Hello all, I am new to these boards (I have been lurking for quite some time but no actual posts).
Anyway, my wife and I are in the market for a full size SUV. Yes we are crazy, but we have a boat and a six month old. Our current vehicle isn't serving our needs now that we have our son. So having looked for a long time now, we have decided on an Armada. We go to the local dealership which is a very large conglomerate dealership with 13 different franchises (I live in OKC so you can guess who I am talking about). We find an Armada that we like and I take it on an extended test drive so I can take it home to see how well it fits in the garage and show the wife. While i'm at home, I notice that the front portion of the hood and grill surround has been re-painted. There is visible fisheye in the paint and it was a terrible job. Whoever painted it, did not clearcoat it properly and did not blend the paint into the rest of the hood like they should have. Also, anytime you do paint work on a body panel, the whole panel needs to be re-clearcoated. I checked carfax, and the vehicle has a clean history as well as my other source (I am an insurance professional and we have another system that we can use to check on previous accidents which is way more reliable than Carfax) which leads me to believe that the former owner (a rental company) probably had some in-house guy do the paint work.
Anyway, I go back to the dealership and the salesman is all ready to send me out the door with the truck. I told him of the problem with the paint. He didn't believe me at first and tried to say it was just touch up that was not done properly. I then informed him of how it should have been done and he then realized that I knew what I was talking about. At this point, he had the used car manager come in and talk with me after realizing that it was a deal killer. The used car manager looks me right in the face eye to eye and says that whenever they get a vehicle in with alot of bugs, the only way to get them off is to re-paint the portion the vehicle. Even if I didn't know what I know about bodywork, anyone with common sense is going to realize that if you can't get the bugs off, painting over them is just going to make them appear through the new paint. I couldn't believe what I was just told. I didn't know what to say but needless to say, they lost my business. I am not dumb by no means and this is right in front of the salesman who already knows what profession I am in and that i'm somewhat familiar with bodywork techniques. He just looks at the floor and doesn't say another word. He doesn't give me his business card or anything. He lets me leave un-touched so to speak.
Did the manager think that I would be ok knowing that it was just bugs (assuming I believed him which I didn't)and not in an accident? If i'm about to drop 25K on a vehicle, it's not too much IMO to ask that the vehicle not be a lemon buyback or that it not have had any paint or body work done to it.
Oh and the same dealership already tried to sell me another Armada that was a lemon buyback from California (they did tell me about it). It was an 05 that had the brake problems so many of Armadas did when they first came out (04,05 model years that had rotors too small). Their reasoning to me is that even though it was a buyback, California has the most liberal lemon laws and it really shouldn't be a concern to me. Whether that's true about CA or not, I don't care but I don't want to have a vehicle that has a carfax and title branded as a manufacturer buyback.
You honest sales people are the ones that I really feel for b/c this jerk (not really my salesman, but the used car manager) are the reason that your industry has the reputation it does.
What an awful story! But, anyway, welcome to Edmunds...
You may already know this, but next time you go used car shopping, borrow a mil gauge from one of your company's adjusters and go over all the body panels with it--should be even easier to spot a repaint.
Both your situations could of been handled differently instead of them dancing around. The sales manager for the first Armada should of just made it right. Re-paint the hood or wetsand or what ever they do.I am not afraid of paintwork on a car as long as it is done right.
As for the second Armada, Yess the salesperson told you accurate information about CA lemon laws. We sell lemon law buybacks at our store if its for something minor or the problem has been replaced. For example, I sold a Cabriolet that had lemon law for transmission, BUT the whole transmission was replaced. Another for a top issue, the whole top was replaced.Also, there might be an extended warranty included on the brakes on that armada. There are alot of Armadas out there, So do your due dillengence. If you can make a trip to Dallas, more selection and more competion, make for a lower price.
Funny you should mention Dallas. It's about a 2 1/2 hour drive from here and we are possibly planning a trip there this weekend. We have purchased three of our last four cars there and you are right in that there is alot better selection.
My only problem with a lemon buyback, is that the title and carfax history will forever show a buyback and that can be a problem when and if I decide to resell it.
I agree with you on the point that vehicles with a questionable history are something that buyers should look long and hard at acquiring. This is part of the demise of the detroit small vehicle market based on buyer's perceptions from the 80's and 90's. Ditto Hyundai from the 90's. Now all seem to have made corrections so that the ESA's are an inducement to try to regain those lost customers. It seems to be working for Hyundai along with it's new vehicle line.
