Any Questions for a Car Dealer?

jocko9 · July 2003

however, if I was in the market for say a Toyota Corolla, and the dealer I drove into had "market adjustment" stickers on each of the say 20 Corolla's on his lot, I would immediately leave and find another Toyota dealer. But that's just me.

landru2 · July 2003

scare you that bad? ;^)

But seriously, you're going to go there trying to buy it for invoice or less anyway. What does it matter what some sticker says?

rivertown · July 2003

It would take something like, "Ignore that, we'll work from the factory sticker." freely volunteered during a test drive, to get me to even think about making an offer on a car with an ADM sticker.
'Tain't about fear. Why waste the time on a negotiation that ain't going nowhere?

jocko9 · July 2003

That market adjustment sticker doesn't scare me, but the fact that a dealer would paste one on every single vehicle would lead me to think they are shady and underhanded to begin with. That may or may not be true. But that would be my impression.

bretfraz · July 2003

Their desire for maximum profit is posted right there on the window for all to see. Seems to me that's the antithesis of shady.

And the only way you'll know if a dealer is willing to work with you is to sit down and start talking.

jocko9 · July 2003

But if their are 5 Toyota dealers in my shopping area for example, and only one is using a market adjustment sticker on every vehicle in inventory, I for one will be much more likely to buy from one of the other 4 which aren't pasting said stickers alongside the MRSP. But again, that's just me.

landru2 · July 2003

How much more would you be willing to pay to deal at a place that does not use these stickers? Since the presence or absence of this sticker has no bearing on what you will want to pay, I assume it is just the "principle" that would have you shop elsewhere. That principle must have some dollar value?

mark156 · July 2003

Landru and Bretfaz... I think the ADM stickers are an insult to our intelligence. Also, it just makes the dealer look like a shyster. Like I said before, if a car will bring MSRP that is something I "might" can swallow, but adding extra profit to MSRP is just plain insulting to me.

Talking about taking a "hit" when the car drives off of the lot..... the "extra" money on top of MSRP will make you even more upside down than before. Do you think the dealer is going to give you that money back when it comes time to trade? Of course not! It's pure profit at the customers expense. I just don't like the practice.

Mark156

imidazol97 · July 2003

The additional markup tactics indicate the dealer intends to get additional money out of the customer than the MSRP and negotiating from it would allow. Not a dealer I want to work with. Most (many) buyers realize they are at a disadvantage working with a salesman because they lack knowledge of the selling price of the car at other dealerships and the selling price at that dealership for other past buyers.

Let's make a comparison of tactics:
Try adding additional markup to your salary next time you're evaluated for a raise. "I have an additional $15000 to add to my 3% raise for next year based on my performance last year. We can discuss what the corporation is ready to pay me working from that total..."

bretfraz · July 2003

From who else does a company derive profit? Who does Microsoft or Intel or WalMart derive profit from?

I also don't understand the "insults my intelligence" comment. If you have done your homework on pricing for a particular vehicle then I cannot see how you could be insulted when you already know what the vehicle is selling for (roughly) in your area. The exact selling price of a specific vehicle is something you will never know until it comes time to make a deal. But you can easily determine a reasonable price range and work to that point. So who cares what the dealer puts on the sticker? An intelligent buyer knows he/she is not going to pay it anyway.

jeffmust2 · July 2003

...to paste your own ABD (Additional Buyer's Discount) sticker on the window during a test drive?

Just curious.

mark156 · July 2003

Bretfraz, I agree with you. I will have done my homework and know what price is fair to pay. But, I will not go to a dealer that uses ADM's.

What I mean about "Insults my intelligence" is that the dealer puts an ADM on the car knowing that it is a useless number. The cars are NOT selling for $4,000 more (Acura MDX that I mentioned before) so, that insults me that they think that I would fall for that. It also shows me that some unsuspecting customer might pay list when the dealer says we can "reduce" the price $4,000 "just for you Mr./Mrs. Customer just to make the deal sound better. I just don't like the tactic of ADM's.

I know you are going to say, "well, they should have done their homework"..... I agree that they should have but the ADM was used as a trick.

