I think GM's ad campaign after 9/11 was "Get America Rolling" or something like that.
So why wouldn't consumers think the economy/car biz was bad. Many ads were/are telling them exactly that.
It may not impact Honda and Toyota dealerships that much, but since most of the commercials I see/hear/notice are car commercials, (and I'm pretty sure I'm not the only one) it stands to reason that many get this impression from the ads they see.
The economy is tanking, the US is in recession, unemplyment is high. All true. However the difference between a "normal" economy and recession is not great in statistical terms - unless you are one of the unfortunate ones who finds themselves unemployed and losing everything as a result of it.
I certainly would not say don't buy a car - but think before you do, no different from usual really.
Folks who've been here more than 10 minutes probably know I'm in the city with it's own carry handle, and you know what, our economy is not the roller coaster that the left and right coasts share.
So when high tech and aircraft manufacturing were not the businesses to be be in, we had some losses, but not as bad as places like CA, WA and OR to name a few. Ok, but on the downside, when there were booms in those industries we don't benefit much either.
The economy here seems to match the terrain, gently rolling, no big mountains or valleys.
So it is a matter of perspective of course. In many places, the economy is probably horrible, relative to what it was 5 years ago.
Other places don't have it so bad.
I know I've done a bunch of large system installs this year, and I know our district met/exceeded sales goals. Did the east and west coast, or even Chicago do that? I don't know.
All I know is (other than this week) I've been pretty busy.
I'm onsite for a customer while they go live, so I'm hoping that I will not be busy. Because if I'm busy this week, it means stuff is broken 8^(
two consecutive quarters of negative GDP. We are not in a recession in the economic sense of the word. We are in a "jobless" recovery right now. Hopefully, that part will turn around in the near future.
Someone posted up above that if people keep reading and hearing how terrible the economy is, well they tend to retrench and wait. That hasn't happened, at least on the consumer side. Consumers are keeping the economy going by refinancing their homes (then using the monthly cash saved to purchase goods) and using home equity loans to buy big ticket items. It's the business side that's not expanding. If consumers had cut back on spending as much as most businesses we would be in a world of hurt right now.
The stock market is up about 20% since March of this year(usually a leading indicator of economic activity). Hopefully, there is light at the end of the tunnel (and that light is not a train).
My point is not that dealers are evil to charge a mark-up, or that you should never pay one. I do say you're probably UNWISE to do so, but that's your perogative as a buyer. If I was buyign a Ferrari Enzo, I might well pay one as well, because that's the price of admission.
My point is that the use of misleading ADM stickers is undoubtedly something that cause me to walk away from a dealership and never come back. When I was shopping for that Civic, some dealers quoted me upwards of $19,000 for initial quotes. This is no different than using an ADM sticker.
Either the dealer (1) believed I was ignorant and ill-informed and wanted to take advantage of me or (2) even worse, he believes that I know what the market is but am stupid enough to let him frame the negotiation according to his opening price. Either way, I am personally offended by his gall, and he has clearly demonstrated a willingness to use underhanded tactics and has left me with no reason to believe he won't continue to do that for as long as we continue discussions. Have a nice day, Mr. Salesguy, our conversation is over.
It is not relevant in any way that we could come to an "at-market" settlement. He has purposefully used a tool to try to extract undue profits from me. I did not walk into his dealership and offer him negative $3,000 for his car, but I suspect he would have been offended if I had. I am equally offended that he tried to pull that very ploy on me.
If you don't think completely unjustified ADMs are sleazy, go ahead and negotiate away. That's your perogative. Perhaps you'll come out with a better deal than you could have from a dealer who does not use ADMs. They can justify them any way they like, but the reason I walk every time is this:
There is only one purpose for an ADM that the dealer doesn;t expect to receive. That is to try to fool me, as the customer. I don't tolerate doing business with people whose first action is to attempt to cheat me.
Now that SCIPIO1 has come in here and beat his chest telling us what a great negotiator he is and that he'll never get scammed on a deal, what else do we need to know?
I always enjoy it when a n00b comes in here and struts his stuff. Nothing like a monster-sized ego to give me a good laugh.
Not that I am a fan of ADM's...but a car dealer is not any different than anyone else when it comes to selling goods and/or services. They can ask what ever they want for said goods.
Decoding MSRP...
Manufacturers(not the dealer)SUGGESTED(not bound by law)Retail Price.
