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Dealer's Tricks - bait & switch, etc.
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I still can see some differentiation in prices between parts of the country due to different costs - if not, there would have to be some major consolidations, comparable to banking industry.
I myself enjoy "shopping around" as long as I'm left alone and can just take my pen, write down posted prices, go home, check internet, get some input from friends about brands and stores and then buy whatever and wherever I think I get the best "combined" value, however I may define it. That's how I buy refrigerator, TV set, stereo, etc. I'd like to be able to buy a car that way. Never gonna happen, though, unless Scion thing takes over, which it won't.
2018 430i Gran Coupe
Using the Scion model a dealer can actually reduce the price of a vehicle but he must reduce all vehicles in inventory to the same level. There cannot be one vehicle lower than the others. But actually there is no incentive to lower prices... there is little or no margin in the vehicles to begin with.
It's good point you make about shopping.
If when you did your shopping say for a Corolla for your first time driver you found that every single source, every lot, every website, everything came back with $15000 + Taxes/Fees; would that turn you off and 'take away your freedom to shop'? How boring.
Would it send you to Hyundai say if they were 'willing to work with you' as the saying goes?
Sure would make my life easier. "Here is the price...do you want it or not"?
As long as the fixed price left some profit in the deal.
Boring but also somewhat liberating. Plus after second or third sourse I may quickly move on, cause no point of further investigations (saved time). The only question remains is Joe's shop better than Bob's, which I can find from friends. Hyundai - perhaps, but not necessarily. It all depends on if I like Hyundais at all, what the potential price difference is, what they say about them in my office, etc. Probably first time buyer would likely opt for Toyota, since they "know" they are not going to get "ripped off" (whatever it means).
Isell: price fixing would be if there was a mandated competition between retailers (which is not), or if your Honda and Toyota got agreement that their comparable models would not get below/above certain limit. Not when they decide to sell at "one price for all". As I heard, Neptune line of Maytag washers is to be sold at full retail or your warranty is void, unless it is a factory authorized sale.
2018 430i Gran Coupe
The nice thing is, as dino001 pointed out, that the difference in purchasing decisions would be made on which shop has a better service reputation, which salesperson you like the most, making it more likely that the customer will patronize the same dealership again if the all-around experience is good.
Personally, I don't mind the negotiating
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As long as I'm happy with it, and it's a "win-win" scenario between the dealership and the customer, the histrionics really aren't needed.
It's a business transaction/relationship. I want to conduct it as such.
Think about for a second if you went into Best Buy and wanted a cheaper price on the TV they had out for sale. Wouldn't you expect the employee to which you're talking to go ask his manager about it?
Just because your salesperson goes out of sight or is talking with the manager does not mean they're "conspiring" or saying bad things about you... They're probably looking at how the numbers work out. Chances are, too, that the sales manager is pretty busy and can't even devote their full attention to the salesperon.
Now if they just keep going back-and-forth-and-back-and-forth-and-back-and-forth... then yeah, that would wear thin...
2018 430i Gran Coupe
You know, someone is making money somewhere, it may very well NOT BE THE DEALER SALESPERSON. But many, many,dealers here in SoCal have turned in to "Mega Stores" with marble floors, free cuppa, cuppa coffee, huge lots, multi-story mega storage lots! These are not cheap!
I said it above- if this system (one-price) became the standard I would pay more than I do now-without question. I am willing to do this. Why? I have seen too many friends raked "over the coals" by people in the car salesmen profession. The only reason I do not over pay when I buy a car is because I am in professional sales (industrial-manufacturer's rep) and have been in this business for the past 25 years. Nobody, and I mean nobody, puts anything over on me! I have seen all the tricks, and even used some of their own (car salesperson) tricks when the situation warrants it! Gee - maybe I should become a "auto consumer buyer- advocate/broker"!
Look like I said in previous posts before, I don't play games tricks, use smoke and mirrors, throw keys on the roof
I am the same way, If I can do the deal now I will do it.
