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Comments
We do this when the sales force starts getting lax on logging and tracking sales calls. Though I would bet we loose 10 sales a month from people not handling a sales call correctly.
Now, if I have a pink leftover car in march, that's different. But I work my deals differently.. it's pointless to me to spend tons of time giving a car away, why work foolishly? If I am going to write a cheap deal I will write it quickly and move on.
Also, those are fees that we do not see a single penny of. Any advertising fee that you see printed on an invoice is what the manufacturer charges us for their advertising, it goes straight to the manufacturer. Destination is what the manufacturer charges us to ship the car to our store and invoice and MSRP on Destination charges are the same dollar amount, there's no markup there.
As a side note, destination charges are uniform, even for the dealer that's across the street from the factory. Cars used to have a West coast and East coast price, with prices out west being higher because of higher transport charges. Washington fixed that.
Neither of those two items are any income for the store. In fact, advertising fees are nothing more than a way for the manufacturer to shrink our product margin.
Mackabee
Most of my business used to come from the phone. I rarely took an "up".
I was wondering if Jeep's "CMA Chrysler Marketing Assistance Charge 2" is the same thing? Do I stand any chance trying not to pay it?
TIA
Hey 'jipster', are you listening? :shades:
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
The way our dealership really works is that we start every deal trying to make as much profit as possible. We then try to find out what a customers hot button is. Payment, price, trade in, difference, or bottom line. Once we figure that out that is how we negotiate. If it is payment we try to get a credit app as soon as possible in the process to see what kind of customer we have. If you hot button is $400 a month then we need to see what kind of rate you will qualify for to get there.
Once the front end is agreed upon you come to the finance office where we present you with a menu, it show your rate and your payment then 4 different payments with different warranties added to the loan. You are presented and explained to each of the warranties. You circle and initial the payment you want and the paper work is completed.
Before I start crying and write a check to cover your unbearable pain of selling those terribly profitless new cars...
Why is that you guys have to stress you don't make any money, yet you keep selling, your dealerships keep growing and everybody keeps their spirits up? Can't have both the same time, can you?
Besides, it's not my concern whether or not there is a profit, enogh profit, how it is distributed between sales force and owners, what are components of the gross, net, etc - other than of course figuring out lowest possible amount you would accept before saying "thank you for your time, please don't visit as any time soon" :P . Of course your job is to figure out maximum amount after which I may say "Thank you for your time, don't expect my call any time soon". If those max/min are in right place, there is a sale - if not, well "Thanks for your time...".
2018 430i Gran Coupe
Help me here, I need an education. What's a BD...BIG DOPE ? :confuse:
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
Because you have to sell new cars to keep your franchise. Belive me if Ford gave us the option to take our entire wholesale in new trucks and SUV's we would be more then happy to do it that way. But they don't give you that option.
All new car sales do are support your fixed op's. The more new cars you sell the more cars you have to service, the more trade ins you have to sell. They are like a neccassary evil I guess.
NICELY PUT
They spent an hour negotiating over the fact that they were not going to pay sales tax, another hour wanting the 0% and the rebate, and the rest of the time negotiating the plan price. I am sure the trade should be good for another hour.
It is hilarious. I hope I get to do the paper work if they close. It should be a real hoot. Usually folks like this try to renegotiate everything once they come in to finance
Thank's for being honest. I'm sure the regulars here know that but it's good for a newbie to hear it from a guy in the biz.
Once the front end is agreed upon you come to the finance office where we present you with a menu,...
And this is when you get your piece of him, right? I hope you have some good hot fresh stuff on that menu to offer. Not just the same cold stale items we're all tired of spitting out.
Seriously, how long does the average deal take at your store, not including time spent in F&I?
I'm trying to give 'jipster' an education.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
Now, reality is that a lot of dealers make these public, but the fact remains that the definition of a dealer invoice is for the manufacturer to show the dealer what he or she is paying for that car.
I mean, it's not difficult to find this out on their own but every once in awhile, I will have a customer actually ask.
Would they do that in a furniture store?
New cars are a necessary evil. Period. However... you have to sell them to get the franchise.
A franchise gets you:
Banks. Lots and lots of banks. This is why the new car stores can get people "bought" that the independents can't a lot of the time.
Service and Parts. This is where we make money. Kind of like movie theatres who make their real money off $6 bags of popcorn, $4 sodas and $3 boxes of Junior Mints.
Used cars. We sell used cars and make money on them. Some of the most profitable dealers that I know sell more used than new, it always worked for me.
So it's a give and take, but the net margins for a typical franchise store are between 2-4% net pretax.
Seeing as service labor is 70-80% gross profit and the markup on parts is 30-40%, it doesn't take a slide rule to figure out that new cars don't make you much.
