Any Questions for a Car Dealer?

landru2 · May 2002

Every cent that a businessman spends in running his business is a "cost of doing business." And customers pay for all a business's costs plus some extra for profit.

And how come no one ever questions freight charges? I've been on these boards for months now and I don't recall ever seeing a post wondering why freight has to be itemized separately. Isn't it a given that the car has to be shipped to the market? The jeans at Walmart don't have a freight charge. So why no outrage over freight charges on cars? Everyone gladly pays for a car company's expense to ship the car to the store but get all in a lather over paying for the company's expense to advertise the car.

It really is too bad that advertising costs are different in different regions making it impossible to print on an MSRP sticker. But then, freight is actually different for different regions as well. Maybe the car companies should just add an average ad fee to every car. I guarantee that people would pay it and the whole ad fee issue would disappear.

rroyce10 · May 2002

...... If the price of "your" particular vehicle is $36,850 with frt. Invoice is going to be "around" $34, not $31. There is probably some rebates ... but as a rule, there is only around 7/8% mark-up in a Chrysler product.

Perhaps, Carsdirect has calculated this as the base price .... spend a few minutes, Edmunds will have the price and you can build in the options, and you will get a better idea ...

This way, you won't drive the Salesperson psycho ... l.o.l...

Terry.

scully6 · May 2002

As you so aptly put it, every business has to charge for costs of business plus profit, and every consumer has to expect that. However, I don't think car dealers should be acted surprised or miffed that customers question these when car dealers and manufacturers insist on 1) itemizing business costs such as advertising and freight for the customer to see, and 2) charging a different price for the same vehicle to different customers.

Yes, the jeans at Walmart have a freight expense and an advertising expense. However, Walmart is smart enough to put a price tag on them that includes everything except sales tax. You are right in saying that if car companies just added an average cost to every car, that would alleviate the issue.

Secondly, and perhaps most importantly, if I pay $15.99 for jeans, the person buying the next pair of the same jeans will also pay $15.99. They will be $15.99 on the first day of the month and the last day of the month, and regardless of which salesperson sold them to me. They will be $15.99 regardless of when they were produced, how many other pairs of jeans are on the shelf, what color they are, or whether I purchase them in Alabama or Oregon.

Now, I realize that jeans and cars aren't similar products, nor is the average car dealer similar to Walmart. But car dealers made their own bed by forcing consumers to deal with a convoluted, and seemingly arbitrary, pricing system. Perhaps a better comparison, landru2, would be between car pricing and airline pricing. In both instances, you could wind up paying much more than the guy sitting or parking next to you, for the exact same product. In that environment, consumers have every right to question and negotiate to protect their self interest.

isellhondas · May 2002

I know some people go nuts over the thought that someone else may have paid less for something than they did.

Not just cars either...A guy finds out that his neighbor bought the same lawnmower as he did a month later...on sale, and spent 25.00 less than he did.

But, to your point, I think it would be GREAT if everyone paid MSRP for every car...no haggling!

Then, folks like you would be content and my life would be so much easier.

I mean, to me...when I make a major purchase I look for what I think is a good value. If I think it is, I'll buy and I won't look back.

I won't scour sunday's paper looking to see if the dishwasher I bought is on sale somewhere else for less..Life is short.

But...that's me and we are all diffeent!

isellhondas · May 2002

How do you know that Wal-Mart didn't decide to "rollback" the price on those jeans the week after you bought them?

Would that bother you? Just curious.

tboner1965 · May 2002

Most of the sales folk here have commented that the one-price stores don't do as well as the ones that practice negotiation.

The sense I get here is that the customers don't trust the auto dealers. Right or wrong, that is the impression.

To these folks, it seems unfair, that some people will pay more for the same vehicle based on the day of the week or month. Yet we all know that happens.

Craig, you know that even the sticker isn't good enough for many dealers, with the ADM sucker stickers many (but not your store) use. Not to mention that dealers mark up above the sticker, many in demand vehicles such as the hot selling Odyssey or Thunderbird.

Much of automobile sales is about emotion. It has to be for some of this iron to sell.

So why blame the customer when in this emotionally charged environment, you see both the good and bad emotions people can display.

You folks know I'm not against dealer profit. (I am against the government making more in taxes on a new car than the dealership does, FWIW.) But to place most of the blame on the consumer when the deck is often stacked against them is a bit much for me to swallow.

So what if a customer wants to negotiate to the lowest price. The store wants to get the highest price it can. Seems like two sides of the same coin to me.

