How Much Profit Should A Car Dealer Make?

dino001 · December 2006

also we dont just go ahead and put it on every vehicle. it is a customer choice to purchase it

This is at least honest - you've got stuff to sell and if someone can be convinced to buy it, fine with me. My issue is with local friendly Toyota dealers who are selling their cars with "Toyoguard" package that is put on the Monroney sticker (courtesy of Southeast Toyota) - now it is a "port option", not a dealer add-on, so it may seem one has no choice but to get it, and by the way often all of their stock has it installed

:sick:

hyundai_slsmn · December 2006

I dont like that either, we almost went to that system but a lot of the salespeople objected heavily. All back end profit which we get paid $0 on and we knew would always lose front end profit to. So it may have been for our own selfish intent but in the end it does benefit the customer. We do sometimes put mud guards on cars or put floor mats in them or roof racks but theyre all put on at the same price you would pay if you bought them through parts and had them installed.

There is a difference between being respectufl with someone while still pushing for a good deal and just being a jerk with someone. There's no reason to treat someone (customer or salesperson) disrespectfully. The only thing you prove by this is who the bigger donkey is.

The best thing to is especially when its a husband and wife and the guy is trying to be the macho alpha male type and you just look at him and say "Is there something I have done to make you treat me this way? If there is I'm sorry" Every time he shuts right up and the whole landscape of the deals does a 180. What a great sight that is.

mikefm58 · December 2006

"Toyoguard" package

When I bought 2 new Toyotas in 2004, both had it on, don't recall where it was on the sticker though. But the sales guy had no problem negotiating as if it wasn't there.

dino001 · December 2006

Yeah, I was told it is a regional thing. Southeastern Toyota is notorious of putting them at distribution points and then making one part of the sticker. It also looks like they come in waves, when I look at local inventory on the net.

My guess is it might be an option to take or reject, or perhaps the its price is low (so the cost of scrapping it is not high), or the invoice price is high, but there is a kickback from SET to the dealer after sale.

This way they get a better shot of pushing this junk onto customers, as many people may not even ask to take it off (part of the "original" sticker). Also, if their invoice on the package is high (and they get money through other channels), they may claim that it really "is" worth $399/$599 or whatever they put on it. Pretty sinister plan - I'm guessing here, but it's the way I would do it if I wanted to prop my numbers at cost of the customers.

stillwaters · December 2006

Hey, I was wondering. I recently purchased a new 06 Land Rover from a local dealership. He did not have the exact vehicle I wanted and had to look around, finally finding the one I wanted at a dealership some 50 miles away. He retrieved the car from that dealer and sold it to me.

So, I figure since nobody is in the business of giving cars away (even to other dealers), I was wondering how much of a "transer fee" my dealership would have had to pay the other dealer?

Keith :confuse:

hyundai_slsmn · December 2006

there really is no transfer fee. sometimes the dealer may have to buy it at invoice from the other dealer in which event the dealer with the right car keeps the HB and FA and the guy you buy it from has less profit margin. Sometimes they will swap straight up. There is cost incurred tho as it takes a salesman off the floor to go get the car, or paying a driver to go get it, fuel, paperwork fiasco of entering it in to you inventory. Generally a dealer will give away a car in stock but not as much f they have to go get it. Instant gratification ability to the dealer really is your best friend

zackcam · December 2006

Addressing the original issue, I would have to put a number value and a percentage on what is fair. Of course, in this capitalist system it is fair for a salesperson to get whatever he or she can from a consumer. But, to be fair for both the customer and the seller I would say about $700 or 4.5%, whichever is higher.

I've actually got a business that deals with this and tries to make buying a fair thing (mostly for the consumer) while keeping people from getting screwed, but I won't solicit it on here since it would contradict the member agreement I consented to. Related to this though, most of the dealers I've talked to are willing to go pretty damn low to get a quick, pre-arranged, and definate sale.

