"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" INVOICE DOES NOT REFLECT DEALER'S ULTIMATE COST BECAUSE OF MANUFACTURER REBATES, ALLOWANCES, INCENTITIVES, HOLDBACK, FINANCE CREDIT AND RETURN TO DEALER OF ADVERTISING MONIES, ALL OF WHICH MAY APPLY TO VEHICLE. """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" My question is: Does the manufacturer (GM) always reimburse the dealer the ad fees after the vehicle is sold, like he does the holdback. In my particular case, the dealer and I agreed on a price of $900.00 over his "final or true cost" of vehicle. He then faxed me a copy of the invoice which confirmed he did not charge me the ad fees. My "driveout" price was the invoice total, minus ad fees, minus holdback, plus $900. This was a GM invoice on a 2002 Tahoe and I am specifically inquiring about GM invoices. I realize that all manufacturers probably do things differently.
The MSRP was $36,939. My "drive away" price was 30,175.78 (dealer invoice of 32,907.19 minus holdback of 1086.27, minus ad fees of 543.14, minus 2002 rebate, plus 900 profit). This was 6763.22 off MSRP. This was with a large volumn dealer in Dallas. I live in Little Rock and most dealers here are advertising 6000 off MSRP on all Tahoes in stock and I have seen a couple run ads for 6500 off . One even ran an ad for 7350 off on one particular vehicle. So the Dallas deal is better but not that much better than I could get here. I have a son who just moved to Dallas and that is why I decided to try the dealers there. I got that price with little haggling and 2 of 3 dealers faxed me the invoice.
From what I have read and been told, the answer to your question is NO. GM dosen't always reimburse the dealer the ad charges. Mostly they are a charge TO the dealer, so there would be no situation that would require reinbursement on a vehicle that a consumer purchased.
I am a GM employee buyer....How come I Never have to pay ANY adv.fees or dealer co-op adv. fees. And somebody in my family is always buying a new GM vehicle and they don't have to pay it either ? The dealer whips out the invoice amd the GMS price is right there...Only add ons are sales tax, 75. DOC free, 15 NYS inspection fee and the difference in lisc. plates (if any)..Geo
Thanks for the info. That's what I thought. The statement at the bottom of the invoice sures indicates that and, if not, the dealer in my case is eating the $543.14 ad fees and selling me the vehicle for $356.86 over his final or true cost. I think not.
1) Ad fees are not profit to the dealer. They are charged to the dealer by the manufacturer. I have been a GM dealer and we never got a dime back on them. They simply reduce our margin on the vehicle. We did get other money from GM from time to time in what is called "co-op" advertising to help pay for the dealer's advertising costs though.
2) GM Employee pricing is based on a set dollar amount irrespective of what the actual invoice amount of the vehicle is. I.E. "GM Employee price on a 2002 Chevrolet Biscayne is $18,650 plus destination and invoice for options" versus Ford's A X or Z plan pricing where it is a percentage of actual invoice. This sort of stuff is prenegotiatied with the UAW.
That 356 bucks is prob. all the dealer made...But lets not forget they might still get "back side money" or something like that. I have been DROOLING over a new CTS to replace my 96 Deville. Mr Dealer WILL NOT DO GMS pricing on it either ! Gave me a new Deville to ride for the week and will do GMS ! Remember mr dealer DOES NOT have to do GMO-GMS if they don"t want too on a hot model GM.......Geo
BTW: they make most of the $$$ on your trade ! I traded a 97 chev xcab 4x4 27k miles . Dealer gave me 16k trade on A new 01 chev. pu. using GMS deal.....97 sold next day for 18,995...wow
Has anyone puchased a 2002 Nissan and paid an ad fee? I'm about to purchase a 2002 Nissan Altima 3.5SE and the dealer wants to charge me a $500 Midwest Advertising Fee. Now, I know that an ad fee is a legitimate fee that is passed on from manufacturer to dealer to customer, but I'm wondering if $500 could be more than it actually is?