However even the most reliable are becoming more and more complex, especially electronically. I too have not chosen to go with any ESA's in the past but now as I see the complexity and cost exceeding the cost of the ESA then I am considering it for the next purchase.
Who in their right mind would buy a lemon law buyback, whether it was from liberal state like CA or not. The manufacturer has already had several attempts to fix the problem, what could indicate the problem is now fixed?
You honest sales people are the ones that I really feel for b/c this jerk (not really my salesman, but the used car manager) are the reason that your industry has the reputation it does.
Well said derek533, and thanks for your story. Repaint because of bugs? Ha. That's a new one.
Bigdveedubgirl, Are you required by law to disclose the fact a car being sold is a lemon law buyback?
yes (at least for Texas) But just because it is a lemon law, it does not mean it has a branded title. It depends what it lemon lawed for.
I have no problem purchasing a lemon law vehicle as long as all the the documentation of what was done to the car and why it was lemon lawed. My dad lemon lawed his explorer for a stinky AC and a door rattle.
The BMW Store gave me a very good deal on my wife's E36, but I've dealt with Swope ever since. Someone at Swope will always greets you, but they'll leave you alone if you are just looking. As for Jake Sweeney, I sure didn't want to be bird-dogged by a green pea, but I did want to speak to someone. My son even noticed that the one salesperson in the CPO showroom didn't even look up from his desk when we walked in. I wonder if I'll get a response to the terse epistle I sent their CPO GM...
In Oklahoma, the dealer is required to disclose this and the vehicle will have a sticker affixed to it somehwere indicating a lemon buyback. Also, in Oklahoma, the title will still be a green title (good standing title) but will have some sort of blurb on the front that it was a buyback.
Bigveedub, I don't suppose you have any Armada's on your lot?! :P
In addition to the typically slow november, we had a wind and rain storm mid month, and were closed for 2 extra days cause we had no power. Rememberance day we were closed. Now we got hit with a foot of snow and there's no customers here at all. Ugh :sick:
I mentioned earlier that we had been given a challenge to sell 40 new and used cars this month(22 new and 18 used) which is 20% more cars then we had ever sold in a month.
It is a 5,000 dollar bonus to be spread equally among the sales staff, there are only five of us plus a receptionist so a little less then a grand a piece, if we can hit our goal.
Are you required by law to disclose the fact a car being sold is a lemon law buyback?
In CT we must disclose the buyback on the car and the customer must sign the documentation stating they are aware of the issues. Additionally when its a ford, Mercury or Lincoln product the mfg holds the title until they receive a signed form from the buyer & dealer stating they know exactly what the buyback is all about and the terms of the buyback warranty.
I sold my uncle a buy back TownCar three years ago...the savings was huge and the car was a lemon because the AM radio always had static. We sold the car new and everyone on the planet tried to fix the problem without any luck. Well, my uncle doesnt listen to AM and the $12,000 savings over a similar non-buy back Towncar was certainly worth it. Buybacks can represent amazing bargains if you do your homework and find one that was a buyback for a relativly minor issue.
Considering how far 'behind' Town Cars were selling for, a $12K saving on top of the regular price must have meant your store gave him a couple of grand to take it away!
I just got a phone up from a gentleman that was 200 to 250 miles away. Told me he was an upfront kind of guy wanted to buy an element and wanted my best price. Said he was looking for an ( last years') 06 model. Said he wasnt a game player said he was a serious buyer. Asked for pricing. Said he had a pretty good price ( 750 below invoice) from his local dealer but he thought that there might be a few more dollars to be had. I do not have one in stock and told him so. He continued to press me for a price. I finally told him that I would be willing to sell him one for invoice price. He got very agitated and told me that I was insulting him with my offer. I tried to explain to him that it wasnt personal, just that invoice was the price I was willing to go get a car and do business with him for. After threatening to call my manager and all sorts of vile things I introduced him to my silent manager, Mr. Click.
I dont need the hit to my CSI this late in the year...
It is funny but then not so funny because it is just too common.
Already 750 bellow invoice, not sure if there are any factory money on elements but knowing honda if there is there is not much, and he is wiling to do a 6-8 hour round trip to try and save a bit more money.
I must be getting thin skinned in my old age. For some reason I wanted to crawl through the phone and bite this ( and I use the term loosely) gentleman.