Zachary Cam

explorerx4 · December 2006

at least try 'spell check'.

pch101 · December 2006

But, to be fair for both the customer and the seller I would say about $700 or 4.5%, whichever is higher.

Honestly, I don't follow what this means. Forgetting for a moment that there is no universal definition of "fairness", what is this amount or percentage based on? Invoice? Invoice, minus incentives and holdback? Does it include commissions and operating costs?

As a consumer, I have absolutely no desire to be "fair", I want to pay as little as I can get away with it. Obviously, if the dealer thinks that he can do better, then he will not agree to such terms and will end the negotiation. Which is, er, "fair" enough.

The question presupposes that it is my job to help the dealer to manage his business. Unless I own the dealership or am employed by it, that is not my concern at all.

It's pretty simple -- if the seller doesn't like the deal, he isn't going to close it, and that's his right. The deal that is accepted may make the dealer a fortune or require him to take a loss, depending upon what it is, but either way, nobody put a gun to his head and forced him to agree.

zackcam · December 2006

I only see definite spelled slightly incorrectly . . . is that really a concern?

As far as fair goes, it is obviously dependant on the person who is expressing his or her opinion in it. So, going by what you're saying, is it actually possible to understand what anyone is saying when an adjective is used? Obviously, even you can have a minimal understanding of the statement by your interpretation of it (this is of course assuming that you meant understand when you said you didn't "follow" what I was saying, oh wow, interpretation!). It's similar to how everyone's reaction is somewhat different when a journalist states a car is a "good buy".

Since I didn't define fair in my original post (and still will not), it is nearly as pointless as you trying to explain your desire to ignore a "fair" deal (but not quite). Now then, my definition of fair would be far too in depth to even attempt to explain on a forum such as this and would include a large multitude of topics. So, I simply added a short statement which would contribute to the mass.

Also, your questions are completely irrelevant because my original post addressed profit to the dealer (which takes into account invoice and all deals offered, among many other factors)

If you want to make an attempt at in-depth thinking, which is seemingly what you are trying to do, you would be more logical to say that it is hopeless to even discuss topics such as this since all of the supportive points will never be covered. Or, you can accept everyone's additional input and keep it tucked away in your mind for future reference.

Also, I make all of my posts on a lap top keyboard which often mis-types. I will not reread what I am posting for a simple opinion share since there is no significant need, so some letters may occasionally be missing. Thanks for the warm welcome.

Zachary Cam

pch101 · December 2006

Now then, my definition of fair would be far too in depth to even attempt to explain on a forum such as this and would include a large multitude of topics.

I don't follow what this means. You're the one who referenced the dollar and percentage figures, so it would clarify your post if you left a reference point to which you are comparing it.

you would be more logical to say that it is hopeless to even discuss topics such as this since all of the supportive points will never be covered.

I clearly disagree with that. I don't see a need for "fairness", period. I attempt to pay as little as I can, and "fair" plays no role in it. From the buyer's perspective, low is good, and lower is better.

zackcam · December 2006

Obviously, I was referencing it to profit for the dealer (the original topic), which takes into account everything you mentioned and more.

I never said there was a need for fairness, only what I believed would be my very in-depth definition of fair for everyone.

Also, I didn't think you would agree with that since we are in fact here discussing this topic; I was simply stating that it would be a very logical statement to make from a "critical thinking" point-of-view, as opposed to saying fair can't be defined.

Zachary Cam

dino001 · December 2006

Zack - the point is that the market determines fair price and it cuts both ways. There is no way of saying that 3 grand above sticker (or below invoice) is fair or not fair when taken out of market context.

Your claim of "in-depth analysis of fair price" is just a big word that has no particular meaning. Perhaps an "average sustainable" profit would be more appropriate. I could agree that your figure, if enforced on the market, may likely keep many dealerships open and many customers happy. But it's no more fair than this guy paying 3 grand over the sticker because he just wanted to be the first with the Solstice and that single mother buying that G6 2 grand below invoice. And why not - if she could buy her son a new jacket, pair of shoes, or get a better vacation, or buy herself a nice pair of earings with the leftover. If the price is too low for the dealer, he could have said no and kept the metal for the next customer.