Mark156

bretfraz · July 2003

I'm not arguing with you, just trying to find out what the real objection is to ADM's when they're so easily ignored. We both know there is no excuse to not having done price research. But that doesn't apply to people like you and I and most TH members so why get bent out of shape about it?

If you have the luxury of multiple Acura dealers in your area, good for you. But if you lived in an area which had only one Acura dealer, and they used ADM's, and they had an MDX you really wanted, what next? Go out of state? Hire a broker? Or just make your best deal regardless of ADM?

If you ask the pros here they'll all tell you to focus on the out the door price when negotiating. This tactic works perfectly for buyers as it puts all the pricing pressure on the dealer to make the deal. By allowing yourself to be affected by the ADM you are assuming the pressure of negotiating price and handing 100% of the deal-making power to the dealer. Why do that?

IMO the BOTTOM LINE is to focus on the deal and ignore the add on's.

mark156 · July 2003

I know you are not arguing with me; your posts seem very level-headed. I hope that my posts don't make me sound like I'm "bent" out of shape, I'm not. I was just relating what I saw at a local dealership and how I felt about it.

I do have the luxury of shopping at multiple dealers in two states because I have two homes in different parts of the US. So, when I'm out West, the prices and ADM's push me back to my other home back East where they don't do that and the deals have always been better in the "mid-east" section of the US.

Just my .02 worth. Mark156

ramped1 · July 2003

The reason to avoid dealers who use ADM stickers is obvious to any informed shopper: it simplifies the buying process. There are few things more aggravating when buying a vehicle than to run across a newbie who touts that he is reducing the price of the car by thousands (which is the amount of the ADM) to earn my business. It is an extra layer of negotiations to work through.

No thanks. I'll leave the ADM dealers to the poor buyers who don't know what they are getting into. As many say, those unfortunates subsidize the good deals that informed shoppers are able to negotiate.

To me, the ADM is a beacon signaling "rough water ahead."

landru2 · July 2003

the informed shoppers here are still asking the dealers "what's your best price?" How else could they get the answer, "your getting $4000 off the adm sticker price"? What happened to the informed buyers basing their price on invoice up?

Rough water ahead? As I had said earlier jokingly, that sounds like plain old fear.

Insulting your intelligence? When was the last time anyone here paid MSRP for a Civic or a Taurus? I've never heard anyone say that the MSRP sticker insults their intelligence. It is just ignored and the cars are bought.

Lest someone thinks I am defending the use of these stickers, I had never even heard of them before reading this board. I just find informed shoppers reaction to them interesting.

sonjaab · July 2003

When I lived in so. Fla EVERY dealer had ADM stickers and mop and glow standard. Most even cut off the price side of the MFR. price sticker and made up their own complete with ADM.
I had to Order my 87 s-10 to avoid it.
When i lived in San Diego every dealer had them.
But Ca. has very high property values so they must need to do it.

Here in northern NY the only dealers that do the ADM and mop and glow are honda and toyota dealers!

imidazol97 · July 2003

What is mop and glow?

peeete · July 2003

All of you have excellent points, I too would be disinclined to work with a dealer where everything had ADM stickers..especially when it it is common knowledge that the cars are discounted below MSRP.

The problems with ADM's is not that they can go away in an instant..it is the fundemental problem of PERCEPTION. That is a key word in sales. (and yes I am a real estate broker).

It is common knowledge that toyotas are discounted, perhaps even close to invoice on mnay models. So what is the buyers PERCEPTION when they walk into a dealer where every car has an adm sticker? Even if they know these cars are disocunted, they have to ask themselves: "whats up with this dealer?" "everyone knows these are are going close to invoice, so why are they wasting our time with this #%&*." and the kicker: "any dealer doing this must be trying to take advantage of us, so why should I even bother to try?"

The perfect example is FLorida. I have gone into toyota dealers in Florida, and they all have the TOYO guard garbage sticker, as well as I believe a $595 "prep" fee. (all brands do this in Florida). Now Ive heard that the owners of the southeast franchise require this stuff, but as a New Yorker, I wouldnt even try to talk to these guys, why go through the fighting??