I never share my commission with my customers, because that is just tacky.
At 2000-2500 vehicles per month, if they sell them ALL at invoice, they still make a ton with just the hold back. It's why they have the internet dept selling everything that way. It's how they have several salespeople in the top 20 in the country at 40+ vehicles a month.
As a dealership Longo may do upwards of 300-400 vehicles a weekend. It's the model Toyota wants all the other dealerships in the States to follow, maybe in the world.
Here on the EC it's Carmax/Miller Toyota. Every bit of the inventory is on the website at rockbottom prices.. except the Prius.
One way of looking at it is Toyota may become the Walmart of auto retailing... or is it Walmart is the Toyota of consumer goods retailing.
The main rule is one price for everyone. A dealer can cut his price(?) if he wanted to do so but then he has to do the same for every vehicle in the same class and publish it in the showroom/on the vehicles. There is only about $600 to 700 in each vehicle - in toto - so:
a) how much could it be cut down, and..
b) why would he.
Toyota ( and I think Honda also ) has a different ordering system from the domestics.. Sell 1, get 1.. sell 2 get 2.. sell 3 get 4. If you dont sell your allocation they begin to take vehicles away from you. Stagnate and you die.
Here is why it doesnt work as well as you might think.. ' My store.. ' it cannot be done in a vacuum by only one store no matter how good your franchise is and how well-intentioned you are about treating everyone fairly. In addition..
Then he asks "Is this the best deal on this car." And I said "We value price all our pre-owned inventory, to make it a simple no hassle sales experience, so yes it is, I might have a few hundred wiggle room"
..and if your answer was 'Yes it is my best price. There isnt even one dollar of wiggle room.'
You are correct in that it doesnt work on a spot basis.. but on a massive basis. If you work for a major manufacturer wouldn't it work if all the other stores in your city/state/region had the same prices?
This wasn't "thought out" at all. It was mandated by law...wasn't it?
The MSRP is meaningless at present. Case in point; I just purchased a 21' travel trailer. There are very few "manufacturers stickers" in this business. Some manufacturers have them, some don't. All dealers do, they are made up. You really, really, need to do your "homework" to buy an RV. That's why at the end of the model year your hear "$20,000.00 to $30,000.00 OFF!!" Yea, off of what???
The MSRP if anything, is a place to start negotiating. And to make sure one doesn't pay over the MSRP
(in most cases). That's all. Plus it lists the features. More often than not it doesn't even list the horsepower of the motor....go figure!
The point is they dont mandate the price they suggest the price. But they have structured it so that there is no incentive whatsoever to sell below that price. But it is always the local dealer's choice to lower the price if he wishes. The one firm caveat is that as soon as he does he must lower the price on every vehicle in that class.
He cant do it as a loss leader .. he cant do it for his buddy.. he cant do it for a buying service or a professional negotiator unless he then does it for everyone.
I suggest rather than blame the inept value pricing of the pre-owned inventory (make no mistake its not smart) you take a look at what you could have done better to sell the vehicle to THAT particular customer. With all due respect - your recounting of that tale makes you sound like an order taker, not a salesperson. Not trying to bash you - I was there once...
To further go off topic, I work at a Saturn store, and we used to have "value priced" used vehicles. We then decided to raise the prices about 1500-2000 and negotiate.... Since then we sell signifigantly more - gross profit is about the same.
I agree with most of the others, though. I think I would have said...."it's already discounted. We value priced this car to move it, quickly. We also value our customers enough that we want them to leave knowing they got a good deal from us....and this car is a good deal. The price you see posted is the price it will cost to buy".
However, I disagree with "girl" - the urge is really to "save", rather than negotiate (except for tho who really enjoy that, but it is a small minority). Most of people negotiate because they feel they have to in order to not to get ripped off. They know that the offer on the sticker is not even close to be final in most cases. If they had trust that the offer was firm, as it is in case of a price tag at local Sears ot Walmart, they'd simply move on to buying or not buying depending whether or not they see value in the offered price and product. They may go to another store, if they believe the prices posted there are better, but that's different.