I recently was shopping for a G35 sedan and was told the price for a new car was $850 of sticker, but there was a $700+ charge for advertising. Is this a legit add on to the final price for the car?
invoice, then it is a charge from the manufacturer to the dealer, and is legitimate, as all vehicles have some sort of advertising charge (charged to the dealer).
However, if this charge is listed on an addendum sticker or is being disclosed with the bill of sale, the red flag should go up - not legitimate.
If you're price shopping, don't get bogged down in 'advertising', 'document', etc. fees.
Ask for a total, or 'out the door', price; then compare that price between dealers. If you're cross shopping dealers in different states, ask for an 'out the door' price not including tax, title, and license.
Sure, the dealer incurs costs for advertising, processing the documents, etc.; but itemizing that stuff when quoting you a price is sales hooey intended to confuse the buyer.
means including all taxes, tags, and fees. If you can't even get that definition right, please quit trying to confuse people with YOUR hooey.
I sell cars in about 5 surrounding states, I know the tax and tag fees for ALL of them. It isn't rocket science, despite how hard it is for Edmunds to figure out the regional fees.
Not all the dealers I contacted were as good as you, Ed. I live at the junction of 3 states and within shopping distance of 3-4 more, and I thought it was a bit much to expect all of these dealers to understand my state sales tax, my county sales tax, my city wheel tax, etc, etc, etc.
Asking for a price 'out the door not including tax, title, and license' worked great for me, even with the in-county dealers, when the spirit was no haggle. The dealers that didn't understand that I just blew off (with a polite e-mail thanking them for the quote) as simply unwilling to deal straight.
Getting caught up in semantics or sales hooey just wasn't necessary.
P.S. Ask a straight question; get a straight answer. Or, NOT!
Requests for a price quote "out the door not including tax, title, and license" got me plenty enough quotes to work with.
LOL, I did get some "I need more info" replies, too. Some were legit (like about color preferance, for which I had none); others were simply ducking the price request (tranny type on a car available only with manual). It was easy to tell which dealers were trying to haggle and which were just doing business straight.
I am trying to buy (order) a 2004 Avalon and received a quote from a Dallas area dealer (internet salesman) for dealer cost + 0. However, his dealer cost was about $800 more than the dealer cost shown by Edmunds. The primary difference was $415 + $345 for the National and Texas area advertising costs, respectively. Are these legitimate dealer costs or are they negotiable? I would appreciate hearing from others on this matter.
that is charged to the dealer by the manufacturer - it's not something the dealer adds on. If you want to send a deal south quickly, hit the dealer over the head about a fee that he has to pay regardless.
You may be able to work an overall price lower but saying specifically that you want to eliminate the advertising costs that they incur not create ,will as Jim says will send it south. What was the Edmunds TMV? Was it close to the invoice plus $800? If so then Edmunds factored it in on their TMV.
with Zues, the ad fee isn't something the dealer controls; it's pointless to talk about 'em.
with afk_x, it's best to negotiate your total price without worrying whether the different contributors to that price are called ad fees, doc fees, destination fees, etc. fees, greens fees, bees fees, whatever fees. Even if you do that, however, don't be surprised if the dealer attempts to add still another fee just before you close the deal; so decide ahead of time whether or not you'll go for it.
If you're concerned about dealer cost, get the Consmuer Reports report; it's worth the money once you've narrowed to make and model.
Consumer Reports (in their $12 buy-it-on-the-web New Car report) showed a $500 factory-to-dealer cash incentive (at least for my New England region) in addition the the well-publicized national factory-to-customer incentive.
I also found out that Suzuki provides dealers with both a 3% holdback and 1.5% floorplan allowance (whatever that is).
So I spent $12 to find out there was additional an additional $700 on the table for negotiating room. Edmunds, KBB and Autosite all had only the factory-to-consumer rebate listed.
I have used CU's New Car reports for years... CU's information has always been at least equal to other free sources, and often had additional items listed (regional incentives, for example) that were missing from the free websites (who seem to report on national programs only).