If any of you old timers from the New York area remember the name Crabtree, you will know what I mean. The fistfights (yes fistfights) over their $2000 "protection packages" were legendary.

All in all the stickers cause far more problems for the dealer in my view, and I suspect far more "walk-outs" due to their presence. I think just "ignore them and negotiate as you usually would" in many dealers would be a bit simplistic.

bretfraz · July 2003

"Bent out of shape" was a poor choice of words. I know you aren't "bent", I just didn't express myself properly. My apologies. I appreciate your perspective on this and just was interested in more insight from you. Thanks.

KCRam · July 2003

A play on the household product by the same name, it refers to the "protection package" offered by many dealers, consisting of paint sealant, fabric/carpet protection, and undercoating/rustproofing.

kcram
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landru2 · July 2003

Yes, perception is the key. In many more cases than posters here would believe, it is the perception of getting a high trade-in value that seals many car deals. You can see this for yourself when you ask someone about the deal they got on their new car. They will invariably reply, "We got a great price on our trade. Way more than XYZ Motors was going to give us." Most people will never even mention what they paid on the new one unless pushed. People like to brag about how much they "sold" something for much more than they like to brag about how little they "bought" something for. It is in these situations that I can see an ADM sticker helping to close many deals. $2,000 ADM = $2000 more for the trade-in. Unbelievable perhaps to the typical Edmunds poster. But we all know that typical Edmunds posters represent only a tiny fraction of shoppers.

ramped1 · July 2003

My point in the ADM discussion is this: There are many dealers who don't use ADMs, so why waste your time playing games with an ADM dealer?

It's like choosing a stock. Why buy one saddled with issues like SEC investigations and fraud when you can simply buy another with a clean balance sheet and no issues?

And as for your reference in an earlier post that my "rough waters ahead" metaphor sounded like plain old fear, you are mistaken. It is plain old experience.

landru2 · July 2003

How many cars have you bought at dealerships that use ADM stickers?

peeete · July 2003

You make a valid point, however, in my experience that is not the case. The last couple of cars I have purchased I researched quite heavily on edmunds, and went to several dealers. None had this adm stuff. Invariably, the price for the new car was almost the same in each case, but the price for my trade varied SIGNIFICANTLY. So while yes, they can over value the trade, and charge MSRP so the buyer feels like he got a good deal, in fact he didnt.

I also think that many buyers are smarter than you give them credit for. People I know can figure out the total "cost" of a deal, and know if it makes sense or not.

The bottom line is that regardless if the adm sticker serves some useful purpose or not, the reality is that most dealers dont use it, so the ones that do have a perceptual disadvantage to the educated buying public.

As an aside I also have to wonder if the over valuing of a trade, and the resultant reduced sales tax paid by the buyer, would not rise to the level of tax fraud by the dealer (perhaps not deliberately, but in reality). The state could argue that the price of the new car is totally negotiable, but the trade in value is guided by the well-known cost services, thus a wildly overinflated trade amount could look like tax evasion.

landru2 · July 2003

I don't what you mean by "well-known cost services." Where I am, taxes are paid on the difference so over-allowing on trades has no impact on taxes paid.

ramped1 · July 2003

I bought one car in the early '80s, an RX-7, that sold for more than the sticker price because of demand. I had no problem with that because I understood that the car was popular. There was no ADM sticker, however. The buyers bid on the cars before they got to the dealership. I offered X amount of dollars over the manufacturer's sticker and the dealer accepted.

As I have already stated, I will not buy a car from a dealer who puts ADM stickers on run of the mill cars that are not in demand. My experience in this location (and I've lived here 38 years) is that the local dealers who use ADM stickers are a pain to negotiate with, so who needs the hassle? There are plenty of great dealers around here who come up with a fair price quickly, and that is who I buy from.

tboner · July 2003

is a lot of the crap (can I say that here) that they represent.

I was looking at Protege5's a while back because I got one of those letters from Mazda, you are pre-approved for nearly 40K in financing for a new Mazda of your choice at 0% for 60 months (or something to that effect) so I went down and I saw ADM stickers on many of the cars on the lot (not just the P5) for added wings, aftermarket wheels, stripes, graphics, etc. Not to mention the mop 'n glow products.