The point of any business is that you better come up with something people want, or you die, sometimes slow and painfull death. While you are dying, some may be able to feast on you and take those loss leader deals. In reverse, if you are customer and you want something in a short supply and high demand, it will be handed to you only if you want it more than others.

zackcam · December 2006

Perhaps the market determines fair price in your definition of it, but since a common definition still hasn't been established it's pointless for you to attempt to explain what you are attempting to explain.

In-depth analysis of fair price was with respect to my definition of it, saying that it would be far too complex to explain here and it would in fact take into account things like market condition and many other factors. I can indeed take many singular statements out of context from your message and prove they make absolutely no sense what-so-ever.

Zachary Cam

dino001 · December 2006

The problem with your "fair profit" approach is that, if applied indiscriminately, it will result in shortages for some models and oversupply in others, thus forcing some corrections. It may work, however, for many "run the mills" products, so in that regard - if you like to call it "fair", be my guest. I'm not here to pick a fight or anything - just to explain that any artificial corrections on marketplace usually backfire one way or another.

In my opinion the real question is not really about fairness, but more about sustainability, as at what average profit level both sides could coexist to mutual benefit, which still would not preclude either side from trying to get on a better side of this average.

zackcam · December 2006

That's completely true. I don't have a fair profit approach per say, that was just the simplest, most straght forward answer to the initially proposed question. As I said before, it would be impossible to analyze all of the factors and so there is no point in doing so in a simple opinion share the likes of this forum. However, it is nice to hear what everyone as to say as it will expand personal viewpoints. So, why bother disputing the validity of my original statement by saying that it doesn't include things which I had actually included and just not stated, in an effort to keep the discussion simple and relevant?

Zachary Cam

Kirstie_H · December 2006

I only see definite spelled slightly incorrectly . . . is that really a concern?

Nope, and a belated welcome! I'm sorry for the rude first response you received, but most of our members are polite, and our policies encourage civility, so I hope you'll find this a good place to exchange ideas and opinions.

hyundai_slsmn · December 2006

is whatever the dealer is willing to take

at one point we were discounting 04 T-Bird's over $9k off MSRP with no rebates or factory programs. Why because that was the only way to get it off the lot. And it was actually considered doing well to only lose $4k on one. Now a Shelby GT500 on the other hand if you are making less than $15k over sticker youre giving it away. And dont even get me going on the first Ford GT we had

tidester · December 2006

is whatever the dealer is willing to take

... and whatever the customer is willing to offer. Win-win is always best.

tidester, host

hyundai_slsmn · January 2007

...customer mentality of "Oh Goodness I cant make the first offer because if they take it then I know I'm paying too much"

dino001 · January 2007

Well, the same with salesman "Oh my God, I can't tell him my best numbers (or even close), not in writing, not ever the internet or fax, cause he will take them and shop me". Cuts both ways.

shasta67 · January 2007

I always figure the dealer made the first offer. It is the sticker on the car. I always know about what I am willing to pay and will offer the dealer pretty close to that. I admit it is usually on the low side but something I am confident they have sold cars for before. If they take it great. I have done plenty of research to know it was a good deal. I don't really wonder if I should have tried to beat them out of another $200. If they don't then I will usually thank them for their time and go find another dealer. Mostly I just use the phone or computer to do this now. Saves me lots of time and frustration.

mikefm58 · January 2007

Or how about the idiot car salesman who's first question to my buddy this past Saturday was, "How much are you willing to pay for that vehicle?" as he was shopping for an Altima for his son.