I can just understand why people would see it as unfair if the neighbor got the same car for $1000 less than they did. So who's the buyer going to blame, himself (naww, this is America, no one understands personal responsibility) or the dealership.

The dealership is now considered, rightly or wrongly a crook in the eyes of this consumer.

TB

landru2 · May 2002

Somebody asked a question about ad fees and I tried to answer it. Although it sounds like the person already had an answer. Oh well.

The issues of ad fees and freight charges are issues to take up with the manufacturers and the government. As far as I know, no one posts here that works for an auto maker. Car dealers can't do anything about those issues.

tboner1965 · May 2002

I do believe you are right. I recall reading that the carmakers were required to charge the same shipping charges if the ship the car 10 miles or 10000 miles.

Gotta love your government at work.

I still don't believe it is soley the customer's fault for feeling ripped off when two customers pay two different amounts for the same car at the same dealership.

Perhaps those feelings are a bit strong, but as I've said before, the one who will suffer the ill will if the customer does feel that way is the store that sold him the car.

May not be rational, but then many automotive related decisions are not rational. Otherwise, how do you explain some of the 84 month loans on used cars seen in other threads.

But many stores are not about long term customer relationships, but rather let's get the most we can now.

I only understand the problem from the customer side. I have no idea what the solution is.

TB

scully6 · May 2002

...it's a difference of maybe $5 on those jeans, or even $25 on the lawnmower, versus a difference of $1000s on a car. It's a major purchase. Of course, a customer feels more invested in protecting themselves when the order of magnitude is that great.

Yes, life is short and I don't haggle over $25, or even $250. But $2,500 can pay for my kid's braces. We all have to protect our families' best interest, and when it comes to making a car purchase, that's the system car manufacturers and dealers have set up for us.

dtwleungnyc · May 2002

The 4 home depots that are located within 15 miles radius from my house all has different prices for the same item. For example, the kitchen cabinets that I looked into could range from $199 per ft, to $499 per ft. Depends on which store I talk to, same material, color and finish btw.

A lot of car buyers today are ingrained with the idea that they are suppose to buy a car at invoice minus holdback and more. And will go absolutely nuts if they know and suspect that they paid $1 more than the guy behind him.

I guess everybody has to decide for themselves on how far and how much time they are willing to spend to save a buck. To me, I value time more. Your mileage may vary.

landru2 · May 2002

Has anyone here ever found out that someone paid less for a car than they did? I mean one that was bought at the same time, and where they bought the same type of car. And I mean where there was definite proof, i.e. seeing the other person's bill of sale. Casual conversation doesn't count because everyone will say they paid a lower price than they did if asked about it.

Of course, I realize that everyone believes that everyone else is buying their cars cheaper but how many people actually know this?

bretfraz · May 2002

Truck pricing question for ya:

A local Ford dealer is offering all '02 F150 Supercabs at $5000 off "bottom line" MSRP. Plus you get the Ford $2500 rebate or the financing deal.

I read this as $7500 off sticker. Have you heard of anyone else offering a deal like this or is it too good to be true? I'll try to confirm the details tomorrow but I wanted to bounce this off ya first. Its from a dealer with a good reputation. http://www.akinsford.com

Thanks for the insight.

bolivar · May 2002

Pasting in '5000.00 OFF BOTTOM LINE MSRP PLUS $2500.00 REBATE ' from their online ad.

I could read this as $5,000 off MSRP plus $2,500 rebate. Which takes it to $2,500 off MSRP.....

MSRP
-$5,000
+$2,500
-----------
= MSRP - $2,500

masspector · May 2002

The last 30 or so posts between scully and others have been interesting and informative. Great discussion with no name calling and mutual respect all the way around.

I agree with scully that as the savings goes up people are more interested in spending time to save money. I am a lower middle income earner. To me every penny counts. Are car salesman not consumers of other products? Some of the posts here seem to say "why worry about that $500?". While I agree that $500 on a $30,000 vehicle is a small percentage of the overall cost, $500 is a lot of money to me. I just can't understand why some cars salesmen here can't understand why lower and middle income buyers value $500 to $1000 in their pocket. Also, other retailers usually have a 30 day price guarantee. If I find it cheaper somewhere else I get the difference in price back in my pocket. I have used this several times on certain products that I have purchased. Overall it has added up to a pretty good chunk of change. If car dealers would do this, this would eliminate the buyers that feel like their friend got a better deal...LOL

I agree with Isell that it would be great if the was a no haggling price on every car, but I think it should be invoice price, not MSRP.