"No haggle" store don't work today because prices posted there are higher than prices many perhaps hope to get in "let me talk to my manager" store. If they really do or not, it may be debatable.
I think current system benefits mostly dealers and that's why we see them defending it so fiercely. There is one simple reason for why they'd stick to it: it makes the customers lose a lot of time before they find the "true" bottom line price at a given store, especially on "less than hot" models. After all that time lost many would stay and sign papers just to end the whole thing, rather than go to the guy across town and start all the BS over again. It is psychology at work: make the customer invest enough into the process so that a withdrawal would be to "costly". In "what you see on the tag is what you pay" store, the customer (and I mean one whoe really wants to buy) comes in, looks at the product, the price and may leave before really commiting to anything - and that, my friends, is unacceptable to any sales person, who is not sure if their price is really competitive or not. Don't even have to mantion "crop" of uninformed or simply weak cutomers, who could pay that long-planned family Hawaii trip in one shot - why take that possibility on the table at all? No reason.
Bottom line - I do not see car buying changing anytime soon, but do not confuse that with "it is here because it's what people want or prefer".
2018 430i Gran Coupe
Problem is, dealers don't make much money on the deal, and can only depend on higher volume temporarily to make up for lost unit profits.
So, if a dealer decides to be one price, they walk a fine line. The price has to be low enough to entice buyers, but high enough to make money to stay in business. And they probably have to do a large volume.
Remember, for every buyer that gets an invoice-holdback-first born son deal, someone else (theoretically) has to pay 1K over invoice to make up for it. With a one price model, everyone would pay in the middle.
People who hate negotiating love it, grinders hate it. And most everybody takes the "one price" and goes to the next dealer down the road and has them beat it by $100.
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
Another aspect that many buyers don't consider is the amount of money it takes to become a dealer. The small mom and pop dealer can run well into the millions and a big mega dealer can be tens of millions. Then add another million plus in the checkbook to run this very cash intensive business...another couple / few Million or so in cash used cars (many dealer don't floor plan used cars...
The high cost associated with selling a car makes one price selling difficult. You can't get a high enough avg with one price selling to keep the business profitable..The current pricing structure works because the people who pay less than market value are being heavily subsidized by the folks who overpay...look at it like welfare for the well informed buyer...
True, it basically game of chicken. And it basically proves my point that current way protects dealers more than customers.
It is also a classic chicken and egg problem. Since there are very few "no haggle" shops, they will always lose to those "beat it by $100" and because they are beaten by that $100, very few dealers would even entertain switching.
Don't get me wrong, I fully understand they need to make money and possible switching would be a sure loser in current situation if nobody else aroun would follow suit. I just protest claims that the current way is the best way for customers. It is not - in long run on average (but who wants to be called "average"
2018 430i Gran Coupe
2018 430i Gran Coupe
A few years ago, we had one of our Prices Plainly Marked sales. We section off an area of new cars and hang price tags in them. These posted prices are always rock bottom pricing to the shoppers.
Ah, but it's the rare time when we hear..." Wow, that's a great price...I'll take it!"
Instead, we will hear..."Well, that's just your asking price, how much lower can you go?" or something like that.
Or, we will watch them write down the prices the see and jump back into their car, clutching that number to go shop.
That is the risk we take by posting prices.
Well, one day, a "Smart Shopper" outsmarted himself.
One of our lot attendants had placed the wrong sign in the wrong car. He had priced a new Accord about 2000.00 less than our invoice!
The customer ran into our building and grabbed me...I had walked him twice before on other visits. He walked me to the car and I immediatly knew a MAJOR mistake had been made! After confering with my boss, we agreed to suck it up and take the loss.
But...no..the Smart Shopper offered less!
We were saved!
I let him know that I would honor that price RIGHT NOW but if he left, I would correct the price.
He left...I changed the tag.
Two hours later, after, I'm sure, he frantically shopped every Honda dealer in the ares, he returned!