He said $100, then laughed and said "Stupid questions get stupid answers." He did eventually end up buying the vehicle but only after he left when they wouldn't meet his price and they came running out as he was getting in his car to leave.

dino001 · January 2007

Not sure why the question is stupid. For every transaction to occur a buyer has to be willing to pay amount of dollars that the seller has to be willing to accept. Unless two Bobsts are talking, it's usually the range that may or may not have common area. Whole buying process is about finding out if that common area exists and both sides are trying to get to their side of this range, hence various tactics on both parts, one of which is not to divulge your real range too early. Question is perfectly legitimate, as much as buyer asking "so how much are you willing to sell it for?". It's not necessary to answer it with your "best number", but I see no harm or stupidity in asking it. Perhaps there were additional circumstances making it "stupid", but on the face value - I do not think it was.

abraindrainer · January 2007

I may not call it "stupid" but getting an honest answer is probably wishful thinking... As a buyer I would also like to get answers to questions like: How many of these have you sold this month? Are you just short of making your numbers? What is the lowest price you have given on one of these units in the recent past? I may get answers to all of these but I suspect most will not be completely truthful...

When I had asked for a "best" price quote, I have been answered: MSRP? Is that the same as $100 answer?

bobst · January 2007

"getting an honest answer is probably wishful thinking"

Oh yeah, I definitely agree!

That's why I don't ask the sales persons any questions other than, "Do you accept our offer?"

mikefm58 · January 2007

Sorry dino, I disagree, we're all looking to pay as little as possible. Asking someone a question like that is, well, foolish IMO. A better question would be something like, "What would it take for me to put you in that car and drive it home today?" The salesman is still asking the buyer to name the first price, just a bit differently.

dino001 · January 2007

Sure, I want it as cheap, too and the dealer wants as much as possible. So what is the difference between "how much are you willing to pay" (supposedly stupid asked by the salesman) and "tell me your lowest/rock bottom/best price" (supposedly smart question asked by the buyer)? I just see no difference.

shasta67 · January 2007

So the difference between asking "What would it take for me to put you in that car and drive it home today" and "how much are you willing to pay for that car" is enough for your friend to respond by telling him a "stupid" answer for a "stupid" question? Man I wish I had quality friends like that.

newbee7 · January 2007

I'm a consumer in the market for a car, so I wish there is an answer to the question "How much profit should a car dealer makes?"

But, I doubt that we ever find an answer. Because if we do, we could find an answer to "How much profit should company X makes?" (replace X with Walmart, Shell, the company you're working for, etc.)

As far as both sides happily agree to a deal and there is no trickery/coercion or unlawful practices about the deal, it's OK. I find it equally fine if somebody wants to haggle over the invoice (like myself :-) ) while somebody else wants to pay MSRP + 20K for a car.

abraindrainer · January 2007

A typical dealership has profit margins of about 1-3% on NEW car sales but this is after all expenses: financing, staff, rents, taxes, etc. So if you know the "real" cost (after all kickbacks and this may change daily or weekly) and you know their fixed cost (associated with sales only) plus their monthly volume... you can figure out what should be the "expected" price.

FYI: New car sales profit margin sales have been on a steady decline for the last decade but the profitability on other products and services has taken up the slack.

volvomax · January 2007

Actually, a "typical" dealership loses money in the N/C dept.
If the typical dealership had a 1-3% profit after expenses, that would mean a gross profit in the 5-10% range.
Probabaly closer to 10% with the size of the nut most of these stores have. No way are they averaging that kind of profit.
Service and Parts, esp Parts are where the big profits are.

abraindrainer · January 2007

You could be right because my information is dated. However, 5% on an average car is $1-1.5k and holdback accounts for a good chunk of that too. How many cars today do not have any dealer incentives? How close is invoice to the actual cost? We all know that margins on new vehicles have been sliding for a decade. Moreover, we all certainly agree that used, parts, service, and F/I are where real profits are generated more and more.

