pay the prevailing market value for the cars they buy.
We may just have to agree to disagree, because I disagree quite strongly with your statement above.
Let's take one of the hottest selling cars in America, the Honda Accord. Go over to the Prices Paid forum for the Accord, and you will see that smart buyers, reading here and applying what they have read, will wait until the end of the month and offer $1,000 under invoice, and most likely have their offer accepted.
Those buyers who have not done their homework, or only part of their homework, will not do so well. There are still many articles available online telling them that they should offer $200 over invoice, and bargain upwards from there. Many buyers will do that, and think they "did good". Other buyers, the better informed, will save $1,000 to $1,500.
I'm not saying all these people are liars, but I just don't believe that every story of "$1000 under invoice" is credible. Some are, some are not for reasons spelled above.
2018 430i Gran Coupe
Also, a lot of those so called "prices paid" never happened or have unknown factors. I used to have to deal with this all of the time.
Exactly. Years ago when Odysseys were scarce, $1000 under invoice? Big joke when people were lining up with their deposit checks.
Look..You think you can do better? Go get your own financing. As a salesperson, I prefer you bring in a check so I don't have to chase you for the BS stips I need further delaying my pay.
Oh, blackbelt, have to say you are sounding a bit like a salesperson from a typical store.
You bet..and still making the money most sales people either don't or can't.
People never change..the consumer is no smarter now than they were 20 years ago; although they have this wonderful false sense of security from the internet where they NOW believe they are well armed with knowledge & power. LMAO.
That dealership in the 0.9% and 1.9% example made a damn mistake.. not the customer. And they discovered it AFTER the customer left. If they had discovered it before the customer signed, that would be one thing and they could have the uncomfortable conversation as to why they have to revise their offer (totally fair).
But once the customer leaves with signed paperwork, thats not a grinder, thats a MISTAKE.
I wrote out exactly what that guy can do. Either force the dealership to pay for it (which 90% of them would do), or keep driving the car until they make you bring it back. If bringing it back is unacceptable to him because its rare or he likes it, then that will probably shine through when talking to them and he'll end up having to just pay the 1.9%. In reality, it seems like he still got a good deal, just not as good as the mistake looked. But even if he returns the car, in the end hell just go elsewhere to get the 1.9% that upset him in the first place.
If he plays it right, and the dealership cares about customer service and opinion, the dealership will pay for their mistake. Otherwise, he just takes the deal he would of taken anyway because it was the best in town either way.
Two days later, the salesman called and told him they had "made an error", and he owed them $5,000 more. Distraught, he called me for my opinion, which was similar to yours above. He also called his lawyer, who I believe, gave him bad advice - that he should just pay the money.
He paid the money.
In your friends case, most likely the amount he paid the dealership (which they were just giving to the bank right away) was simply not enough to payoff the lease payment.
So, he could continue and stick to the contract, at which point he would probably have $5k still outstanding due on his lease. In most states, I would assume you cant buy a car from a bank and leave a $5k balance. Which then simply nullifies the entire transaction since you cant buy a car (even if its your car youre leasing) if its not paid off.
In the first example the dealership made a mistake and accidentally underpaid themselves.
In this example, the dealership made a math mistake and accidentally underpaid your friends lease bank account with his savings bank account.
Also, after leasing cars since 1994, he probably didn't want to actually screw the dealership when they were doing him a favor helping him buyout his lease.
I'm pretty big on sticking it to large companies when they leave themselves vulnerable, but in this case I would of probably paid it and understood it was fair.
Call it the way you see it my friend.
I see these types of consumers far too often..they lie more than any sales person I've met to date. I love how they threaten with "their" attorney..Right! Like they have one on retainer? Please.
Guess what happens when "they" threaten with "their" attorney?
Mega dealerships DO have attorneys on retainer who are more than happy to litigate Mr. Littleman into oblivion.