We have been getting a rash of customers who are backing out AFTER leaving a deposit over $100 and people not thinking they are getting a good enough deal on a CPO and say they can get one for 3k cheaper at Budget. AAAACCKKK and we are supposed to have a freeze on Thursday!!!!!
I sold two used cars yesterday. A disco to the daughter and our only used 2006 Supercharged Range Rover to the father who is the CEO of a major corporation
Just before I wrapped these two sales up one of our other salesman had someone looking at the 2006 used CPO Range and he was waffling because we have a 2004 and 2003 for 20,000 and 35,000 dollars less respectively.
The next morning our other salesman says that his guy is going to be upset that he lost out on that car.
I told him well you don't become a CEO of a major company without knowing how to make big decisions quickly. Their time is valuable and they can recognize a good deal when they see one.
Now we are just two new cars away from that 5 grand bonus.
It takes just as much skill to walk away from a deal as it does to negotiate one.
I would have thanked the gentleman for his time and told him I didn't have anything in stock that would fit his needs. Therefore, I couldn't "quote" him. I would also have told him to run, don't walk, to get that Element at $750 under.
I would have thanked the gentleman for his time and told him I didn't have anything in stock that would fit his needs. Therefore, I couldn't "quote" him. I would also have told him to run, don't walk, to get that Element at $750 under
As I stated earlier I didnt want to quote anything but he was quite insistant on getting a quote and hurry up because he was a " serious buyer".
He probably bought a $750 wax package with it
At my dealership you can actually buy a car under invoice and it will still be a profitable deal for us, on paper anyway. No need to sell rust and dust, paint and fab or whatever you want to call it. We have a system called push pull. When I sell a new Honda off of my lot, 100 dollars of profit is taken from that deal and applied to the cost of the "oldest" new Honda on the lot. We have 10 "old" new cars t any time and 100 dollars per deal is applied to each in order. Next day it starts over. We have sold cars in the past for thousands below the invoice and made profit on them. Its actually quite funny when we send someone out of here that is shopping and arent smart enough to realize what a good deal is and imagine the competitions reaction when they see the pricing.
It only makes it profitable for the dealership at the expense of profitability of other cars. In other words yes you were able to reduce the cost by $1000 and sell it for $600 less and make $400 more on the car but to do that you reduced your profit on ten other cars by $100 each.
It may look good on paper but the reality of it is is that the dealership is taking a bath on that one oldest car.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I think it does, for psychology of the salesforce. You guys forget that the old cars are already losers. So what is an incentive now to try to sell if the unit is already stigmatized and it may spill to the person who sells it. At what appears to be a modest cost for new units it creates an additional support for the selling staff and incentive to get rid of it quickly, but not get "punished" by selling a loser.
This is a common business practice whenever there's a significant inventory position. This is done every Saturday in almost every store I imagine. I used to do it as well in the steel industry.
The whole inventory position is viewed as a unit. The entire day is viewed as a whole. If it's been a good day then taking losing deals at the end to move additional units is an overall profitable situation as long as the 'loss' is not outrageous.
In my prior position when we had a purchase of steel to sell we did our best to maximize profits early on in order to have a cushion in case we had to blow out the final items at the end. As long as the position was profitable overall all was good.
Old stock like an Accord VP that will sit forever when you can put a shiny S2000 in that parking spot instead... Yeah, moving it is a good thing, because often those budget buyers also need financing or want a couple of accessories on the super-stripped model(like the missing rear swaybar or rear speakers on the VP)
That little program makes no sense whatever It makes loads of sense when I can sell a new Accord for hundreds and in some case thousands less than you. I'm moving a unit while you are arguing with your sales manager about the validity of the customers quote.
You won't sell them for thousands or eveb hundreds less. Not for long that is
This program has been in place for a long time. All youre doing is hedging your bets or applying some of your profits towards moving old inventory. Are we losing money? No, because we have already written down the inventory.
Are we losing money? No, because we have already written down the inventory.
Thats not how it works, you can write down inventory all you want it doesn't change how much you actually spend on it. All you are doing is robbing Peter to pay Paul.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Ask a customer who just bought an Accord for 1500 below invoice if he saved money. Another thing to consider is that we are paying floor plan interest on these old cars every month.
...you can write down inventory all you want it doesn't change how much you actually spend on it. All you are doing is robbing Peter to pay Paul.