I agree with butch...If I know what I am going to pay, thats IT! Its a deal or its not. An ADM is not going to alter my negotiating.
If nothing else, this is amusing-
"Yes, you can make a lot of money that way. But you won't make it from me. I buy a new car, on average, every nine months. They're not cheap cars."
Buy a new car(not a cheapie) every nine months from your long-time sales guy...Hmmm, yeah they just make a lot money off of you a "different" way. C'mon...your buying behavior is hardly close to the norm.
"There is only one purpose for an ADM that the dealer doesn;t expect to receive. That is to try to fool me, as the customer."
But you have the knowledge and power, so...
Why be offended since the ball is already "in your court"
Also, isnt it a bit presumptious to assume he is trying to fool you. Asking more than msrp(at face value)is a way of increasing profit(OOPS,I said it!!).
So, If I had a car to sell and I priced it 4000 more than what all the price guides say its "worth" according to the condition its in. You come see my car armed with that information. Would you assume I was trying to "fool" you by asking "too much" for car I was selling? When really all I am doing is trying to maximize profit.
If you asked $4000 more than you reasonably expect to get, you run the risk that you will alienate the potential buyer and that he will walk away. Why not $12,000? Or $15,000? 30,000? Because with the increasing unreasonableness of each asking price, you raise the risk that the buyer will walk rather than negotiate.
I am not disputing your right to ask whatever you want. What I AM saying is that the degree of extremeness that you build into your opening offer is directly proportional to your assessment of how little you think of a buyer. You would not ask for $40,000 for a car you know is worth $10,000. In a more efficient and liquid market, say the one for Honda Civics, it is no less bold to ask for $19,000 for a car you know will draw huge competition at $15,200.
That is my point. The dealer has every right to ask whatever he wants. I have the right to walk away, and will exercise that right, anytime a dealer thinks he can ask for an ADM when he KNOWS that there is no way an informed buyer would pay over MSRP.
If you choose not to walk away when someone makes a ridiculous offer, then that's your choice. It's been empirically demonstrated that, on average, people who chooses to entertain an extreme offer rarely compensates adequately to make up for it in the course of the negotiation. Perhaps you are an exception, in which case all the more power to you.
I just don't get your point about how "making money in other ways" is in any way the same as asking for an out-of-market price. The idea is not to prevent anyone from making money on you (that works as poorly as trying to take someone for all he's worth every time). The goal is to provide a fair profit in return for a fair service provided. My salesman SHOULD make a lot of money from me, over the course of a good relationship. And he does. He makes a fair commission on each sale, proportional to his value-add to the sale and our ongoing customer relationship. What he does NOT do is make an outrageous profit on a single sale. Surely you can't mean to imply that buying a new car for $60,000 every six months is the same as buying the same car for $75,000 ONCE?
If you asked $4000 more than you reasonably expect to get, you run the risk that you will alienate the potential buyer and that he will walk away. Why not $12,000? Or $15,000? 30,000? Because with the increasing unreasonableness of each asking price, you raise the risk that the buyer will walk rather than negotiate.
Q: Why can't they sell that car(boat, house, or ____)?
The 4000 was more than "reasonably expected" I said my asking price was 4000 more than all the guides said it was worth. Not the same
I asked about a specific point you mentioned- Would you assume I was trying to "fool" you by asking "too much"(i.e 4000) for the car I was selling?
"What I AM saying is that the degree of extremeness that you build into your opening offer is directly proportional to your assessment of how little you think of a buyer"
OK...degree of extremeness based on what?
Sorry, disagree. My asking price is my asking price. I dont factor "what I think of" the buyer into the equation. How can I think little of some one whom I dont even know.
If he/she doesnt like my price a counter can be made, and so on. A deal is struck or it isnt. If my car doesnt sell, i.e the market wont bear my asking price, then a new strategy will likely be invoked.
"anytime a dealer thinks he can ask for an ADM when he KNOWS that there is no way an informed buyer would pay over MSRP."
So with all of the car pricing information readily available today for consumers, your reasoning suggests this really shouldn't work.
"I just don't get your point about how "making money in other ways" "
There wasn't one really. Just kinda funny to see someome boldly say I wont ever pay xxx over for any particular car tagged with an adm but will shell out XXX dollars every 9 mos buying a new car not tagged with an adm. Thats all.
"What he does NOT do is make an outrageous profit on a single sale."
Define outrageous.