I agree with the others here, stop worrying about dealer cost. If the invoice price on edmunds is 24K and that is what you want to pay, offer 24K + TTL. Or calculate the OTD price you want to pay and offer that. Make sure the dealer knows that you are not going a penny higher OTD.
Advertising fees may be legit, but like anything in a car deal, everything is negotiable.
As I said in my original note, I want to order a 2004 model in which there is no Edmunds or any other price data available yet. So I was trying to understand why for the 2003 pricing, the dealer I talked with claimed his cost on a 2003 was $800 more than the Edmunds price. I guess I could negotiate the 2003 price I was willing to pay and then agree to increase that amount by any actual dealer cost increases on the 2004. Bottom line, the dealer wants $800 more than what Edmunds recommends on a 2003.
Why is it that they break the cost down that way on the invoice? That destination charge is in teh same boat in my book.
I mean when I buy anything else - a tube of toothpaste, a television set, whatever - I know I'm paying shipping and advertising and any number of such things but they don't spell it out on the receipt. In the case of the television it's even frequently a negotiable price (we'll beat any competitor).
Odd thing car buying...
2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
Way back when, consumer action groups wanted car invoices broken down so consumers could see how the money is divided, giving them disclosure.
The problem is, most people haven't a clue as to how to read an invoice if they saw one, given the "A" plan, "Z" plan, advertising, holdback, transportation, etc. You can't just pick the lowest number on the page and assume that's a good price to buy the car for...
Fairly sure that any pricing service will, if you read the disclosures, tell you to add the appropriate ad fee for the manufacturer and region you are buying in to their price. And to add to what Zues posted, one of the reasons it is broken out is for accounting purposes. Another reason, is that many times it is a percentage of the MSRP, so that must be sub-totalled first. Look at your pay stub, aren't the deductions itemized? Same with a vehicles invoice.
When I worked in wireless telecom mfring every product we made had what's called a BOM or Bill Of Materials. Its basically an itemized list of every single component in a device, complete with part number, supplier, cost, and other related info. The BOM had to be revised every time we changed parts suppliers or improved a component but we still had to maintain the old info for comparitive reasons.
We had customers who wanted our BOM on the products they bought from us. We never supplied it to anyone (only sr. execs had a copy) as we thought our customers would analyse it and use the info to negotiate a lower price while at the same time using it against our competition to demand the same thing.
I struggled with reading the BOM on products I knew very well. I'd think a consumer would have an aneurysm if they ever saw a BOM of their car.
I'm sure somewhere there's an invoice sheet for your tube of toothpaste with the shipping and advertising costs broken out. It's just that no web site has bothered to get the toothpaste invoice from insiders in the toothpaste industry, and then create a "Build Your Own Toothpaste" function. My point is that these things are probably broken out on every invoice for any product, but we don't get to see the invoices for anything except cars. Basically, someone is "stealing" the invoices and selling them to websites, which is great for us consumers. However, it's silly to then turn around and complain that they've broken everything out...
I think we are using the term invoice too loosely here. The invoice price is what one is expected to pay. Generally, that means the price for materials, labor, overhead and shipping & handling charges. Contrary to popular belief, the dealer does not actually pay that amount to the manufacturer. He pays something much less.
The so-called invoice price, is merely the standard cost of the items listed. The standard cost is the estimated or budgeted cost, not the actual cost. So using the standard cost is a good proxy of the true invoice cost though it is always higher than the net invoice cost to the dealer. That is why the dealer can sell below cost and still make a tidy profit.
An invoice, which is a piece of paper, billing for goods is what you pay for services. You get your car worked on, they tell you it'll cost $200, and you see an invoice for $200.
"Invoice" cost on a car, with the exception of holdback, which doesn't count, IS what the dealer pays, unless there's dealer cash.
No dealer is making a "tidy" profit by selling at invoice, unless you get the trade for 2 grand back of book!
The "unless there's dealer cash" is the rub. I am not a dealership owner, so I cannot speak from direct experience but I think it is more common today to have some form of dealer cash, be it marketing support, volume bonuses or whatever it is called. I see too many cars advertised below invoice. Not just screamer ads, but ads that say, 20 to choose.