Some nitwits started doing it and it snowballed from there. I remember someone asking to see the invoice on a new Gallardo.
OK, sure.. why not. Sticker is $200k, invoice is $180k, you're paying $200k. What's to know?
If you plan to answer my question in post 16794, please don't factor this one in. Anomalies only tend to skew otherwise good data.
It is hilarious. I hope I get to do the paper work if they close. It should be a real hoot. Usually folks like this try to renegotiate everything once they come in to finance
Are you going to finish this in one episode?
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
Now you tell me how a person can look at that menu and then walk out of an F&I office saying that the dealer tried to sneak a warranty in in or that they bought something they did not want. There is no way to make it any clearer
As far as how long it takes???????????? I would say the average deal from greeting to close is about 90 minutes. That is considering the customer knows what they want but still goes on a test drive, and needs to have a trade in looked at. if it is a straight sale with no test drive it can be as little as 10 minutes
2018 430i Gran Coupe
I do and that's why I NEVER do it. With all the information that is available from everywhere, why does a customer have to ask or think they have a right to ask? Also, I don't think that the typical customer who would ask, would believe it if it was shown to them.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
A plan deal should go like this...
1. This is your plan price and this is how I figured it out. Show them the bulletin on the plan to prove that if they don't believe it. Some people seem to think that X-plan is some amazing price that will blow them away. X-plan price on a $82,250 MSRP Range Rover is about $77,900 dollar plus tax.
2. I rarely have special interest rates to offer anyone so that isn't an issue. If it ever was the bulletin would come out again and that would be the end of the discussion.
3. The trade value is the trade value and we print out a sheet from the Galves website that shows what the value of the vehicle is and what we are offering them for their car. They arent necessarily the same thing as we are only using Galves as a guide so the amount offered might be above or below Galves.
A bad survey is a certainty with people like that, not worth the aggravation.
Now that is some menu but I'm still going to spit it out. Thanks anyway.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
Not worth it for the bad survey either as I am just a couple surveys away from qualifying for the top level and getting a BIG check retroactive to the first of the year.
Classic stuff
I could pick apart every component of you "value packages", but let me just say it politely here "Thanks but no thanks" for all but "Premium care", which might be of potential some value. And can I have it without GAP?. No, lets look at it close, shall we? How much is standard Ford warranty now? 5yr/60K powertrain and 3/36 everything else? So we add whopping 1 year/15K miles for former and 3/39 for latter parts? But wait - we have probably nice list of exclusions - you know all hoses, belts, anything that actually breaks on the car. Or better - it actually lists all the covered parts - as many as 500. How many items does a modern car have? three thousand, or is it five? But you say - it's covered by your "Premium care" maintenance. How long? Oh - it also conveniently stops 3/36, so besides wiper blades, oil changes and one fluid change, what else do we exactly get before 3/36? Oh.. zip? I thought so, too.
Again - it looks to me that nice $1800+tax doesn't buy that much - or does it?
2018 430i Gran Coupe
Is the salesman losing out on business because of these people or are they about the only ones in the showroom?
Folks that tell me stuff in my office like you pointed here are my favorite customer. They usually end up buying something once it is explained to them. They are the second easiest close. The reason being is that once you explain it to them they have the brain capacity to see value in the service contract bundled with the maintenance plan, Hell just the 30K Maintenance by its self is an average of $400, and that does not take inflation into account, who knows what it will be 2-3 years from now.
That is unless they are the type that pride themselves on saying they never buy any warranties, then you just can't talk to them, so I just circle decline for them and let them sign.
The easiest are the ones who have had the maintenance plan before, they sit down in my office and tell me they won't ever buy a car again with out one.
I don't have to "push" anything on anybody.
The fact that front sales people aren't paid for it properly cause the owner chooses (and they agree on it) to exclude substantial part of the total gross from commission base, is a compensation issue. It's really not my concern that the front salesperson was not paid on mop&glo, rust& dust, warranty, GAP and financing.
So saying they make no money just because difference between sales price and total cost of acquisition came up to negative after inclusion of all indirect costs, is manipulation of truth. New cars provide a convenient and powerful entry point for making money on related products. It's simple as that - fact that front sales staff is not paid on those additional items is a problem, but it's industry's problem, not mine.
2018 430i Gran Coupe
BTW Our dynamic duo just walked on the $21500 figure. I never even got an opportunity.
$21500 was X-plan + tax - the rebates, they took the trade out and raised to $20K.
Some "people" have to be thrown out before they will buy. They simply don't believe there is any more money in a deal until they get thrown out.
Same with the Fusion, the only thing that kept us from selling 30 of them last month instead 15 was the fact that we did not have the inventory.