"Surely you can't mean to imply that buying a new car for $60,000 every six months is the same as buying the same car for $75,000 ONCE? "
Of course not. But let's be realistic. How many people buy new upscale cars with the frequency you do?
I was going from what someone else said earlier. I do not know whether you are offering 0%. Certainly many other manufacturers are. My friend got 1.9%. If 0% is not currently being offered, my mistake. Either way, car sales are being subsidized by financing breaks. I doubt you'll find many industry analysts who believe that demand isn't being artificially inflated by these subsidies, and that the situation isn't getting worse by the week for manufacturers.
Sales numbers are not, by themselves, adequate measures of demand or industry health. What we are seeing is channel stuffing by the carmakers on a gargantuan scale. The domestic producers are the primary guilty parties, but as this drags on, they are beginning to drag down the rest of the industry with them.
In your example we are arguing semantics because the situation is hypothetical. In a highly liquid market, for example for new Civics, I would definitely construe an offer at $4,000 above "fair" value to be an attempt to fool me. In an illiquid market, like collector cars, the bid-ask spread is much wider and as such $4,000 may not represent an unreasonable gulf.
"Sorry, disagree. My asking price is my asking price. I dont factor "what I think of" the buyer into the equation. How can I think little of some one whom I dont even know."
Your asking price is based upon your assessment of what you believe a hypothetical buyer would not walk away from. As such, it does indeed reflect your (perhaps unconscious, but nonetheless real) assessment of buyer behavior. Come on, you didn't just pick $4,000 out of the air. You made it with some thought about what sort of interest you thought that price would generate.
"So with all of the car pricing information readily available today for consumers, your reasoning suggests this really shouldn't work."
I never suggested it wouldn't work. It does work, because people rarely prepare adequately prior to beginning their negotiations. But just because it works doesn't mean it shouldn't be offensive to someone who has, indeed, prepared adequately.
"There wasn't one really. Just kinda funny to see someome boldly say I wont ever pay xxx over for any particular car tagged with an adm but will shell out XXX dollars every 9 mos buying a new car not tagged with an adm. Thats all."
As I said before, I never said I wouldn't pay over MSRP. For an Enzo, I would definitely consider it. But there's a huge difference between buying the many $60,000 cars versus buying the equivalent a single time for $75,000.
yes, the final price is all that matters but the posting of ridiculous ADMs makes me immediately on the defensive because I think that they are 'sneaky' and while I caught the ADM scam I may not be able to catch the next one. True or not, the posting of an ADM makes me think I had better be very careful or I will get taken on something else.
Having the oil changed on wife's car today at the dealer. Walked over the to VW dealer next door to see if they had a Touareg (sp?) - the didn't. But I noticed that every single car had ADM on it ranging from $1199 for the "VW Protection Plan" which included:
Paint seal Mud gards Sunroof deflector Tire road hazard protection
Some had the $2999 package which included a variety of other minor things. . .
Also, every one had an additional $299 VIN Etching.
So, would I ever buy a car from these guys. No. I don't trust them.
Their new add campaign is very...interesting. They are appologizing for their poor quality in the 80's and 90's, and are talking about how going into the future, they now have their eye on the ball. Hmmm...Sorry we tried to dump all this poor quality crap on you, but going forward, we're really good.
I like cars. I like new cars even more. I like the new car smell and the feeling of driving something unknown. You know when you've just got a car and you are not familiar with its performance limits, features, all those buttons and so on. But the excitement goes away in 6 month or so and after a year I want something new. Actually, it does not need to be a brand new car. It needs to be NEW to me. E.g my current car 2002 BMW 540 does not excite me any more but I would be very excited with 2000 E55. So what is the cheap (or at least relatively reasonable) solution. Should I get 1 year old car and keep it for 1 more year, 2 year old for 1 year or 3 year old for 1 more year. I do not want to deal with older cars. It should be still under warranty. BTW what is a current trade-in value for a black 02 540ia with 18K, sport,cold weather,DSP sound and navigation?
I did a drive-by at the Pontiac dealer last night and found two interesting things: There are more stick shift Vibes than autos on the lot -- 4 cars out of 12 were autos. That's unheard of in this area. Maybe sticks are coming back? Or those are the ones they can't sell? Anybody seen a shift in customers towards manuals again?