When I mentioned the buy rate for my loan on my camry purchase the F&I guy made the comment "I do not know why we are giving you this good a rate AND losing so much on the sale. We are not making anything on this rate."
The best I can figure I got the new car about $300 below edmunds invoice price. This excludes SET fees, TDA, etc, if the dealer had to pay those. I had no trade so they made no money there. They gave me 2.99% for 60 months on my loan. They charged a $389 doc fee and $100 loan fee, but they backed this into my offered price for the car.
They had to make some money somehwere or they would not have done the deal. They are not in business to give me charity. I know you have been out of the business a while but maybe you can look at this deal and figure out where their profit is. I think it is in a factory to dealer incentive. I was told there was $1500 on the LE model. Mine is the XLE but maybe they had it on the XLE too.
"I do not know why we are giving you this good a rate AND losing so much on the sale. We are not making anything on this rate."
It's a shame when a salesguy or F&I guy is so weak they have to whine like that.
Making nothing on a rate is very possible - when there are incentivized rates from the manufacturer, the F&I guy usually doesn't get a flat fee ($100), like when selling at "buy" rate with normal financing.
Still he should be happy to have the sale, put on his selling shoes, and hook you up with choke and croak, gap, mop n glo and a big ol' warranty!!
and like I said before, they'll analyze a car deal to death over $20, then walk blindly into Zales and pay an $800 markup on a diamond necklace for their wife.
It boggles my mind that people will pay three times as much as something else costs ($1200 necklace, $400 cost), but will hack over $20 on a $25,000 car.
It's easy to understand. We want to pay a fair price for a vehicle and in order to do that, we need to know how much the dealer pays for the same vehicle and we start from there. We don't want to pay more than we have to and you don't want to sell for less than you have to. If you know of any where that tells me the fair price for a vehicle in certain region of the country and at certain day, then there is no reason to inquire the invoice. Don't tell me to use Edmunds TMV. It is always few months behind; at least in my part of the country. Zue: again, it is easy to understand. If every one in town selling the necklace for $1200 then that's what we have to pay if we want one. In addition, is there any place we can look up the invoice for the necklace? That's the main difference between buying nacklace and buying car.
I'm curious....you say ..."We want to pay a fair price for a vehicle and in order to do that, we need to know how much the dealer pays for the same vehicle and we start from there.."
What is a fair price and how do you determin a fair price based solely on profit? Do you know the cost of everything you purchase? There are alot of items that people haggle price. Boats, furniture, bedding, hotel rooms, certain kinds of clothing, jewelry, etc.. where do you find "cost" on these items? you don't pay the full asking price for these items do you???
I personally wouldn't have a problem if all dealers simply posted the walk out sticker price on their cars like most retail dealers do to make my decision (i.e. Wal-Mart).
However, the car industry has determined that as PT Barnum quoted "There's a sucker born every minute" and they traditionally make more money using this negotiated sale's technique.
The following web site outlines some of the notorious scams that some unethical car dealers try on their victi..uh I mean customers... http://www.carbuyingtips.com/
I'm not saying all of them are like this but historically car dealers in general have a bad reputation for taking advantage of customers. They continue this sales method because they make more money wheeling & dealing vs. post the walk out price.
If dealers used the full disclosure method (take it or leave it approach) then customers could more easily determine the value of the car vs. their competition. But the industry set this practice, not the consumers. So you have to haggle for 3 hours to find out the so-called price.
If the dealers chose not to, they would not have to reveal their invoice price information to anyone including Edmunds. However, you can find invoice information in all types of car publications.
Don't get me wrong, I understand the industry's dilema of supply and demand setting the price and hey that's why this is the Good Ol' US of A. Most cars are simply not worth the MSRP. That's why I want to be the most educated consumer that I can be. Just don't blame the customer for trying to play the game that the car industry designed. If the industry doesn't like it, change the rules.
"That's why I want to be the most educated consumer that I can be. Just don't blame the customer for trying to play the game that the car industry designed. If the industry doesn't like it, change the rules."