Let's not forget: Cars are a captive product/market! Dealers and manufacturers could/do sell them at a loss as long as they are assured to make a profit during the life of the vehicle. Today you bought a car, over the next few years you are almost guaranteed to be in an accident for which dealer/manufacturers will sell rediculously overpriced parts for which driver only pays indirectly (via insurance)... Then, one can also convince/scare plenty of buyers to "maintain" their cars on the "severe" schedule. It is all good :P as long as they make money... on average.

grandtotal · January 2007

I plan to buy a new car soon. It is (supposedly) a "hot" car. For the last four months I have been tracking the dealer's inventory on line and have been surprised to see how long the vehicles are actually sitting on the lot before being sold. I think the negotiations may get interesting when (if neccessary) I demonstrate that the car they are likely to claim is in great demand actually is not so much.

cobraboy1 · January 2007

Every one here seems to agree that a dealer should make somewhere between 3-5% profit on a car, per customer,so why is it that no-one that I know does? I am a Mazda salesman and I know that out of my last 5 customers they would only agree to paying 300.00 over invoice! Let me make this as simple as possible, I make 25% commission on the PROFIT of the vehicle over invoice. 300.00 profit = 75.00 commission for the last 6 hrs that I just dutifully spent with you. I have no problem spending that time to help you out and I can tell you that there is only $900 worth of markup from invoice to sticker on a Mazda 3.

A fully loaded up CX-7 with all of the options has I think somewhere around 2000K worth of mark up, on a car that is $34,000k = about 5.8% profit margin. I have told people that we are making less than 6% profit on sticker off of them and they seem to be fine with it, UNTIL they ask, " How much money is that?" When I tell them about 2k then they say, "2K?!?! That is way too much to pay I will pay you 500 over" Do I take it? Of course, because if I said no then I would lose my job. So now I just made 125.00 for 5 hrs of work,and I work about 55hrs a week. Half of that time is spent waiting for clients.

Or ther are lots of people that say they will only pay 100.00 below invoice only, and I have to sell it or my job is in trouble, Well I understand that people have bills to pay, but so do I! I make on average about 50.00 per customer and I am expected to make a living. Is there any possibility of us getting this changed?

qbrozen · January 2007

5-6 hours with a customer?? That's ridiculous. Either you or they need to speed up the process!

The conversation you described should have taken all of 2 minutes. Add in a 15-minute test drive, 15-minute demo, and let's say a half hour while you appraise the trade, chat with your manager, get coffee, whatever. That's an hour. So let's stretch it and say 90 minutes TOPS before you pass off to F&I.

audia8q · January 2007

I think the negotiations may get interesting when (if necessary) I demonstrate that the car they are likely to claim is in great demand actually is not so much.

With one of my mfg the car shows up on the consumer locater when the car is ordered...thus showing in inventory for 3-4 months before it actually hits the lot...how would this play into your negotiations?

Also, lets say they claim its a hot car and its been there for a month...you point this out and the sales manager says "so what"....now what do you do?....just wondering.

The days in inventory angle of negotiating has never worked with me...unless the car has been in stock for a year or its a used car that I made a big mistake buying or over valuing.

dino001 · January 2007

Do you numbers include dealer's doc/whatever fees, ext. warranty, accessories, "protection package", financing/lease?

See, my guess is quite a few people "could easily live" with dealer making nominal 3-5% profit on the car if it was a final figure. The problem is it's not and you know it, and I know it. Invoice level or so are very good starting points to achieve 3-5% at the end of the day, after everything is added.

I know that your pay may not be calculated based on those items, but that's not our (customer's problem). Our job is to find out at what level your boss is willing to settle. Invoice plus a few hundred plus the rest seems to be just that.

jipster · January 2007

Is there any possibility of us getting this changed?

Not unless you're talking about something illegal... or voodoo.

Dealerships have no incentive to change the system. It works well for owners, managers, and a few salespeople per dealership. So, it's up to you to adapt.

abraindrainer · January 2007

The problem is that the dealership real cost is not really invoice if one is to include all other incentives, holdback, volume discount, etc. Is the cost really invoice? Similarly, there is a lot of money on the back end (as has already been been stated above). If you are unhappy about only making a commission on the front end, that is not the fault of the customer, it is the fault of management at your dealership that has convinced you to work for $50 every 5-6 hours.