You're also getting an aging unit off the books. Saving a bit of interest payments and saving some of the holdback (that goes torwards that interest payment). Then, there's opportunity costs, which aren't as easy to quauntify. That aging inventory slot can go towards something newer and more profitable. I've actually seen more than one dealership do this (and to the benefit of the lucky customer).
I've got some very good deals, on very good cars, if I was willing to find something that's been hanging on the lot for 90+ days. They usually have more miles on them than newer inventory, but that's something I can live with given the price break.
Ask a customer who just bought an Accord for 1500 below invoice if he saved money.
We are talking about the dealer side of the equation. The dealer is losing on that deal no matter how you cook the books. Sure you can occasionally sell the car for a thousand less but to do that you have to sell more cars for more money.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I understand what you are saying, but it usually means cutting your losses. You don't usually do it and make a profit and you can't continually do it with most of your cars either.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Sure they can. Most dealerships are required to keep at least one of every major trim in stock per cycle/month. And Honda DX are slow slow sellers. You sell them dirt cheap to make room for the EX if you can.
Or it's like the GM dealer - they have a new 2005 Canyon still on the lot(!). And it's still sitting there. Eventually they're going to have to toss it to a wholesaler and cut their losses. Hold onto stuff for two long and it's a disaster.
But you guys are kind of missing my point. Can you imagine the look on our competitions' faces when customers bring in quotes for hundreds if not thousands below invoice? Typical knee jerk reaction is to call the customers bluff. 9 times out of 10 we tell the customer to go back and show the salesman their new car.
On the dealer side it makes no difference at all except it's easier to stop the drain of interest.
A basic case: 10 new Civic's arrive and are sold immediately within a few days. $100 of the gross from each of these is applied to the one old unit to 'reduce the cost'. Yes It's artificial but it's the same owner just a different pocket. What he has been able to do is get an old piece of iron off the lot that was eating up 0.75% of interest a month.
It is no difference to him, he sold the unit for $1000 below cost because it was a lot anchor or he took $100 off the gross of 10 other vehicles. It's the sales people that benefit or lose. The 10 civic sellers lost $25 each in commission the one lot anchor seller made $250 in commission.
The problem this solves is getting the sales people interested in moving the lot anchors. The sales managers can't go out and push prospective buyers toward the lot anchors it's the sales people that have to have some financial incentive to do so.
I think everyone is missing the point on this. The dealerships' bottom line is still the same regardless. the only benefit is to the sales consultant. They can still sell that aged unit and receive a good commission for it. The dealer benefits because their people will still show that vehicle with some enthusiasm because it is no longer a "mini". At the end of the month, the dealers profit is the same.
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Anyway, my wife and I are in the market for a full size SUV. Yes we are crazy, but we have a boat and a six month old. Our current vehicle isn't serving our needs now that we have our son. So having looked for a long time now, we have decided on an Armada. We go to the local dealership which is a very large conglomerate dealership with 13 different franchises (I live in OKC so you can guess who I am talking about). We find an Armada that we like and I take it on an extended test drive so I can take it home to see how well it fits in the garage and show the wife. While i'm at home, I notice that the front portion of the hood and grill surround has been re-painted. There is visible fisheye in the paint and it was a terrible job. Whoever painted it, did not clearcoat it properly and did not blend the paint into the rest of the hood like they should have. Also, anytime you do paint work on a body panel, the whole panel needs to be re-clearcoated. I checked carfax, and the vehicle has a clean history as well as my other source (I am an insurance professional and we have another system that we can use to check on previous accidents which is way more reliable than Carfax) which leads me to believe that the former owner (a rental company) probably had some in-house guy do the paint work.
Anyway, I go back to the dealership and the salesman is all ready to send me out the door with the truck. I told him of the problem with the paint. He didn't believe me at first and tried to say it was just touch up that was not done properly. I then informed him of how it should have been done and he then realized that I knew what I was talking about. At this point, he had the used car manager come in and talk with me after realizing that it was a deal killer. The used car manager looks me right in the face eye to eye and says that whenever they get a vehicle in with alot of bugs, the only way to get them off is to re-paint the portion the vehicle. Even if I didn't know what I know about bodywork, anyone with common sense is going to realize that if you can't get the bugs off, painting over them is just going to make them appear through the new paint. I couldn't believe what I was just told. I didn't know what to say but needless to say, they lost my business. I am not dumb by no means and this is right in front of the salesman who already knows what profession I am in and that i'm somewhat familiar with bodywork techniques. He just looks at the floor and doesn't say another word. He doesn't give me his business card or anything. He lets me leave un-touched so to speak.