My problem was the premium prices attached to mediocre products. For example, I think some of the wheel packages were $1200. Now I realize they may have to buy tires, depending on the size, but where were the factory wheels? They wanted to charge me twice for the wheels, sort to speak. Not to mention they were fairly mediocre wheels.

For that same $1200 I could buy a set of O.Z. Superleggera's that weigh less than the factory wheels and get better performance.

Besides, I really don't care for "bling bling" dubs that are 25# before a tire is mounted.

So then it becomes a hassle. Either I eliminate that car, or I have to tell them to put the factory wheels back on, etc.

But ultimately, I kept my SVT Contour. We couldn't agree on a deal as the SVT was more valuable to me than the trade value I was given, So I bought a 94 Geo Prizm to satisfy my urge to drive something different, sold the Buick, and just returned from Phoenix where I'm having Streetflight install the turbocharger they've engineered for the Contour/Mystique/New Cougar.

I go get my "new" SVT Contour on Friday the 11th.

Bwaaaahaaaaahaaaaaa!!!

TB

landru2 · July 2003

That should be great when it's done. I just sold my SVT last week. 5 years later and Ford still doesn't make anything that is nicer. This upcoming Futura looks promising.

steve_on · July 2003

My take on ADM stickers at dealers.

Big RED flag that you are dealing with a Rip Off dealer who will try to take advantage of you at every turn in the deal.

With other dealers to choose from, I avoid and encourage others to avoid such stores.

masspector · July 2003

I posted this in the thread that sounded appropriate, but got no response.

I recently completed a financing contract with the dealer and the bank was Bank of America. The dealer knew that was who the bank was going to be, but it had not been officially apporved so the contract appears to be some generic finance contract for my state.

My question is that there was a section about me maintianing insurance on the vehicle. I understand that you have to maintian full insurance coverage on a financed vehicle, but in this section it specified that my deductible could not be higher than $500. That is what my deductible is, so no problem. I was wondering, is this normal? I have never noticed that requirement before on a finance contract.

thel · July 2003

I have to have deductibles of no more than $500 as well. So based on my experience, it could very well be normal. I guess they just want to make sure that if the car is damaged, that you will be able to afford to get it fixed.

yaman · July 2003

We just bought a car and have the same requirement-no more than a $ 500 deductible.

masspector · July 2003

Any dealers or salesmen know why this is?

robr2 · July 2003

Just a WAG but since the bank's name is on the insurance policy, perhaps they want to ensure that you will have the car fixed should an incident occur and as such require a lower (more easily afforded) deductible.

mark156 · July 2003

When I mentioned earlier about ADM stickers... a lot of dealers will add pin stripes, etc... the part that bothered me was the "Market Adjustment" on the ADM sticker. There were no added features except this addition to raise the price over sticker. They didn't even get to over-charge on added items... they just added $3,995.00 to a $41,000 Acura MDX MSRP sticker. If the MDX was SO special, I wonder why there were 6 on the lot? I don't call that "flying off the lot like hot cakes"!

just my .02, Mark156

rroyce10 · July 2003

....... Wow, this issue has kinda taken' a life of it's own ..

          When You go to your local Boat Show, they don't even show an MSRP, they show a figure that's usually about 10/20% over the "real" MSRP and then show a big whopping 10/20% Boat Show discount .. On any given day at the large furniture stores, you can see the big 30%/50% Super Xtra 4th of July, Mothers, President, Labor day discounts ~ except they crank up the prices $1,000 or more, so you end up paying $2,500 for a couch that cost the dealer $900 .. go to Costco, they show 35% off on their Omega/Movado/Corum watches, in fact you can buy them just about anywhere for about $500/$1,000 less than their ultra super group, special handshake and wink of the eye prices .. but nobody seems to be crying about that ..

         ADM's are just a figure, just like your neighbor down the street that's asking 375,000 for his $325,000 home, or the guy that has been on the Autotrader since May and asking $57,000 for his 01, 9k MB SL500 that's worth $53,0 asking ..