I think you should check your facts before you start complaining here. $20k Mazda 3 has about $1.5k in distance from invoice to MSRP. At invoice, many dealerships still make holdback and doc fee but only if they move their inventory instead trying to squeeze pennies from every walkup. Why would I buy from you at $300 premium if I can buy it no-haggle from a place like fitzmall.com who sells the 3 at invoice?

Irony: I was recently shopping a mazda and some dealerships were crying about not making any money at invoice less incentives but others were selling exactly the same vehicle for $2-3k less than that!

Cobraboy1: When consumers get full disclosure on relavant information from folks like you, then you will get your 3-5% no questions asked!

jipster · January 2007

When consumers get full disclosure on relavant information... then you will get your 3-5% no questions asked.

Doubtful. I think most people (myself included) would try for a lot less than 3-5%, even given full disclosure. Maybe, 2-4% a few questions asked, and... 0-2% no questions.

abraindrainer · January 2007

Consumers are not going to have any agreement on any actual percentages if the level of BS (as per cobra's post) persists!

boomchek · January 2007

:mad: :mad: :mad:

But what difference does it make how much money is on the back end? Consumers wanted invoice, so that's in the open now, but how far do dealers really have to open their books to Joe Carbuyer?

If there is holdback, it's usually paid to the dealer after quotas are made, so why should that be given away as well?

And why should volume discount come into play?

And salesman bonuses from the manufacturers? Should we give those up as well? Or commissions? Or year end bonuses? Or maybe we dealers should just work for free and HOPE that at the end of the year the manufacturer will pay us our holdback, from which the dealer would pay bills, salaries, and costs?

I can understand the fact that as consumers we'd like to pay the least for any product or services especially big ticket items, but to be digging through accounting books and figures of businesses to figure out how much they make and how much we as consumers should allow them to make is I think a bit silly.

If you go to any business and receive good service, and you pay what you think is a fair price for a product, then who cares about what goes on in the back end?

If I hire a taxi cab to take me downtown, I don't ask the driver about what his expenses are, or how much he will spend on gas to drive me there.

If I buy a suit (that is probably marked up 200%), I don't ask the store to show me an invoice from China as to how much the materials cost, what the taylor got paid, or what the store is making on it.

If I buy electronics, I don't do that either.

If I, or anyone else for that matter is buying a house, do we ever ask for the cost sheet of the materials used to build it, what the previous owner paid for it, nor do we DEMAND what they should make on it?

So why should car dealers be under such scrutiny even though the business changed quite a bit from the old days?

That's all for now....still love my job. :P

PS Braindrainer, this is not directed at you specifically, I'm just thinking out loud in general.

shasta67 · January 2007

But what difference does it make how much money is on the back end? Consumers wanted invoice, so that's in the open now, but how far do dealers really have to open their books to Joe Carbuyer?

If there is holdback, it's usually paid to the dealer after quotas are made, so why should that be given away as well?

Well to say invoice is in the open now is kind of a stretch. A number they say is invoice is out in the open but the "true" cost to the dealer is still pretty well hidden.

You are right, it does not matter. The only thing that matters is what a dealer will sell the car for. I think the biggest problem with the whole system is it was set up to intentionally confuse and mislead the consumer. Now with the internet a lot of the mystery has fallen away dealers are having a hard time making as much profit as they used to. (on new car sales at least) My own personal opinion is it will only get worse. I think the present system is perfect for someone like myself. I can use the internet and phone to get a great deal but there are still enough people out there paying too much so the dealer can afford to sell to me. My fear is that someday all car salesmen will be $8-10 an hour and the price will be set but at a price higher than I now pay.

dino001 · January 2007

I'm glad you love your job, Boomcheck. The worst can happen if one hates what they do.