If holdback is causing so many problems with dealers and buyers, why not just stop the program? The dealers here have repeatedly stated that holdback is not profit, so it would not effect their profitability at all.

Landru, i think people do not have a problem with destination charge as much as advertising since the destination charge is printed right on the sticker. I agree that if it were on the sticker, or somehow included in the invoice cost to the dealer and not seperated out that people would not gripe so much about paying it.

Kudos to all of the dealer posters here for trying to inform the buying public better and as usual a great job by tbone.

abtseller · May 2002

I don't sell Fords, but from what I'm seeing on their trade-in value, you are probably looking at a "real" $7500 off MSRP. Ford is hurting bad at the moment, so expect to be able to deal accordingly.

Wonder why we don't have any Ford salespeople on the board?

Ed

masspector · May 2002

I thought landru sold fords.

tboner1965 · May 2002

So maybe they are $7500 off up there, but that's like a $1.25 down here 8^)

j/k

TB

isellhondas · May 2002

I must have misread your post...sorry, I'll get another cup of coffee...

I thought I read that you thought fixed pricing would be a good thing, not at MSRP, but at INVOICE?

It's gonna be a rough day...and I don't go to work for a few hours...

tboner ...good posts...

scully, I understand...

I guess we can beat this to death.

Of course, the dealership wants to maximize profits...wouldn't you, if you had ten million or so invested in a store?

And the shopper wants the "best" price. that same shopper also wants to be treated with respect and wants a great experience before and after the sale.

My take is simply this...dealerships can pull some nasty tricks, and customers can get rude, petty and nasty in their quest to save another hundred bucks.
Again...life is short!

nyccarguy · May 2002

I don't know if you misread my post, but I NEVER stated and will NEVER advise someone to pay over MSRP for an Odyssey or any car for that matter. I just stated that the market price for these MiniVans right now is at MSRP and that's what you should expect to pay (if it is less, then great!). Happy Hunting.

masspector · May 2002

Of course I said invoice. If I as the consumer had a choice in what the car is priced at I would chose invoice over MSRP everytime, just as you would if you were not a car salesman and had to pay your hard earned money for the car. Have you ever gone to a store to buy an item that you saw on sale and then told the clerk I want to pay the price before the item was put on sale?

What I really meant was a price closer to invoice. Example, a $30,000 MSRP vehicle has an invoice of $26,000. The no haggle price would be $27,000. This price would become the MSRP. Of course this is predicated on the fact that no haggle pricing would have to be adopted by all dealers and manufacturers. If this were the case then hopefully there would be no need for invoice or MSRP prices to be researched at all by consumers. Car sales would be similar to other retail sales. This is the price and unless one dealership had a "sale" then the price is the price.

It has been said before on these forums that consumers would be shocked if they knew the real "invoice" cost of other items they buy, like furniture, clothes, and other retail items. But I do not see any websites like edmunds advertising invoice costs for these items. A store advertises a price and you compare it with any other places you can buy that item and you buy from the cheapest source on an identical item.

I understand that cars are a little different, and it is hard to find two exact vehicles alike in an area, but if manufacturers would get in the habit of making MSRP a little over invoice for the base price and the options I think life would be a lot easier for buyers and car dealers. I don't see where a dealer would have a problem with this pricing formula unles they are selling the majority of their cars at or near MSRP. But I find this hard to believe as most of the dealers on here have said that new car sales has become the loss leader for most dealerships and they are just breaking even or lossing on new car sales anyway. If this is the case then why not just make it easier on everyone by dropping the haggling and posting a fair price.

nyccarguy · May 2002

I agree with you, but I don't think the American Consumer would ever go for "No Haggle Pricing" when it comes to cars. I know Saturn still does it, but they're not too successful when it comes to profit.

masspector · May 2002

Sigh....I have to agree with you too. We Americans love hating car dealers too much. Saturns failure is that its no haggle price is MSRP. I bet it would be a different story if their no haggle price was invoice.

rbrenton88 · May 2002

A few posts back, you asked if anyone knew a real life price comparison...I have one:
In August '94, I bought a red, '95 Maxima GXE with auto, sunroof, and comfort package (power locks, seats, and few other bric a brac features) via Autovantage for invoice + $700. I don't recall the exact price
One week later, a family member bought the exact same vehicle, same color even, but w/o the sunroof, from the same dealership. Though he used the traditional method of grinding.
When all was said and done, adjusting for the cost of the sunroof, he paid about $150 less than I did, plus he got the mats thrown in for free.