And secondly, the storage lot was filled to overflowing with new Pontiacs... enough to make you wonder who they're gonna sell all these cars to. Some cars I saw on the regular lot did not have an MSRP sticker -- I thought that was illegal? Or the car is sold already? This dealer is a standup operation in my experience, BTW.
On one of those cars I saw a sticker that said "Property of GM" on it; maybe many cars had that sticker. Does that mean the General is using dealer's lots for storage, hoping the dealer will order/buy the cars eventually?
Can someone tell me what "Property of GM" means in this context? TIA -Mathais
I believe I have seen that sticker on new models not yet released for sale by GM, e.g., 04 models that won't go on sale until ???? August 5, but have to be delivered in advance. As soon as they are released for sale, the window sticker goes on.
First of all, 0% is good, but not that much better than market rates (4%). However, that is not my point.
I always take the cash over the financing...why? Well, I will give an example:
in Dec 2001, I bought a SAAB 9-5 SE wagon for 30,500. That including 5000 in dealer cash (instead of 0% financing). The financing was worth about 5K, if I kept the car for the five years. However, 6 months into ownership, I was t-boned...totalled the car. If I had taken the financing, I would have had an additional 5K in initial cost. Instead, I got a bigger check from the insurance company.
You might want to look at lease assumption - try www.swapalease.com or www.leasetrader.com. You could pick up the last 12 or so months of somebody's three year lease, get a 2 year old car that's still under warranty (and new to you), and walk away clean after a year.
I concur with jratcliffe.. You could drive a different late model car every year or year and a half, and at most only pay a transfer fee. The real savings is you only pay sales taxes on your monthly payment. (YMMV according to your state tax laws). Very low upfront fees, compared to leasing new or buying a new car every year. It won't be cheap, but much cheaper than trading a car every year.
So for example a $40k Chevy Tahoe would see an interest rate savings of $4000 over a five year loan with a discounted rate of 4 percent. So if the rebate is less than $4000 take the interest rate. If the rebate is $4000 or greater take the rebate.
This really isn't black magic (or rocket science), but many people are very confused as to what is a better deal. Also if you have poor credit you need to adjust the formula above to reflect the true interest rate reduction that you can actually get from GM.
I'll take the bird in hand. Not only do you have to factor in the possibility of a totaled car, but the very real possibility that you won't keep the car the entire 5 years for various other reasons.
Well using my Tahoe example, by taking the now current rebate on a Tahoe (of $3000) it would cost you $1000 relative to the 5 year discounted loan reduction of $4000.
Or alternately if you keep the car longer than 45 months you come out ahead. If you don't plan on keeping the car that long then maybe a lease would suit you better.
In terms of accidents, Gap insurance is available on the internet for around $300. So you could buy gap insurance if you are so inclined and still come out $700 ahead. The Gap insurance will also protect you if your car ( after an accident) is worth less than the loan balance. With used car values pretty low these days that gap insurance just might be worth it.
In all the web sites I have been visiting, I have yet to read about the following items:
In dealing with Daly City Toyota (Daly City, California), they are attempting to charge me for Toyota Dealer Advertising ($391) and Wholesale Financial Reserve ($221) on a 2003 Toyota Tacoma. I have not seen these charges on other Toyota Dealer invoices and in discussing the matter with the salesperson, I came to the conclusion that I am being penalized for paying cash instead of financing.
I also have discovered that the manufacturer MSRP discount ($570) for the options package is never reflected as a discount in the invoice price. This leads me to believe that this is false advertising.
The dealer makes money by arranging financing on a car buy, so you could well be seeing a higher purchase price by paying cash. You can let 'em sell you a loan, negotiate a lower price, and then pre-pay the loan. Read the loan agreement, though, to make sure it's simple interest and provides no pre-pay penalty.
Well.. total paid over 60 mos on $37K ($40K-3Krebate) is $40,884.60. But, you aren't paying that extra amount up front, just at $14.74 per month over 60 months, reducing the present day cost to $800 (the amount you would finance at 4% over 60 months to add $14.74 to the payment). So now, the difference is just $800. I've owned 16 cars (5 of them leased), and only kept one of them as long as 60 months. In your example, you save money if you keep the car for the entire loan term, but for any car much cheaper than that, the advantage goes away quickly.
I had a tough time trying to understand your logic from your post but I believe that it is not quite correct.
However as I posted above you need to compare the interest rate savings to the rebate to figure out what is the better deal. For the mathematically challenged the formula I posted in post #5253 is very useful.