About asking dealers for their invoices or discussions about "fair profit" etc., I believe it's the industry who opened the door to these kind of discussion, not customers. It all starts at "bazaar" setting at the car store, practically unprecedented in any other retail business. You have sentences like "we have to make money, you know" - totally unnecessary and not really relevant, if you think about it. I don't care if you make money - for all I know you may be paying me from your own pocket if it takes to sell that dud on the lot that is already sitting there for six months. The automatic response to those is "Allright then, lets show how much exactly you are making here". Once this door is open, there is no coming back to "it's not your business". When you stay away from the subject of your profit, commission, livelyhood, all is fair game (within law and basic ethics, of course).

If you feel no remorse of snatching big profits when you have a hit on your hands (and why should you - it's your job to do so), don't bring your kids' college fund (or big screen TV - whatever it is you are saving for), when you are trying to unload that stinker. The awards come with risks - one of them is being stuck with a wrong product. I may feel personal sympathy to you, especially if you are my compatriot in a foreign country

, but as a customer it's my duty to get it the cheapest I can within bounds of the law.

Your industry believes that the current way is the best way of doing their business (for them of course

) - if they did not, they'd change it. If you accept that, you have to able to tolerate all that comes with it, including customers wanting to see your paperwork including your birth certificate. Does not mean you have to give it to them, but then you also have to be willing to let them walk.

Most of people are reasonable most of the time. They often get unreasonable when they're put in situation they don't fully understand. Car shopping is currently such a situation for many, as they have no time or patience to thoroughly follow the market, yet they here about those dirty tricks, huge markups, enormous incentives reported by similarly ill-informed reporters or their neighbors.

Car transactions are complex enough by their nature: options, financing, trade. Yet, you see dealers making lots of effort to make it even more muddy than it needs to be, just for a chance of scoring a whale. While you are fishing for that whale, you risk alienating majority of non-whale customers to the point they won't believe a word that comes out of your mouth or those who will try to take last $100 from your paycheck. Apparently it is worth the risk, as not much has changed in last years in the way the industry operates.

boomchek · January 2007

It all starts at "bazaar" setting at the car store, practically unprecedented in any other retail business. You have sentences like "we have to make money, you know"

I agree with you on that Dino, but it is the customer in many cases who asks for discounts and invoices, and not the salespeople.

If a customer comes in and wants to buy a car at MSRP, I don't think you will hear whining from salespeople about putting kids through college, or that we have to make money.

On the other hand it CAN be as simple as customers want it to be:
"I'd like to buy this red Civic DX-G, and I see that this Honda costs $XXXXX. How much is the total with tax?
Thank you, here's the full amount. I need the car by Friday."

I had deals like that where a customer was on the road within 1 hour in a new car. They paid the sticker price and drove away happy. It's as simple as that.

And off you go in your shiny new automobile! :shades:

On the other hand you can make a process complicated for ANY purchase, from a pound of bananas, to a Plasma TV.

You can go to your supermarket, and out of town supermarkets, research banana prices, and banana brands, and even research the stock market prices for banana companies, and commodity prices for bananas, and how much supply and demand there is at a certain time of the year for bananas.

Then you can find insider info on how much your supermarket pays its employees, and how much it buys these bananas for, and whether they have volume discounts from their wholesalers on these bananas. Then based on that you can go to a couple different supermarkets, and test them to see which one you like the best. And finally when you're ready to make a move on two pounds of bananas, you can send emails for banana quotes, and go into a few stores to see if they can cut you a deal. Maybe even talk to the fruits manager, and see what he can do for you. And hopefully after two months of researching you can walk away with two pounds of ripe bananas. :shades:

HOWEVER, you won't want to hear that your neighbour picked up similar ones for two bucks less across town, then you'd be thinking your supermarket ripped you off and that they're nothing but liars, and cheats! :mad:

newbee7 · January 2007

If a customer comes in and wants to buy a car at MSRP, I don't think you will hear whining from salespeople about putting kids through college, or that we have to make money.