Did the manager think that I would be ok knowing that it was just bugs (assuming I believed him which I didn't)and not in an accident? If i'm about to drop 25K on a vehicle, it's not too much IMO to ask that the vehicle not be a lemon buyback or that it not have had any paint or body work done to it.
Oh and the same dealership already tried to sell me another Armada that was a lemon buyback from California (they did tell me about it). It was an 05 that had the brake problems so many of Armadas did when they first came out (04,05 model years that had rotors too small). Their reasoning to me is that even though it was a buyback, California has the most liberal lemon laws and it really shouldn't be a concern to me. Whether that's true about CA or not, I don't care but I don't want to have a vehicle that has a carfax and title branded as a manufacturer buyback.
You honest sales people are the ones that I really feel for b/c this jerk (not really my salesman, but the used car manager) are the reason that your industry has the reputation it does.
You may already know this, but next time you go used car shopping, borrow a mil gauge from one of your company's adjusters and go over all the body panels with it--should be even easier to spot a repaint.
As for the second Armada, Yess the salesperson told you accurate information about CA lemon laws. We sell lemon law buybacks at our store if its for something minor or the problem has been replaced. For example, I sold a Cabriolet that had lemon law for transmission, BUT the whole transmission was replaced. Another for a top issue, the whole top was replaced.Also, there might be an extended warranty included on the brakes on that armada. There are alot of Armadas out there, So do your due dillengence. If you can make a trip to Dallas, more selection and more competion, make for a lower price.
My only problem with a lemon buyback, is that the title and carfax history will forever show a buyback and that can be a problem when and if I decide to resell it.
However even the most reliable are becoming more and more complex, especially electronically. I too have not chosen to go with any ESA's in the past but now as I see the complexity and cost exceeding the cost of the ESA then I am considering it for the next purchase.
You honest sales people are the ones that I really feel for b/c this jerk (not really my salesman, but the used car manager) are the reason that your industry has the reputation it does.
Well said derek533, and thanks for your story. Repaint because of bugs? Ha. That's a new one.
Bigdveedubgirl, Are you required by law to disclose the fact a car being sold is a lemon law buyback?
I have no problem purchasing a lemon law vehicle as long as all the the documentation of what was done to the car and why it was lemon lawed. My dad lemon lawed his explorer for a stinky AC and a door rattle.
Bigveedub, I don't suppose you have any Armada's on your lot?! :P
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
I mentioned earlier that we had been given a challenge to sell 40 new and used cars this month(22 new and 18 used) which is 20% more cars then we had ever sold in a month.
It is a 5,000 dollar bonus to be spread equally among the sales staff, there are only five of us plus a receptionist so a little less then a grand a piece, if we can hit our goal.
Right now we are four cars away from 40.
We need two used cars and two new cars.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
In CT we must disclose the buyback on the car and the customer must sign the documentation stating they are aware of the issues. Additionally when its a ford, Mercury or Lincoln product the mfg holds the title until they receive a signed form from the buyer & dealer stating they know exactly what the buyback is all about and the terms of the buyback warranty.
I sold my uncle a buy back TownCar three years ago...the savings was huge and the car was a lemon because the AM radio always had static. We sold the car new and everyone on the planet tried to fix the problem without any luck. Well, my uncle doesnt listen to AM and the $12,000 savings over a similar non-buy back Towncar was certainly worth it. Buybacks can represent amazing bargains if you do your homework and find one that was a buyback for a relativly minor issue.
I dont need the hit to my CSI this late in the year...
Already 750 bellow invoice, not sure if there are any factory money on elements but knowing honda if there is there is not much, and he is wiling to do a 6-8 hour round trip to try and save a bit more money.
More than likely, the $750 below invoice was just pulled out of the air.
My experience is that if someone has to come out and say "i am not a game player" that means that they are playing games.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I sold two used cars yesterday. A disco to the daughter and our only used 2006 Supercharged Range Rover to the father who is the CEO of a major corporation
Just before I wrapped these two sales up one of our other salesman had someone looking at the 2006 used CPO Range and he was waffling because we have a 2004 and 2003 for 20,000 and 35,000 dollars less respectively.
The next morning our other salesman says that his guy is going to be upset that he lost out on that car.
