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Dealer's Tricks - bait & switch, etc.
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The thing has of course a flip side. I know personally people who honestly believe that fair profit is a loss, especially when it comes to product they buy. Other group so much believes in their own negotiating skills that they would be sick if they did not get better deal than their neighbor. Another version of "keeping up with Jensens" - it is "getting better deal than Smithses".
So you can see - too much at stake to change anything.
2018 430i Gran Coupe
area are all driven by older folks............
One UGLY vehicle IMO...........and folks say the Aztek
is scary.............
See a trend. This is the long term goal of Toyota.
Is your internet dept different?
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But she did say they try to push the accessories and there were a ton of them. I guess that's where the profit is, as well as ext. warranties, pre-paid maint. plans, ins. and stuff like that.
Yep there is profit in those but since it's all laid out on a menu before hand with all the costs it's your choice. The hope is like at a buffet you'll put lots on your plate. I dont know if you were told but the menu doesnt change. If you want a new feature they are all plug-and-play.. today, next month next year whenever you want.
That is the thing Isell-now I don't mean anything personal. But one doesn't know what a "fair profit" is. Somebody previous said it best. I am about 10 miles away from Longo Toyota here in So. Cal. Everyone knows that you can go there and get one of the best prices in town. However, try to take that price somewhere else and you will be told-"You can't buy it for that!" Apparently, Longo costs are MUCH LOWER for a vehicle if you factor the massive holdbacks they must get. This recently happened to me at another "high volume" store. I did all my homework-was ready to walk off the showroom floor, and they made the deal. It was on a '05 Toyota 4Runner. I cannot figure out to this day how they could sell me a car at $2,000.00 under invoice! So - did they lose money? Or did they hope to make it on the trade when the dollar difference would of put much higher than Retail Kelley Blue Book? I don't know what they were thinking!
Remember the internet is still in its infancy as is it's impact on the car industry... IMO people would rather buy a car then be sold one.
That's what it should be. ONE PRICE for all dealers. Then they can sell service,warranties, etc. from a "value add" standpoint and only "THE BEST STORES" would survive.
Profit should not be a factor....value should. My therory is to negotiate based on what I think the car is worth to me. I do look at invoise and all of that; however, I would rather buy the Accord EX at 22K (which (i think) has some profit) than the Ford Taurus at 21K, even if the dealer is selling at invoice.
Are dealers entitled to a fair profit? Frankly I don't care. How they make there money is thier business. My job is to get the car I want at the price I want to pay (usally the minimum price I can get).
Sometimes, I have to negotiate; sometimes I am happy with the price.
And, if I was in Seattle and looking for a Honda, I would definitely call Isell. However, I am in the other Washington.....3000 miles is a little far to go buy a car when there are many Honda dealers in my area (closest bein 350 yards from my office).
Like it sounds like Scion does now...Wow, sell 20 cars and make 2000.00! How many quality salespeople do you think will stick around for that?
When I buy something, I don't care one bit how much evil profit the store is making. The item in question is either a good value for me,or it's not!
I don't want my customers to try to figure out what in their minds is "fair". I also don't want them to think about the tremendous overhead, taxes, etc it takes to open the doors everyday.
It's either a deal both sides are happy with or it's not!
Of the $2.65, $1 is my salary, $.4 is my benifits, $.3 is to cover my time when I am not working for a customer, $.4 is the cost associated with marketing, writing proposals, and administering the company, $.3 is the cost of the office (rent, heat/AC, computers, etc), and the remain 15 cents is corporate profit.
Just the cost of doing business!
BTW - Tampa dealers found a perfect was to deal with Scion think - handsome $499 doc fee (State law allows them put whatever they see fit). So combined with something like $500-800 nominal profit over invoice (before accessories), now we are talking over $1K/car for the dealership. For $13-$15K car it is over 5%. I don't know what would be the salesman's cut on that, but I would hardly call it a "mini". Not a Hawaii vacation, either, but don't say you can't feed the kids with that
2018 430i Gran Coupe
The salesperson normally gets no part of the doc fee. I'm not certain about every store but it covers the clerical paperwork costs in most cases.