Thats just it, the consumer who is educated doesn't HAVE to play that game.
The educated consumer can "get up and walk out" if they dont like what they are hearing.
If dealers used the full disclosure method (take it or leave it approach) then customers could more easily determine the value of the car vs. their competition. But the industry set this practice, not the consumers."
Most, if not every dealer, imo, would have to do that for it to work. The ford dealers in my area became one in the same and initally went to a one price structure. It didnt work because local customers were going to nearby towns to purchase from the mom n pop stores(and getting better deals) because they still would negotiate.
"So you have to haggle for 3 hours to find out the so-called price."
I for one have never, and will not negotiate for hours. I also have felt that I received a fair price as well on every car I have bought.
Comments
INVOICE DOES NOT REFLECT DEALER'S ULTIMATE COST BECAUSE OF MANUFACTURER REBATES, ALLOWANCES, INCENTITIVES, HOLDBACK, FINANCE CREDIT AND RETURN TO DEALER OF ADVERTISING MONIES, ALL OF WHICH MAY APPLY TO VEHICLE.
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My question is: Does the manufacturer (GM) always reimburse the dealer the ad fees after the vehicle is sold, like he does the holdback. In my particular case, the dealer and I agreed on a price of $900.00 over his "final or true cost" of vehicle. He then faxed me a copy of the invoice which confirmed he did not charge me the ad fees. My "driveout" price was the invoice total, minus ad fees, minus holdback, plus $900. This was a GM invoice on a 2002 Tahoe and I am specifically inquiring about GM invoices. I realize that all manufacturers probably do things differently.
You paid no holdback, no ad fee's .. and the dealer sold it too you for net, net, plus $900 for a Tahoe.
What type and what was the MSRP of the vehicle..?
Terry.
So the Dallas deal is better but not that much better than I could get here. I have a son who just moved to Dallas and that is why I decided to try the dealers there. I got that price with little haggling and 2 of 3 dealers faxed me the invoice.
Never have to pay ANY adv.fees or dealer
co-op adv. fees. And somebody in my family
is always buying a new GM vehicle and
they don't have to pay it either ?
The dealer whips out the invoice amd the
GMS price is right there...Only add ons
are sales tax, 75. DOC free, 15 NYS inspection
fee and the difference in lisc. plates (if any)..Geo
Ed
2) GM Employee pricing is based on a set dollar amount irrespective of what the actual invoice amount of the vehicle is. I.E. "GM Employee price on a 2002 Chevrolet Biscayne is $18,650 plus destination and invoice for options" versus Ford's A X or Z plan pricing where it is a percentage of actual invoice. This sort of stuff is prenegotiatied with the UAW.
Hope this helps!
Bill
made...But lets not forget they might
still get "back side money" or something
like that. I have been DROOLING over a new
CTS to replace my 96 Deville. Mr Dealer
WILL NOT DO GMS pricing on it either !
Gave me a new Deville to ride for the
week and will do GMS ! Remember mr dealer
DOES NOT have to do GMO-GMS if they don"t
want too on a hot model GM.......Geo
BTW: they make most of the $$$ on your trade !
I traded a 97 chev xcab 4x4 27k miles . Dealer
gave me 16k trade on A new 01 chev. pu. using
GMS deal.....97 sold next day for 18,995...wow
Ed
However, if this charge is listed on an addendum sticker or is being disclosed with the bill of sale, the red flag should go up - not legitimate.
Ask for a total, or 'out the door', price; then compare that price between dealers. If you're cross shopping dealers in different states, ask for an 'out the door' price not including tax, title, and license.
Sure, the dealer incurs costs for advertising, processing the documents, etc.; but itemizing that stuff when quoting you a price is sales hooey intended to confuse the buyer.
I sell cars in about 5 surrounding states, I know the tax and tag fees for ALL of them. It isn't rocket science, despite how hard it is for Edmunds to figure out the regional fees.