I told him well you don't become a CEO of a major company without knowing how to make big decisions quickly. Their time is valuable and they can recognize a good deal when they see one.
Now we are just two new cars away from that 5 grand bonus.
Grrr
I would have thanked the gentleman for his time and told him I didn't have anything in stock that would fit his needs. Therefore, I couldn't "quote" him. I would also have told him to run, don't walk, to get that Element at $750 under.
He probably bought a $750 wax package with it.
As I stated earlier I didnt want to quote anything but he was quite insistant on getting a quote and hurry up because he was a " serious buyer".
He probably bought a $750 wax package with it
At my dealership you can actually buy a car under invoice and it will still be a profitable deal for us, on paper anyway. No need to sell rust and dust, paint and fab or whatever you want to call it. We have a system called push pull. When I sell a new Honda off of my lot, 100 dollars of profit is taken from that deal and applied to the cost of the "oldest" new Honda on the lot. We have 10 "old" new cars t any time and 100 dollars per deal is applied to each in order. Next day it starts over. We have sold cars in the past for thousands below the invoice and made profit on them. Its actually quite funny when we send someone out of here that is shopping and arent smart enough to realize what a good deal is and imagine the competitions reaction when they see the pricing.
Key words are "on paper". I can make any single deal profitable or unprofitable "On paper".
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Sorry, meant to clarify. profitable for the dealership AND also VERY VERY ( notice the two verys?) profitable for Joe Consumer.
It may look good on paper but the reality of it is is that the dealership is taking a bath on that one oldest car.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
2018 430i Gran Coupe
The whole inventory position is viewed as a unit. The entire day is viewed as a whole. If it's been a good day then taking losing deals at the end to move additional units is an overall profitable situation as long as the 'loss' is not outrageous.
In my prior position when we had a purchase of steel to sell we did our best to maximize profits early on in order to have a cushion in case we had to blow out the final items at the end. As long as the position was profitable overall all was good.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Old stock like an Accord VP that will sit forever when you can put a shiny S2000 in that parking spot instead... Yeah, moving it is a good thing, because often those budget buyers also need financing or want a couple of accessories on the super-stripped model(like the missing rear swaybar or rear speakers on the VP)
It makes loads of sense when I can sell a new Accord for hundreds and in some case thousands less than you. I'm moving a unit while you are arguing with your sales manager about the validity of the customers quote.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
This program has been in place for a long time. All youre doing is hedging your bets or applying some of your profits towards moving old inventory. Are we losing money? No, because we have already written down the inventory.
Thats not how it works, you can write down inventory all you want it doesn't change how much you actually spend on it. All you are doing is robbing Peter to pay Paul.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
You're also getting an aging unit off the books. Saving a bit of interest payments and saving some of the holdback (that goes torwards that interest payment). Then, there's opportunity costs, which aren't as easy to quauntify. That aging inventory slot can go towards something newer and more profitable. I've actually seen more than one dealership do this (and to the benefit of the lucky customer).
I've got some very good deals, on very good cars, if I was willing to find something that's been hanging on the lot for 90+ days. They usually have more miles on them than newer inventory, but that's something I can live with given the price break.
We are talking about the dealer side of the equation. The dealer is losing on that deal no matter how you cook the books. Sure you can occasionally sell the car for a thousand less but to do that you have to sell more cars for more money.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Or it's like the GM dealer - they have a new 2005 Canyon still on the lot(!). And it's still sitting there. Eventually they're going to have to toss it to a wholesaler and cut their losses. Hold onto stuff for two long and it's a disaster.
A basic case: 10 new Civic's arrive and are sold immediately within a few days. $100 of the gross from each of these is applied to the one old unit to 'reduce the cost'. Yes It's artificial but it's the same owner just a different pocket. What he has been able to do is get an old piece of iron off the lot that was eating up 0.75% of interest a month.
It is no difference to him, he sold the unit for $1000 below cost because it was a lot anchor or he took $100 off the gross of 10 other vehicles. It's the sales people that benefit or lose. The 10 civic sellers lost $25 each in commission the one lot anchor seller made $250 in commission.
The problem this solves is getting the sales people interested in moving the lot anchors. The sales managers can't go out and push prospective buyers toward the lot anchors it's the sales people that have to have some financial incentive to do so.
Any place where you have a lot of this dealer can do that or even worse my neighbor paid X amount below invoice I have to beat him.