In response to isell.. the Scion experiment and pay plan is in its infancy so it's not for everyone... I've declined to become part of it for the same reasons you have. But in a year or two after some growth.. delivering 50-60 units per person with a no stress, no hassle atmosphere will bring a couple of 22 y.o.'s $125K or more with volume bonuses etc. That's a lot better than the average salesperson delivering 10-14 units per month and making $35K/yr.
I also think that this 'experiment' might be a warning shot so to speak across the bows of the other manufacturers. What if it becomes wildly successful in the Scions then Corolla's ... then Camry's.
e.g. LE Camry ( LX Accord ) 4c Pwr everything, CD, XM, VSC+Trac, 6 A/B, ABS, BA, EBD at.... $16K MSRP one price for all no discussion. NO H/B, no Commission, $100-150 flat, deliver 50-70 units make $150K.
2018 430i Gran Coupe
Every dealer is different, but salespeople usually don't get commission on the doc fee. That goes straight to the owner. Just like the taxes and registration fees go straight to the state.
Salesperson usually doesn't get paid on percent over invoice either (so the 5% number doesn't matter). They get paid on the profit's actual dollar figure.
Like I said, every dealer is different, but if the car sells for $500-$800, some dealers will pay a mini on that ($50-$100) or some might pay a 15%-20% commission ($75-$150). Regardless, it's tough to make much on selling base Scion's alone.
Considering the industry sales average is something like 6-8 cars per month, I'd personally find it pretty tough to feed the kids on that kind of money!
Call me skeptical - I don't think the industry as a whole can sustain a business model that requires each salesperson to sell 500-700 cars per year to earn a decent salary. Isn't the average in a normal store like 120-150 per year?
Plus, it's not the sales model that is giving you that volume - it's the product. Not all products are that hot.
IMHO, this will not be spreading like wildfire.
2018 430i Gran Coupe
I don't know for sure, but don't Scion salespeople also sell Toyota since Scion is always in the same building? If so, then that would make it a lot easier to make a living.
Isn't the average in a normal store like 120-150 per year?
The monthly average is something like 6-8, so it would be more like 70-100 cars per year.
Not 50-60/person yet.. that's Toyota's goal. We're pretty big in the region but now after 18 mos the total is about 50 units/mo. In a couple of yrs 100+ units is a definite. There is usually a couple of volume bonus's and a yearend volume bonus and a Toyota trip for high volume producers as well. $125K is a realistic goal in a couple of years. There are some mega dealerships that already have several sales people in the 600-700 units/yr range ( vehicles other than Scion ).
Call me skeptical - I don't think the industry as a whole can sustain a business model that requires each salesperson to sell 500-700 cars per year to earn a decent salary. Isn't the average in a normal store like 120-150 per year?
You are correct on both points. But that's the point of the experiment I believe. How far can it be extended?
Plus, it's not the sales model that is giving you that volume - it's the product. Not all products are that hot.
It may be both. Certain high volume standardizeable products like Corolla's and Camry's would seem to fit this as well. These are massive volumes. Trucks maybe not.
It may not be able to spread to other manufacturers but that may be part of the 'experiment'. With the BillionGazillion$ Toyota has in reserve it may be feasible for them to pursue this in a little more depth. Or it might just be a Hyundai-fighting strategy. Hyundai has targetted Toyota specifically so 'yota may be preparing to fight back.
Again in 2 yrs it may be entirely different. And it may be that Toyota ends the experiment - but that I believe is unlikely. Their intentions seem to be in the other dirction.
They are pushing everyone to keep up or get swept away by internet sales.
Juat like the Elements I sell.