         Dealers use them for many reasons, most to show a big overallowance to the guy that thinks his 99 Buick Park avenue with 50k is worth $15 grand cuz' he read it somewhere, or the guy with the BMW 98 318i with 75k is worth $14 grand cuz' he read the same info line ..

         Let's be real here, dealers got them to sell .. who cares if the ADM is marked up $500 or $5,000, there is only 2 numbers that are important when buying a vehicle, either the bottom line or the difference figure ~ and if you can agree on those, then ADM's become a mute point ...

                         Terry

scipio1 · July 2003

I refuse to deal with the guys who want to play games with ADM.

I negotiate mergers for a living, so to me an unrepresentative ADM is nothing more than a hardball tactic trying to frame the discussion to an extreme bargaining position.

This is offensive to me for several reasons. (1) It proves that the dealer isn't above ripping me off. They set the number high in the hope that I am dumb, and that I will fail to fully compensate for their hardball opening offer. That offends me, and I'd rather walk away than waste my time pointing out that their negotiating position is untenable.

(2) It wastes my time. You aren't going to get anywhere near that, not in this market. The number will be less than MSRP, and usually closer to invoice than MSRP. You know it, I know it. Don't @#$@ around and play games. A dealer who will game the opening gambit will game me all the way to the signing. You know what? He can waste his time gaming someone else. He'll never know how much money he lost by having me walk out the door.

Digressing onto a completely different tangent, it never fails to amaze me how people will let themselves be taken advantage of. It's easy to say that all that matters is the bottom line, but people rarely do what they ought to do do get themselves a good bottom line. Personally I think it's because people are mostly conflict-averse, and would rather not fight it out, under the impression that getting a good deal means "duking it out" with the dealer.

Based on my experience, power comes from having choices, having alternatives. Getting a good deal depends more on figuring it out, rather than duking it out. Being tough is helpful when you're dealing with @#$&heads, but being smart beats being tough any day of the week.

scipio1 · July 2003

Ah, as I go back further into the thread, I am getting a feel for the topic...

The ADM stickers are not irrelevant. They are an attempt to frame the conversation. You may think you are immune to framing effects. Studies show that even the most educated, professional negotiators are not immune to framing effects. In fact, the reason dealers use ADM stickers is that studies have conclusively demonstrated that people rarely compensate enough for an extreme opening offer.

Personally, I respond to a attempt at extreme framing with an even more outrageous counter-offer. When I was out looking for my M3 Cabrio, one dealer had the balls to open the conversation with MSRP of $62,000 + $6,500 (in this market!!!). I told him deadpan I'd give him my $30,000 330i if he gave me the M3 plus $15,000 cash (or check if absolutely necessary, but he'd need to get it certified first).

rroyce10 · July 2003

..... You wanna run that by us again .. you gave him a what for what ... ?

Terry.

landru2 · July 2003

He knows. He knows that you want to pay invoice. He doesn't care about losing your business. Unfortunately, there are enough "dumb" buyers to keep this practice around. I'm sure we can agree that if wasn't working for some dealers it would disappear.

rroyce10 · July 2003

..... Bud, you couldn't have said it any better on both counts ..

.. >> Unbelievable perhaps to the typical Edmunds poster. But we all know that typical Edmunds posters represent only a tiny fraction of shoppers. << ..

Terry.

butchbr73 · July 2003

personally.... i don't care what the sticker says on the window... ADM or not. I know what the real deal is with the car, so what do I care what they have it marked at, like I said before, they can ask what they want. The guy down the street can ask $500k for his $450k home, not anything wrong with that.

I would like to think I am an educated buyer, and therefore know whether the car I am looking to purchase is selling for invoice, msrp, etc... I honestly wouldn't even look at the sticker on the window except to see what option packages it has. With all that said, I have never purchased a new car, so its a mute point. Same theory applies to used vehicles.... I like to think I know I have a decent idea of what they are worth, but the dealer can ask whatever he wants, thats up to him. Just cause its "asking price" is a little higher than you expect doesn't mean he is sleazy, does it? Your neighbor selling the house isn't sleazy, is he?

my 2 cents.
thanks.

mark156 · July 2003

You just can't compare houses and cars... they are SO different. Houses don't have "wholesale" value. Rarely are homes traded and marketed like automobiles. They don't have new models year after year and houses have 5% financing... not zero percent.. LOL! They appreciate where cars depreciate. I know there are rare exceptions to the rule but houses and cars are not the same. Motorhomes and cars might be a better comparison.