If you don't plan on keeping the car for long then just adjust the loan term in the formula to calculate the savings available for your term.
I'm not for or against rebates versus interest rate reductions. what I am for is a clear and straight forward look at what the relative discounts are. If the loan is a better deal then I would take that. If the rebates are a better deal then I would take that.
Its just basic math..Your formula is a little off... the .5 multiplier will vary with length of loan term. For a 60 month loan, its about .53-.54. The multiplier gets larger with length of loan term. Just for example, for a 30 year loan term, the multiplier would be .68. I calculate the break-even point on the previous loan example at 48 months. If the price of the car is $32K or less, with the previous assumptions, then the advantage goes to the rebate, under all circumstances. Thanks...I haven't used my math skills in awhile. Hope you are having a great day.
Here in the East Coast (Pa) they are on all new Toyota cars.At least all the ones I have seen.However the financial reserve number is something I do not recall seeing
This could also indicate vehicles that are to be used in a local event: IE The Greater Podunk Pontiac Golf Championship. GM gives vehicles to the tournament sponsors to shuttle the players, media, caddies, officials, et al to and from the event and outings.
These vehicles are then sold at auction.
I remember a couple of years ago a local Cadillac dealer storing dozens of vehicles for a golf tournament.
We had a Pontiac Transport when they were quite new. One day my wife pulled up outside the local mall where it so happened they were filming a movie. Before she could say anything John Cusack had opened one of the sliding doors got in and sat down. It turns out he mistook our van for one of a fleet of Transports that they were using to shuttle people to and from filming.
Hi gary131. Rather than worrying about all of the random fees that dealers often try to tack onto deals, it is important to concentrate on the big picture - you want to spend as little as possible to drive off in the vehicle that you are interested in. It doesn't really matter how a dealer breaks down their price if they are offering the best overall deal. Try to concentrate on the total price of the vehicle, the out-the-door price. Get a few out-the-door price quotes from dealers in your area and then purchase from the one that offers you the most attractive deal, provided that you feel comfortable with them.
...I liked it too...did you catch the unintended correlation in the post? The phrase "say anything" directly preceded John Cusack's name. Say Anything was one of the better 80's teen type movies; that and Ferris Buellers Day Off...
Comments
So, I guess a lot of that remains with me still.
I can't really ever remember "good" times.
And I guess it bothers me when a customer tells me that I should take a ridiculous offer on a car because of the "bad times" we are in.
A lot of it is real to be sure, but I guess I remain an optimist.
I know hand-wringing and worrying has never done me any good at all.
Still, we are going through some difficult times.
; )
Mackabee
So why wouldn't consumers think the economy/car biz was bad. Many ads were/are telling them exactly that.
It may not impact Honda and Toyota dealerships that much, but since most of the commercials I see/hear/notice are car commercials, (and I'm pretty sure I'm not the only one) it stands to reason that many get this impression from the ads they see.
FWIW,
TB
I certainly would not say don't buy a car - but think before you do, no different from usual really.
http://www.bayarea.com/mld/bayarea/news/special_packages/attack_o- n_america/stories/4034543.htm
But you are correct...if you tell the public that the economy is terrible and that the sky is falling enough times, they will believe it!
So when high tech and aircraft manufacturing were not the businesses to be be in, we had some losses, but not as bad as places like CA, WA and OR to name a few. Ok, but on the downside, when there were booms in those industries we don't benefit much either.
The economy here seems to match the terrain, gently rolling, no big mountains or valleys.
So it is a matter of perspective of course. In many places, the economy is probably horrible, relative to what it was 5 years ago.
Other places don't have it so bad.
I know I've done a bunch of large system installs this year, and I know our district met/exceeded sales goals. Did the east and west coast, or even Chicago do that? I don't know.
All I know is (other than this week) I've been pretty busy.
I'm onsite for a customer while they go live, so I'm hoping that I will not be busy. Because if I'm busy this week, it means stuff is broken 8^(
TB
Someone posted up above that if people keep reading and hearing how terrible the economy is, well they tend to retrench and wait. That hasn't happened, at least on the consumer side. Consumers are keeping the economy going by refinancing their homes (then using the monthly cash saved to purchase goods) and using home equity loans to buy big ticket items. It's the business side that's not expanding. If consumers had cut back on spending as much as most businesses we would be in a world of hurt right now.