So there is at least one definitive example in history of someone paying less.

But no, I didn't/doesn't bother me. That's $150 of my inheritance still intact. Heh-heh!

cfg1 · May 2002

But can you just adjust for the price of the sunroof? Maybe the ones without sunroof were real dogs to sell.

landru2 · May 2002

Thanks for the reply. I wonder if your family member was upset that he had paid less?

landru2 · May 2002

Well, on first glance something doesn't add up here. I quickly checked Edmunds pricing for a F-150 S/C 4x4 XLT and according to them the difference between MSRP and invoice is only $3337. Now, I know that holdback is calculated differently in the U.S. than Canada (here it's 2% of invoice) but it's doubtful they have another $1663 to deduct to get them to $5000 off MSRP.

I would guess that either they mean that the $5000 includes the $2500 rebate or that they have a pretty significant dealer cash at the moment.

isellhondas · May 2002

Compared to most items sold at retail, the invoice is pretty darn close to the MSRP on some models. Pretty slim margins even at MSRP!

Not slim enough though, I guess...

scully6 · May 2002

Could it be that the no-haggle policy doesn't work as well as Saturn hoped because a lot of people are not wild about Saturns? Not to call Saturns a dog or anything, they're perfectly nice cars. It's just that I've heard more than a few people say that they like the one-price policy, (also at Carmax), they just don't get inspired by Saturns. Now, if the other car manufacturers tried it, who knows? I wonder if that would actually hurt the overall profitability for Honda and Toyota?

phkck · May 2002

Was out shopping these great looking trucks. Costco finance deal is Invoice + 1% - rebates ($1500). Also, some dealers offering $6000 off sticker in KCK area. So looks like you are at least in the ballpark with the Quad cab.

isellhondas · May 2002

At the risk of offending anyone, I don't think Saturns are *bad* cars but they are...well...rather lackluster. They have never done much in the marketplace. Still, some folks probably buy them solely because they can buy one knowing that, for crying out loud, their neighbor didn't pay less.

I just don't understand...

landru2 · May 2002

Toyota are one-price in Canada. I don't whether it's been good or bad for Toyota yet.

I do know of consumer groups that complain that Toyota's prices are now higher than they sold for before.

masspector · May 2002

Isn't it always the case that when companies (any company, not just car business) do something to "help" the consumer that it usually ends up costing the consumer more?

tomm14 · May 2002

I am going to trade my 91 BMW Convertible for a 2002 Dodge Ram Quad Cab. I have checked CarsDirect and there price for the one I want....retails for $36,565 invoice is $32,872 and there price is $31,447. Edmunds has it for around 33,000 but I don't think they are including the $1500 rebate.

What I am concerned about is my credit. I had a BK about 7 years ago....since then my credit is perfect. I scored on Equifax at 630. I don't know what I scored on the others...My question is...can I qualify for a 36 month lease....what do you think my payments would be with $4000 down..that is with my trade all together...I this price for the vehicle realistic.....will a car dealer match Carsdirect....I could just go through Carsdirect...but I don't know if they have tier 1 and tier 2 leases...I dont want to get a bunch of inquiries on my credit and make my score worse then it is.

Another thing....should I tell the dealer first that I have bad credit.....

Thanks

tincup47 · May 2002

If the manufacturers are going to make their dealers sell at one price like Saturn, I can assure you it will be at MSRP. MSRP is what the manufacturers think their cars should sell for, not invoice. The reason cars sell at or near invoice is because you can play dealers (who are independent businesses competing against one another) off each other. Also, for every person today who buys near invoice there are 2 or 3 who pay near MSRP. So the person who does their homework and can negotiate a good price under the current system will lose their ability to do just that.

lancerfixer · May 2002

I don't know much about leasing or credit scores, but I do know that throwing down $4,000 on a lease is kinda dumb.

edle777 · May 2002

This is what Toyota calls their no-haggle price system. If you check their wbsite, it will give you both the MSRP and the Access price. On a $32K car I checked, the Access price was only $400 less than MSRP.

I think the consumer really loses in this case. Most hagglers could get a much better deal. Unfortunately, I don't know anyone who's tested the system yet (and won!).

spright · May 2002

I think that the posts asking whether people are upset if Walmart lowers the price on something a week after their purchase miss the point of why most people haggle at car dealerships. For myself and the people I know, the issue is whether someone buying at the same dealership on the same day is paying less---THAT'S what makes us haggle.