Mark

masspector · July 2003

Excellent point..."Based on my experience, power comes from having choices, having alternatives. Getting a good deal depends more on figuring it out, rather than duking it out. Being tough is helpful when you're dealing with @#$&heads, but being smart beats being tough any day of the week."

If you have to have the red 350Z convertible, guess what? Your going to pay through the nose. if you just want any sporty convertible, pick up a miata or mustang. Its all supply and demand, Dealers love it when there is a low supply and high demand, buyers love it when it is the other way around. Fortunately in the current market it is usually a high supply and low demand. Even Honda had 0% for 60 months on all new cars this past weekend in my area. Now I know we are in a deep recession...LOL

butchbr73 · July 2003

....i'm not comparing houses and cars. you are right, they are very different. but they do have one thing in common, they are worth what they are worth. The $450k house is not worth $500k currently, no matter how you look at it??? The $20k is not worth $30k. Either way, each is asking too much. Thats the point.

peeete · July 2003

scipio.
Adm stickers just turn off to lots of people. Just because there are enough dumb ones out there to make up the loss in some customers walking doesnt make it right.

I can understand that if a car is "hot" and in short supply adm's may be appropriate. But on garden variety cars in plentiful supply? I dont think so.

I firmly believe that this shows a poor attitude on the part of the dealer to his customers; rather than a potent marketing tool to make buyers feel like kings cause they got "soo much" for their trade. Not everyone trades you know.

There are lots of dealers out there who dont use adm's, treat their customers fairly, and Im sure do quite well. If that is the case, why the need for adm's at all?

I really believe that you can run an honest dealership. give good value, and make lots of money. You will be a refuge for all the buyers who have been beaten up elsewhere (Ive seen it happen in Westchester County.) To me thats the best sales technique of all. And before I get flamed, I know its a very tough business, and Im not stupid.

If you take a look at freshalloy.com, it is frequented by two infiniti dealerships. From what I can see, they go out of their way to help people on a national basis with problems they have, such that people fly in to them to buy cars and drive them home. Thats a heck of a business model, and just shows that the no bs, fair pricing model (on hot in demand cars) works. How many of you have dealerships with national, fly-in clientele? I wish I had done it for my G35, because my dealer stinks.

isellhondas · July 2003

I guess I don't understand what you mean when you refer to "this" market?

We are doing quite well and are up quite a bit from last year.

It's always the prevailing MARKET that determines pricing. It's not window sticker or a dealer's invoice.

joatmon · July 2003

In 91, I needed a car. I wanted a BMW because I liked driving my wife's. Well, during a trip to the dealership, I was turned off by the ADM sticker. I left, bought an Acura Legend, then another Legend, and then a 4 Runner.

I was lured back into BMW to look earlier this year. They still use ADM stickers. I want ahead and bought a BMW. Then I bought another 6 weeks later.

I believe that I'd have driven nothing but BMWs since '91 if they didn't put those silly ADM stickers on their vehicles.

Bottom line... they made a difference to me. You can say they shouldn't, but reality is reality.

YMMV, and that's OK,

Jack

rerenov8r · July 2003

I know "isellhondas" from past posts has said that their sales are pretty good, but for the life of me I can't square with the allegedy HUGE unemployment, the still lifeless nature of I/T spending, declining factory orers and the whole host of HORRIBLE economic news...

From California's "budget crisis" to the the jumps in helath care costs it certainly doesn't sound like ANYBODY has ANY ability to be a new (or used) car, but clearly the sales numbers say that folks ARE buying...

I'm sure the domestics wouldn't still be offering their incentives (and even lots of foriegn makers have special finance rates under 4%...) if they didn't need to, so the "market" is still in athe "buyers favor"...

Sure, there are ALWAYS particular MODELS that in ahigher than average demand, and that can distort both the sellers' and buyers' views {the halo effect

} but the OVERALL economic pciture is still FAR from good...

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