Ed
Asking for a price 'out the door not including tax, title, and license' worked great for me, even with the in-county dealers, when the spirit was no haggle. The dealers that didn't understand that I just blew off (with a polite e-mail thanking them for the quote) as simply unwilling to deal straight.
Getting caught up in semantics or sales hooey just wasn't necessary.
P.S. Ask a straight question; get a straight answer. Or, NOT!
Ed
Now, if you live in one state or county and buy in anoter, don't bring that into the equation because all it does is confuse people.
Most people buy in the state they live in, for the most part, the majority of the time.
LOL, I did get some "I need more info" replies, too. Some were legit (like about color preferance, for which I had none); others were simply ducking the price request (tranny type on a car available only with manual). It was easy to tell which dealers were trying to haggle and which were just doing business straight.
What was the Edmunds TMV? Was it close to the invoice plus $800? If so then Edmunds factored it in on their TMV.
Just focus on out the door price...
db - thanks for the plug, my self-esteem gets a shot in the arm.
with afk_x, it's best to negotiate your total price without worrying whether the different contributors to that price are called ad fees, doc fees, destination fees, etc. fees, greens fees, bees fees, whatever fees.
Even if you do that, however, don't be surprised if the dealer attempts to add still another fee just before you close the deal; so decide ahead of time whether or not you'll go for it.
If you're concerned about dealer cost, get the Consmuer Reports report; it's worth the money once you've narrowed to make and model.
Edmunds has all the same information in an easier to use format.
I also found out that Suzuki provides dealers with both a 3% holdback and 1.5% floorplan allowance (whatever that is).
So I spent $12 to find out there was additional an additional $700 on the table for negotiating room. Edmunds, KBB and Autosite all had only the factory-to-consumer rebate listed.
I have used CU's New Car reports for years... CU's information has always been at least equal to other free sources, and often had additional items listed (regional incentives, for example) that were missing from the free websites (who seem to report on national programs only).
IMO, very well-worth the $12 spent.
Advertising fees may be legit, but like anything in a car deal, everything is negotiable.
I mean when I buy anything else - a tube of toothpaste, a television set, whatever - I know I'm paying shipping and advertising and any number of such things but they don't spell it out on the receipt. In the case of the television it's even frequently a negotiable price (we'll beat any competitor).
Odd thing car buying...
Way back when, consumer action groups wanted car invoices broken down so consumers could see how the money is divided, giving them disclosure.
The problem is, most people haven't a clue as to how to read an invoice if they saw one, given the "A" plan, "Z" plan, advertising, holdback, transportation, etc. You can't just pick the lowest number on the page and assume that's a good price to buy the car for...
Thank goodness they didn't deicide we needed to know the individual costs of the parts!
We had customers who wanted our BOM on the products they bought from us. We never supplied it to anyone (only sr. execs had a copy) as we thought our customers would analyse it and use the info to negotiate a lower price while at the same time using it against our competition to demand the same thing.
I struggled with reading the BOM on products I knew very well. I'd think a consumer would have an aneurysm if they ever saw a BOM of their car.
I think we are using the term invoice too loosely here. The invoice price is what one is expected to pay. Generally, that means the price for materials, labor, overhead and shipping & handling charges. Contrary to popular belief, the dealer does not actually pay that amount to the manufacturer. He pays something much less.
The so-called invoice price, is merely the standard cost of the items listed. The standard cost is the estimated or budgeted cost, not the actual cost. So using the standard cost is a good proxy of the true invoice cost though it is always higher than the net invoice cost to the dealer. That is why the dealer can sell below cost and still make a tidy profit.
An invoice, which is a piece of paper, billing for goods is what you pay for services. You get your car worked on, they tell you it'll cost $200, and you see an invoice for $200.
"Invoice" cost on a car, with the exception of holdback, which doesn't count, IS what the dealer pays, unless there's dealer cash.
No dealer is making a "tidy" profit by selling at invoice, unless you get the trade for 2 grand back of book!
When I mentioned the buy rate for my loan on my camry purchase the F&I guy made the comment "I do not know why we are giving you this good a rate AND losing so much on the sale. We are not making anything on this rate."