Welcome to how life really works. Your comments remind me of the customer who wants a "LOW mile Honda Accord, no older than 4 years old and is willing to pay no more than $5,000"
"Welcome..Welcome to fantasy Island"
Today, a consumer has ready access to invoice pricing, dealer holdback, and to some extent manufacturer to dealer incentives.
Today, consumers have knowledge of dealer reserve and other finance tools dealer F&I managers employ to boost dealer profit. Consumers today know the real value and potential profit for both the dealer and F&I manager of the many F&I products.
Interestingly, a recent article in an F&I magazine revealed F&I profit represents, in many cases, up to two thirds of total dealer profit. Real good knowledge for the consumer.
Today, consumers have knowledge of the various tactics and word tracks used by automobile sales people to nudge the buyer.
Today consumers have various car buying sites like True Car and Car Woo from which they can glean interesting knowledge on prices dealers are willing to sell at with no real negotiation. As a bit of advice to anyone reading this forum, a smart consumer will view those prices as the dealer initial offer rather than any number thrown at them by the sales person.
Today consumers understand the four square sheet so prevalent years ago. Do dealers still use the four square sheet? I have not seen one for more than a decade.
This information was not readily available twenty or more years ago. Any consumer with such knowledge is certainly well armed when they enter the car buying arena to duel with the professional sales people.
When was the last time you bought a car?
Let me assure you that it's still in use. Why? Cause it works.
How does knowing that 2/3s of a dealerships profit comes from F&I department help a customer? For one, that number seems a bit off. You'd have to have the dream team of F&I, yet somehow have horrible front end gross. And thats of course ignoring the parts and service department, only looking at sales.. But even if true, so what? Will you not buy something because thats wear the profit is?
News flash, but 95% of a real estate agents profit comes from selling you that house. 90% of a farmers profit comes from selling you milk. Most of a bankers profit comes from signing you up for a mortgage you wanted anyway. And the list goes on... do you not want to buy something simply because someone supports an entire family and home from it?
About customers lying.. its sorta true and sad. I've sold hundreds of cars a year for several years now, and very rarely lie if ever. I can't even think of an example. Often salespeople sell by OMISSION but not by lying. If a customer asked me a straight up question, I'd be an idiot to LIE. I don't.
However, customers lie often. One thing customers should realize is that when you're talking to one person in a dealership, several other people are listening. I'm personally known for being on my own phone call, talking to a customer, and noticing something funny said by another person on a phone call all the way on the other side of the showroom. We all listen to each other to compare style, tactics, and just to take note that someone is dealing with a customer while we arent. So the he said she said often gets caught at dealerships because someone was involved and listening. Thats why 'managers' come out in any difficult case, so theres two people. Two people to stop a mistake from happening, and two people to hear how the deal was closed.
And like mentioned before, we all know each other in the industry and know tactics very well, so don't make stuff up. Often times customers will come from visiting our competitor dealership and say something to me a certain way because they heard it said earlier and Ill say "Oh did you meet with Dan at Watsonville? Hes a nice guy. But I'm here to earn your business so I promise Ill take care of you. But ya, Dans a nice guy... maybe a little fast talking riiight
Three items are below average and 1 is above average.
Mean and Median are very different things. Don't get me started on standard deviation, Variance or the correlation coefficient. :P
2018 430i Gran Coupe
Of course used cars and the low volume special editions and exotics will not be as tight, especially used cars...
There is an underclass of entitlement thinkers who don't think anybody should profit from others - this thinking is Communistic and will sink a country or economy. Taxes are paid by profits from business. A business is entitled to make all the profit they can honestly. There is nothing obscene, immoral or unethical about an oil company making money. Start taking their profits away, and watch the supply of gasoline dry up. If there is no profit to be made, there will be no reason to go into business, ergo, no product made or sold. If a grocery store can't make a reasonable profit over their costs, they will close.