On the other hand it CAN be as simple as customers want it to be:
"I'd like to buy this red Civic DX-G, and I see that this Honda costs $XXXXX. How much is the total with tax?
Thank you, here's the full amount. I need the car by Friday."

I had deals like that where a customer was on the road within 1 hour in a new car. They paid the sticker price and drove away happy. It's as simple as that.

How many percent of your customer pay at MSRP?
When you go out and buy a car for yourself/spouse/children/relative, do you pay MSRP?

Why did you sell a car for less than MSRP? If selling a car for less than MSRP is a loss, why are you still selling cars?

A customer makes an offer you don't like just say you don't accept the offer. Who forces you to whine and then still sell the car for less than MSRP?

Taking your buying bananas example, I guess I can still do all the research and make a lower offer for the bananas to the supermarket. But, the problem is the supermarket will never accept to sell the bananas for less. Therefore, I know it won't make any difference for me to make a lower offer.
Or, I can simply go to a different supermarket whose bananas price is more reasonable.

If car dealers do the same and hold the MSRP firmly, the customers may not have another choice. But, hey you guys don't do that. You made it possible for us to buy at less than MSRP. We, customers, just take advantage of that. Money are not easy to make for some of us. The money we saved by paying less for a car goes to our kid's tuition, clothes, vacation, etc. too. The reasons a car salesman uses during his whining always go both way, not just for him.

Its part of your job to live with the fact that somebody will pay at MSRP while many others won't. If you choose to do this job and still can't make enough money, it's your choice.

boomchek · January 2007

If selling a car for less than MSRP is a loss, why are you still selling cars?

I never said that selling it for less than MSRP means it's a loss to us.

And second of all I do not whine, I was just quoting what Dino was saying, even though there are some whiner salesmen out there.

Dino said that the process is complicated, and I was saying that it doesn't have to be if you do pay MSRP.

And you are right. It is the desperate dealers and weak salesmen who need deals that will blow a car away below cost when they don't have to. But guys like that don't last very long because they see that they end up working for almost nothing, and the dealer won't afford to stay in business.

As for the money is not easy to come by part, it goes both ways. We all need to feed our families and go on vacations.

dino001 · January 2007

On the other hand it CAN be as simple as customers want it to be:
"I'd like to buy this red Civic DX-G, and I see that this Honda costs $XXXXX. How much is the total with tax?
Thank you, here's the full amount. I need the car by Friday."

Well - it obviously can, yet if you have a lot of people willing to do that, the dealers immediately take it to the next level: suddenly all those cars will have "protection package" for $799, "strake kit" for $599 and F&I guys will make a lot of effort not to let you sign that paper in 10 minutes - rather they will run you through an obstacle course with extended warranties, life insurance and other add-ons.

I think a lot of people pick up the fight and fortify themselves early exactly because any early concession is seeing as a sign of willingness to let their wallet be vacuumed with "extra care".

BTW, I would never say that the guy is a liar just because his price is higher than what I think it should be. But I would say it if he started making false claims about customer rebate/financing availability, tried to get me 9% APR with 750 FICO score and insist it's the best deal in town, or push a lease/baloon program without full disclosure of terms.

dino001 · January 2007

or invoice in my dealing unless dealer expressly opens the door with their own remark.

Another legitimate situation where bringing invoice in is relevant are those special programs, like GMS, Ford X/A plans, VIP plans, etc - those usually expressly use invoice cost as determinant and require dealers make full disclosures, including dealers incentives, not only consumer's.

Other than that - here is your price, here is mine, can we talk about it? Yes - so let's talk, no - see you. I may be back if I find my idea about the price was incorrect, otherwise your next shot is in 3-8 years, maybe. No name calling, no cries, no foul.

Name calling often starts when we agree on something, then suddenly the final bill looks somewhat different - new surcharge, new "package", etc. We agreed to $20K+TTL, but the bill says $20K+$599+$399+$15+$200+TTL. Then we do have a problem...

How Much Profit Should A Car Dealer Make?

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