The best I can figure I got the new car about $300 below edmunds invoice price. This excludes SET fees, TDA, etc, if the dealer had to pay those. I had no trade so they made no money there. They gave me 2.99% for 60 months on my loan. They charged a $389 doc fee and $100 loan fee, but they backed this into my offered price for the car.
They had to make some money somehwere or they would not have done the deal. They are not in business to give me charity. I know you have been out of the business a while but maybe you can look at this deal and figure out where their profit is. I think it is in a factory to dealer incentive. I was told there was $1500 on the LE model. Mine is the XLE but maybe they had it on the XLE too.
It's a shame when a salesguy or F&I guy is so weak they have to whine like that.
Making nothing on a rate is very possible - when there are incentivized rates from the manufacturer, the F&I guy usually doesn't get a flat fee ($100), like when selling at "buy" rate with normal financing.
Still he should be happy to have the sale, put on his selling shoes, and hook you up with choke and croak, gap, mop n glo and a big ol' warranty!!
They will analyze or try to analyze it down to the penny!
These same people don't think about the massive OVERHEAD that it takes just to open the doors.
I don't want or expect them to care about that either.
I mean, the car is either a good value or it's not!
It boggles my mind that people will pay three times as much as something else costs ($1200 necklace, $400 cost), but will hack over $20 on a $25,000 car.
Zue: again, it is easy to understand. If every one in town selling the necklace for $1200 then that's what we have to pay if we want one. In addition, is there any place we can look up the invoice for the necklace? That's the main difference between buying nacklace and buying car.
What is a fair price and how do you determin a fair price based solely on profit?
Do you know the cost of everything you purchase? There are alot of items that people haggle price. Boats, furniture, bedding, hotel rooms, certain kinds of clothing, jewelry, etc.. where do you find "cost" on these items? you don't pay the full asking price for these items do you???
A $42,235 GS300 has a very similar markup in it to a $43,318 RX330 with Nav.
Want to buy the GS? Discount...
Want to buy an RX with Nav? MSRP. Period.
However, the car industry has determined that as PT Barnum quoted "There's a sucker born every minute" and they traditionally make more money using this negotiated sale's technique.
The following web site outlines some of the notorious scams that some unethical car dealers try on their victi..uh I mean customers...
http://www.carbuyingtips.com/
I'm not saying all of them are like this but historically car dealers in general have a bad reputation for taking advantage of customers. They continue this sales method because they make more money wheeling & dealing vs. post the walk out price.
If dealers used the full disclosure method (take it or leave it approach) then customers could more easily determine the value of the car vs. their competition. But the industry set this practice, not the consumers. So you have to haggle for 3 hours to find out the so-called price.
If the dealers chose not to, they would not have to reveal their invoice price information to anyone including Edmunds. However, you can find invoice information in all types of car publications.
Don't get me wrong, I understand the industry's dilema of supply and demand setting the price and hey that's why this is the Good Ol' US of A. Most cars are simply not worth the MSRP. That's why I want to be the most educated consumer that I can be. Just don't blame the customer for trying to play the game that the car industry designed. If the industry doesn't like it, change the rules.
Thats just it, the consumer who is educated doesn't HAVE to play that game.
The educated consumer can "get up and walk out" if they dont like what they are hearing.
If dealers used the full disclosure method (take it or leave it approach) then customers could more easily determine the value of the car vs. their competition. But the industry set this practice, not the consumers."
Most, if not every dealer, imo, would have to do that for it to work. The ford dealers in my area became one in the same and initally went to a one price structure. It didnt work because local customers were going to nearby towns to purchase from the mom n pop stores(and getting better deals) because they still would negotiate.
"So you have to haggle for 3 hours to find out the so-called price."
I for one have never, and will not negotiate for hours. I also have felt that I received a fair price as well on every car I have bought.
For my other company I buy a fair amoutn of cars. I can usually get a realistic price within 20 minutes and I do about 10 minutes of research.
And 90% of the time I do it over the phone. I also rarely worry over $2-300 on a $20-70,000 purchase.