You may be right about the volume. The Scions crossed the 100K mark which seems almost to be a barrier. After that the growth seems to slow. Interesting to see if the growth continues.
See how simple life can be.
I don't quite understand this statement. One price for a new car. The customer has a trade-you Bluebook it and give him a price. He can either live with it or not. If EVERYONE had one price-then the customer could be free to trade in wherever he liked. Of course if another dealer gives you a substantially higher allowance, that would be a "red flag" to ask about the doc fees! I guess in theory there might be a few cars (very few) that one dealer might give a higher allowance for depending on the area the dealer's business is in. Maybe like BMW 5's or what have you.
Well, at least I understand what your saying. I am from the "old school". Having paid cash for every car I ever purchased, I don't think anybody has any business buying a car and rolling over negative equity in to the next one. How many people from a percentage stand point have to do this?
At this present time it is very difficult for a buyer of a GM or Ford to trade out of the vehicle early because the resale market has fallen so sharply in the last several months. The resales have fallen faster than the loans are being paid off.
Didn't I read that Scion (Toyota) plans complete new model introductions every two to three years and that this is how they intend to promote interest and sustain momentum? Aren't the XA and XB already scheduled to be phased out and replaced?
It might be possible to maintain these high unit sales providing Scion can continue to release new models that capture the hearts and souls of buyers in this market segment. It reminds me a bit of car design of the 60s where there was a much more noticeable change in trim pieces and features from one model year to the next as well as what seemed like more frequent model rein"car"nations.
The real dud in the current Scion line up seems to be the XA, which lacks the love-it or hate-it aspect of the XB or the sportiness of the TC. Despite excellent gas mileage it has seems to have no buzz and gets overlooked. Maybe it reminds buyers of the Geo Metro or Ford Festiva and other previous generation econoboxes.
Gogiboy
The xA is the little brother so to speak but we have been sold out since August. Every one has been ordered in advance due I think to its fuel economy when gas peaked and the price of the vehicle.
You've been in the business long enough to know that will never happen ...
Actual store volume - probably .. sales per person, never happen .... most "really good" salespeople that sell 15/18 vehicles a month (every month) can get pretty overwhelmed ... the guys and ladies that do 20/25 units a month (every month) usually have a secretary type and/or a part time "paid" delivery person, because the store won't risk the CSI on the delivery .. and for the long ball hitters that do 25/30+ units a month .. well, they have the detail department, paperwork, delivery and finance department wired for sound -- if ya know what I mean ..l.o.l...
That said .. the first time the store's volume increases or their CSI hits below a certain figure the store will make them split their deals, divide the sales floor or increase the sales force -- period.
50 - 60 per salesperson..? not in this universe - or any other for that matter.
Terry.
Yes, that is Scion's niche... You don't have to deal with any negotiation. Sort of like what Saturn started doing 10-15 years ago. Scion makes it easier with all their online stuff (see above posts by some knowledgeable posters).
Of course, even "paying sticker" on these cars only yields a dealer profit of $500-$800, so the dealers aren't getting rich on them.
I don't see the Scion coupes doing that well either. The "Celica" "Prelude" market died a few years ago.
Why not advertise every cat on the lot as $5000-and include the unpleasant details in the fine print.
I and one other person average ~20 ( 6 yr CSI ~94 )but I took 6 months off this year. If I did 30 on average then I would have a secretary as you mention, its not necessary doing 20+.
There are several people at the Mega Toyota stores in the 50-70 range per month..
I will agree that 10-17 is 'normal' for most Toyota stores. Typically 15 out of the 30 here are in this range every month.
Coincidentally as I was posting here yesterday with isell.. one of the Scion people did 4 vehicles herself. It's not everyday but that is Toyota's goal.
I think you're right on this as well. In addition to fighting Hyundai and trying out this experiment, dropping the price $5-6000 vis-a-vis the Celica was a way to resuscitate the entry level coupe product. So far the tC is doing way better than the Celica was at the end.