The stock market is up about 20% since March of this year(usually a leading indicator of economic activity). Hopefully, there is light at the end of the tunnel (and that light is not a train).
My point is that the use of misleading ADM stickers is undoubtedly something that cause me to walk away from a dealership and never come back. When I was shopping for that Civic, some dealers quoted me upwards of $19,000 for initial quotes. This is no different than using an ADM sticker.
Either the dealer (1) believed I was ignorant and ill-informed and wanted to take advantage of me or (2) even worse, he believes that I know what the market is but am stupid enough to let him frame the negotiation according to his opening price. Either way, I am personally offended by his gall, and he has clearly demonstrated a willingness to use underhanded tactics and has left me with no reason to believe he won't continue to do that for as long as we continue discussions. Have a nice day, Mr. Salesguy, our conversation is over.
It is not relevant in any way that we could come to an "at-market" settlement. He has purposefully used a tool to try to extract undue profits from me. I did not walk into his dealership and offer him negative $3,000 for his car, but I suspect he would have been offended if I had. I am equally offended that he tried to pull that very ploy on me.
If you don't think completely unjustified ADMs are sleazy, go ahead and negotiate away. That's your perogative. Perhaps you'll come out with a better deal than you could have from a dealer who does not use ADMs. They can justify them any way they like, but the reason I walk every time is this:
There is only one purpose for an ADM that the dealer doesn;t expect to receive. That is to try to fool me, as the customer. I don't tolerate doing business with people whose first action is to attempt to cheat me.
I always enjoy it when a n00b comes in here and struts his stuff. Nothing like a monster-sized ego to give me a good laugh.
Decoding MSRP...
Manufacturers(not the dealer)SUGGESTED(not bound by law)Retail Price.
I agree with butch...If I know what I am going to pay, thats IT! Its a deal or its not. An ADM is not going to alter my negotiating.
If nothing else, this is amusing-
"Yes, you can make a lot of money that way. But you won't make it from me. I buy a new car, on average, every nine months. They're not cheap cars."
Buy a new car(not a cheapie) every nine months from your long-time sales guy...Hmmm, yeah they just make a lot money off of you a "different" way. C'mon...your buying behavior is hardly close to the norm.
"There is only one purpose for an ADM that the dealer doesn;t expect to receive. That is to try to fool me, as the customer."
But you have the knowledge and power, so...
Why be offended since the ball is already "in your court"
Also, isnt it a bit presumptious to assume he is trying to fool you. Asking more than msrp(at face value)is a way of increasing profit(OOPS,I said it!!).
So, If I had a car to sell and I priced it 4000 more than what all the price guides say its "worth" according to the condition its in. You come see my car armed with that information. Would you assume I was trying to "fool" you by asking "too much" for car I was selling? When really all I am doing is trying to maximize profit.
However there isn't any ZERO percent financing on Civics.
I am not disputing your right to ask whatever you want. What I AM saying is that the degree of extremeness that you build into your opening offer is directly proportional to your assessment of how little you think of a buyer. You would not ask for $40,000 for a car you know is worth $10,000. In a more efficient and liquid market, say the one for Honda Civics, it is no less bold to ask for $19,000 for a car you know will draw huge competition at $15,200.
That is my point. The dealer has every right to ask whatever he wants. I have the right to walk away, and will exercise that right, anytime a dealer thinks he can ask for an ADM when he KNOWS that there is no way an informed buyer would pay over MSRP.
If you choose not to walk away when someone makes a ridiculous offer, then that's your choice. It's been empirically demonstrated that, on average, people who chooses to entertain an extreme offer rarely compensates adequately to make up for it in the course of the negotiation. Perhaps you are an exception, in which case all the more power to you.
I just don't get your point about how "making money in other ways" is in any way the same as asking for an out-of-market price. The idea is not to prevent anyone from making money on you (that works as poorly as trying to take someone for all he's worth every time). The goal is to provide a fair profit in return for a fair service provided. My salesman SHOULD make a lot of money from me, over the course of a good relationship. And he does. He makes a fair commission on each sale, proportional to his value-add to the sale and our ongoing customer relationship. What he does NOT do is make an outrageous profit on a single sale. Surely you can't mean to imply that buying a new car for $60,000 every six months is the same as buying the same car for $75,000 ONCE?
If you asked $4000 more than you reasonably expect to get, you run the risk that you will alienate the potential buyer and that he will walk away. Why not $12,000? Or $15,000? 30,000? Because with the increasing unreasonableness of each asking price, you raise the risk that the buyer will walk rather than negotiate.