Chris

tboner1965 · May 2002

And maybe it was mentioned before. Many stores have a 30 day price guarantee.

Find the same item for less in 30 days and we'll refund x% of the difference, where x is greaterthan or equalto 100

Probably a meaningless guarantee, as how many people keep looking at the price of other items after they buy. I really doubt many take advantage of this price guarantee. It probably does put many buyers at ease.

Now on cars, people always talk about what they paid. We are talking years if not decades down the road.

Hmmmm

TB

masspector · May 2002

I have used retail price guarantee sucessfully a number of times. It is especially useful on electronics and software.

godeacs · May 2002

you are wrong! I hate to disagree BUT here in San Antonio there are several dealers that sell "1 price/no haggle" at FAR below MSRP (they have to, to stay competitive: Acuras, Nissans, Hondas, GM, etc) and they are doing quite well. The sales experience is fantastic (83% surveyed say they'd buy again). Of course, you can grind and grind and save a few more $$$...but to me and many, it's not worth it.

masspector · May 2002

What am I wrong about? Are you refering to tincup's post? I said that no haggle dealers should have their one price closer to invoice than MSRP. Saturns no haggle price is MSRP. Isellhondas had suggested that one price would be fine with him if it were MSRP. All I said was that one price/no haggle would be fine with me too if it were closer to invoice.

From what you have said about their success, kinda proves my point. Buyers are happier with the low one price/no haggle and the dealer sells more cars. I hope your situation in San Antonio catches on in the rest of the country. It would make car buying a whole lot more pleasant.

pat84 · May 2002

Even if all dealer's went to one price-no haggle prices, which were closer to invoice, I am sure that some will be able to get a better deal. Invoice and MSRP can be manipulated, somewhat arbitrarily,
right ?

tboner1965 · May 2002

Even at a "no-haggle" dealership, there is always the opportunity to haggle on the trade.

So while Saturn dealers don't deal on the price of the car, I'm sure the same negotiations most try to avoid, happen related to the trade.

So I think it is folly to believe that one will avoid negotiation.

TB

masspector · May 2002

I agree 100%. However if you had the choice of having two root canals or one, which would you choose? I was only speaking about the purchase of the new car. Doing a trade in is a whole other animal as witnessed by the pricing nightmare of used cars.

suvshopper4 · May 2002

masspector: If no-haggle were true for all dealers of the same make (a la Saturn), wouldn't the no-haggle price be the MSRP (or, I guess, the MRP)?

And I wonder how Saturn gets around the price-fixing laws, unless they own all their dealerships.

tboner1965 · May 2002

nor do I play one on TV, but price fixing laws probably only apply if Ford and Saturn conspired to set the price for all cars on the market. For example. I do believe the maker of a product has the right to set the price of his/her product.

That isn't the classic definition of price fixing.

Now getting that price, is another matter 8^)

TB

suvshopper4 · May 2002

tboner: Yes, I agree, the manufacturer gets to set their price. But when they sell the product to an independent dealer, how can they dictate what the independent dealer must resell if for?

That's why I wonder if Saturn owns all their own dealerships. I doubt they do, though. So how can Saturn dictate resale price to an independent dealer?

Or maybe the dealers are, legally / technically, distributors, and that's how the issue is avoided?

Dunno.

tincup47 · May 2002

And are bound by the terms of the franchise agreements they signed. I'm sure Saturn has spelled out pricing in their agreement. It was easy for them because they had that strategy from day 1, for any other manufacturer it would be more difficult because they have retailers not price restricted already.

isellhondas · May 2002

Well...back when i was a very young District Manager for Sears, we didn't have a specific policy, but we would take care of customers by refunding the difference between what they paid for something and a sale price.

Within a couple of week, I think.

Personally, I used to think some people were pretty petty about this, I mean, I once signed a credit for less than two dollars on something.

But I guess it's MONEY and that's the most important thing....geez!

godeacs · May 2002

was these local dealers have their "no haggle" price set closer to invoice than at MSRP like you stated above( ie Saturn). Granted, they are the minority in SA but they are doing good business and are a pleasure to deal with. Like you, I would like to see it catch on but due to the nature of the business it will take a longgggggg time!!..lol

tboner - concur! The negotiation bit can't be ignored totally when a trade is involved. So there is always room to "play the game" I'm afraid...

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