The consumer has the obligation not to "pay to much" if they care. The seller has no obligation not to "sell for too much". That's capitalism. I know liberals think that's evil. But it's not.
Of course, I could be wrong......
Yes, but...
Unrestrained capitalism lead to the unfortunate occurrences of 2008, which damned near led to the downfall of civilization as we know it.
Perhaps I have been lucky. Or, more likely, I weed out the type of dealership which uses the four square during my initial research into dealer reviews and reputation.
Whatever, I suspect the four square, if it still works, is not effective on buyers who understand the process. After all, there are some dealerships and sales people who recognize the four square is actually an insult to some customers.
A recent report by a major dealership group, AN, indicated an average back end profit of nearly $1,400 for each car sold. A different report mentioned the typical front end profit is about $700 for each vehicle sold.
In any case, the numbers are not really important. There are numerous articles about how dealers have turned to F&I profits to offset decreases in front end profit levels. Dealers have been forced to sell lower to compete in the new world of Internet car buying. At the same time dealers have ramped up their F&I sales to counter the profits lost on the front end.
It is quite obvious dealers make a significant profit after the vehicle is sold and the buyer is in the box. That is knowledge any consumer can use to prove the overall deal.
There is no problem with a dealer earning a profit. After all , they are in the business of earning a profit. However, many of us believe the deceptive manner in which some dealers attempt to earn that profit is questionable.
Things like the use of the word fee in doc fee. Clearly the word fee was chosen to attach some semblance of validity to that charge. Clearly we all know this amount is nothing more than additional profit for the dealer. The selling price of anything includes all dealer cost and dealer profit. The doc fee is nothing more than a deceptive increase to that price.
Or the entire dealer reserve ploy. You know that one, when a buyer qualifies for a rate of 2 percent and the dealer attempts to write the contract at 4 percent.
Or charging a customer $2,500 for an extended service contract that costs the dealer about $900.
Or charging $600 for etch, when the dealer paid less than $100.
Are suggesting a car buyer should not be aware of such things? Are you suggesting such knowledge is not beneficial to the buyer?
I know such knowledge has saved me thousands. Personally, I have no concerns as to where the dealer finds profit. I negotiate a good price on a vehicle, choose my own financing, and simply say no to everything offered for sale in the box. Works every time.
On my most recent buy, for my daughter, the F&I person quotes me 1.9 percent. That was good. What was unique in my experience was he told me my daughter actual qualified for 1.8 percent. We accepted the 1.9 percent based on the overall deal.
Probably as important to the dealer was we wrote several glowing reviews for the dealership. We will also likely return for future buys.
I guess it is true some dealerships view the long term as important. So many seem like Blackbelt, only interested in instant profit. Thankfully such dealerships are easily identified and avoided.
Example, not so long ago I bought a Nissan. I made an initial fair offer which was rejected by the tower. I was, of course, turned over to a more seasoned salesman, could have been you. After several hours, I played the time to go card.
At that time the dealership made a final offer. I delayed a bit to give the appearance I was confused. I then said OK.
I returned with the initial salesman to his office. A few minutes later the final paperwork was delivered. The greenpea looked at me a bit later and said they had sold me the vehicle for much less than I initially offered. I still smile when I think of that purchase.
Yes, sometimes the customer is smarter than you seasoned sales people think they are. LMAO!
2018 430i Gran Coupe
2018 430i Gran Coupe
A lot of people agree that a car dealership should make a profit IF that profit is paid by someone other than themselves.
It is " entitlement thinking" to be sure and this is becoming more prevalent in this country.
Making a (gasp) profit isn't an evil thing. After spending two million dollars to open a modern dealership with it's massive overhead, profits have to be made.
Some liberals have a lot of trouble understand this basic concept.
This is rationalization at its finest.
What you are choosing to ignore, is that the result for the consumer is the same. What isn't the same, is your fallaciously clear conscience.
2018 430i Gran Coupe
2018 430i Gran Coupe
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