Q: Why can't they sell that car(boat, house, or ____)?
A: Priced too high.
I said my asking price was 4000 more than all the guides said it was worth. Not the same
I asked about a specific point you mentioned-
Would you assume I was trying to "fool" you by asking "too much"(i.e 4000) for the car I was selling?
"What I AM saying is that the degree of extremeness that you build into your opening offer is directly proportional to your assessment of how little you think of a buyer"
OK...degree of extremeness based on what?
Sorry, disagree. My asking price is my asking price. I dont factor "what I think of" the buyer into the equation. How can I think little of some one whom I dont even know.
If he/she doesnt like my price a counter can be made, and so on. A deal is struck or it isnt. If my car doesnt sell, i.e the market wont bear my asking price, then a new strategy will likely be invoked.
"anytime a dealer thinks he can ask for an ADM when he KNOWS that there is no way an informed buyer would pay over MSRP."
So with all of the car pricing information readily available today for consumers, your reasoning suggests this really shouldn't work.
"I just don't get your point about how "making money in other ways" "
There wasn't one really. Just kinda funny to see someome boldly say I wont ever pay xxx over for any particular car tagged with an adm but will shell out XXX dollars every 9 mos buying a new car not tagged with an adm. Thats all.
"What he does NOT do is make an outrageous profit on a single sale."
Define outrageous.
"Surely you can't mean to imply that buying a new car for $60,000 every six months is the same as buying the same car for $75,000 ONCE? "
Of course not. But let's be realistic. How many people buy new upscale cars with the frequency you do?
Sales numbers are not, by themselves, adequate measures of demand or industry health. What we are seeing is channel stuffing by the carmakers on a gargantuan scale. The domestic producers are the primary guilty parties, but as this drags on, they are beginning to drag down the rest of the industry with them.
"Sorry, disagree. My asking price is my asking price. I dont factor "what I think of" the buyer into the equation. How can I think little of some one whom I dont even know."
Your asking price is based upon your assessment of what you believe a hypothetical buyer would not walk away from. As such, it does indeed reflect your (perhaps unconscious, but nonetheless real) assessment of buyer behavior. Come on, you didn't just pick $4,000 out of the air. You made it with some thought about what sort of interest you thought that price would generate.
"So with all of the car pricing information readily available today for consumers, your reasoning suggests this really shouldn't work."
I never suggested it wouldn't work. It does work, because people rarely prepare adequately prior to beginning their negotiations. But just because it works doesn't mean it shouldn't be offensive to someone who has, indeed, prepared adequately.
"There wasn't one really. Just kinda funny to see someome boldly say I wont ever pay xxx over for any particular car tagged with an adm but will shell out XXX dollars every 9 mos buying a new car not tagged with an adm. Thats all."
As I said before, I never said I wouldn't pay over MSRP. For an Enzo, I would definitely consider it. But there's a huge difference between buying the many $60,000 cars versus buying the equivalent a single time for $75,000.
Having the oil changed on wife's car today at the dealer. Walked over the to VW dealer next door to see if they had a Touareg (sp?) - the didn't. But I noticed that every single car had ADM on it ranging from $1199 for the "VW Protection Plan" which included:
Paint seal
Mud gards
Sunroof deflector
Tire road hazard protection
Some had the $2999 package which included a variety of other minor things. . .
Also, every one had an additional $299 VIN Etching.
So, would I ever buy a car from these guys. No. I don't trust them.
Adam
A good example of short term corporate thinking.
Train the customers to demand and expect this forevermore!
Local honda dealer 1.9% on all 03 civics,60 mth.,
0 down etc...thru hmc.
Local toyota dealer 0% int. and $1000 rebate on camry...thru tmcc
And secondly, the storage lot was filled to overflowing with new Pontiacs... enough to make you wonder who they're gonna sell all these cars to. Some cars I saw on the regular lot did not have an MSRP sticker -- I thought that was illegal? Or the car is sold already? This dealer is a standup operation in my experience, BTW.
On one of those cars I saw a sticker that said "Property of GM" on it; maybe many cars had that sticker. Does that mean the General is using dealer's lots for storage, hoping the dealer will order/buy the cars eventually?
Can someone tell me what "Property of GM" means in this context?
TIA -Mathais
by GM, e.g., 04 models that won't go on sale until ???? August 5, but have
to be delivered in advance. As soon as they are released for sale, the window
sticker goes on.
2014 Malibu 2LT, 2015 Cruze 2LT,
I always take the cash over the financing...why? Well, I will give an example:
in Dec 2001, I bought a SAAB 9-5 SE wagon for 30,500. That including 5000 in dealer cash (instead of 0% financing). The financing was worth about 5K, if I kept the car for the five years. However, 6 months into ownership, I was t-boned...totalled the car. If I had taken the financing, I would have had an additional 5K in initial cost. Instead, I got a bigger check from the insurance company.
regards,
kyfdx
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Accidents aside the break over point as to whether or not to take the rebate comes from the following ballpark formula :
Interest rate savings = 0.5 * loan amount* term(in years) * rate_discount (in percent)/ 100
So for example a $40k Chevy Tahoe would see an interest rate savings of $4000 over a five year loan with a discounted rate of 4 percent. So if the rebate is less than $4000 take the interest rate. If the rebate is $4000 or greater take the rebate.
This really isn't black magic (or rocket science), but many people are very confused as to what is a better deal. Also if you have poor credit you need to adjust the formula above to reflect the true interest rate reduction that you can actually get from GM.
Knowledge is power !
As so what exactly is your point here ?
regards,
kyfdx
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Well using my Tahoe example, by taking the now current rebate on a Tahoe (of $3000) it would cost you $1000 relative to the 5 year discounted loan reduction of $4000.
Or alternately if you keep the car longer than 45 months you come out ahead. If you don't plan on keeping the car that long then maybe a lease would suit you better.
In terms of accidents, Gap insurance is available on the internet for around $300. So you could buy gap insurance if you are so inclined and still come out $700 ahead. The Gap insurance will also protect you if your car ( after an accident) is worth less than the loan balance. With used car values pretty low these days that gap insurance just might be worth it.
In dealing with Daly City Toyota (Daly City, California), they are attempting to charge me for Toyota Dealer Advertising ($391) and Wholesale Financial Reserve ($221) on a 2003 Toyota Tacoma. I have not seen these charges on other Toyota Dealer invoices and in discussing the matter with the salesperson, I came to the conclusion that I am being penalized for paying cash instead of financing.
I also have discovered that the manufacturer MSRP discount ($570) for the options package is never reflected as a discount in the invoice price. This leads me to believe that this is false advertising.
Anyone have any insight on these matters? Thanks.
The dealer makes money by arranging financing on a car buy, so you could well be seeing a higher purchase price by paying cash.
You can let 'em sell you a loan, negotiate a lower price, and then pre-pay the loan. Read the loan agreement, though, to make sure it's simple interest and provides no pre-pay penalty.
In your example, you save money if you keep the car for the entire loan term, but for any car much cheaper than that, the advantage goes away quickly.
regards,
kyfdx
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I had a tough time trying to understand your logic from your post but I believe that it is not quite correct.
However as I posted above you need to compare the interest rate savings to the rebate to figure out what is the better deal. For the mathematically challenged the formula I posted in post #5253 is very useful.
If you don't plan on keeping the car for long then just adjust the loan term in the formula to calculate the savings available for your term.
I'm not for or against rebates versus interest rate reductions. what I am for is a clear and straight forward look at what the relative discounts are. If the loan is a better deal then I would take that. If the rebates are a better deal then I would take that.
I calculate the break-even point on the previous loan example at 48 months. If the price of the car is $32K or less, with the previous assumptions, then the advantage goes to the rebate, under all circumstances.
Thanks...I haven't used my math skills in awhile. Hope you are having a great day.
regards,
kyfdx
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These vehicles are then sold at auction.
I remember a couple of years ago a local Cadillac dealer storing dozens of vehicles for a golf tournament.
Car_man
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What next, $12.50 for the Salesman Lunch Fee? $20.00 for the Showroom Window Cleaning Fee? $200.00 for the Owner's Daughter's College Tuition Fee?
Regards... Vikd
currently ducking his head
http://www.financenter.com/consumer/calculators/
Jade's House of Delight and Massage fee (JHDM) - $69.99
Troll Trauma Treatment fee (TTT) - $9.17
Idiot Brother-in-law Subsidy fee (IBS) - $.29
etc.
Lots of fees.
Lots and lots of fees.
LOL!
Regards... Vikd