He demanded I sell him the Accord for the price he had seen. I reminded him of our earlier conversation.
I then pointed out the shiny new Accord sitting in our delivery area being delivered to a happy, smiling lady who was delighted to have paid the corrected price!
What a happy day that was!
When we are trained over years to expect the posted price to be asking, there is no surprise that the reaction is "there must be something left here", even when clearly it is not (perhaps some unadvertised incentives?). It would take years of constant and consistent approach to change customers' expectations. Nobody approaches register at Walmart and says "$25 for that toaster - c'mon what's your real price?".
BTW, it took her several years to regain trust of the family.
2018 430i Gran Coupe
Why did you even offer to sell him the car for the super low price? I think it would have been fine to yank the price off the car before he had a chance to say he would accept it.
Him: "A minute ago, that Honda was selling for $8K but now its not. What happened?"
You: "No one said they would buy the car for that price, so we changed our mind and increased the price."
Yes...you have. But, thankfully not as frequently as the bobst key story. :sick:
Seriously though, I'm sure the term "rock bottom" pricing means something different to the dealership than it does the consumer. To the dealer $800 over invoice may be rock bottom pricing. But, to the consumer, looking for true "rock bottom" pricing, it would be close to invoice. So, it's not surprising the consumer is looking for a lower price.
You should do just what isell did...tell the man he can buy it now for that price but if he leaves.....
A dealership's reputation is worth more then a few dollars. I have sold hundreds of cars at a "loss" because it was the right thing to do at the time.
at the end of the year, there isnt much difference between 2 million profit and 1.999 million in profits
1. They're losing the opportunity to make more money on the cars that are popular.
2. They'll get beat by $25-50 on the bread-and-butter cars by the dealer down the street and lose sales.
First of all I never knew how much of debated topic "One Price" stores was. I am sure glad I ruffled some feathers.
I agree about "One Price" in a vaccum of one store, its got to be accros the board. New cars I think is more likely to be successful if its brand wide. I aggree that I should of said "This is our best price....." I think it was the need in ME to negotiate. I do still think as much as people complain about the "game" I think that people love to negotiate. We negotiate everyday with our spouse, our kids, our co-workers ect. We don't even know it half the time when we are doing it. And negotiation, does not have to be negative. A client just left here in smiles because he negotiated an excellent deal on the car. It was not a 3 hour process, It was not good cop bad cop, it was a healthy exchange of words, he spoke his case, we spoke ours, and a aggreement was made. Like I said in another post, I think the negotiation process works if done the right way, the customers time is valued, we provide the customer with all the information for them to make a informed decision, and they are treated with respect and courtesy.
As for being an order taker, My recount of my experience was just a few sentences. No quite enough information to make that assumption. Perhaps my definition of an Order Taker is different? What did you mean by that?
Until a buyer points to a product and says "I will buy it for the price you offer", I think the seller has the right to change the price or choose to not sell the product.
I'm glad we operate that way.
Of course, there exceptions to every statement made.
That is his right but my point is why come down here every two years when he would trade and go through his whole "what is the best price", "rock bottom" stuff and then leave knowing he wasnt going to buy from us. I would rather him just call me and let me tell him a price so we could save time and effort.
Anyway, the last time he was here we were proactive.....I got permission to sell him a Camry for whatever price he would pay right then and there. The man wouldnt dare say a word....little did he know that if he would of said $5 out the door, I would of sold him the car.
I never told him that when he was leaving because I got more pleasure watching him getin his car and leaving knowing he just wasted a chance of a lifetime!
This is exactly the situation.
Now expand this to Corolla's ... just make all Corollas LE's..
PW/PL, CD/MP3, ABS/BA/EBD, VSC/Trac, 8 Airbags $15000 one price for the entire country. ( Current MSRP for this is ~$18200 )
Upgrade to an S model if you wish but the options are your choice.
It depends on which models are one price. Make the 'bread and butter' vehicles one-price... it's almost that situation now anyway for Corolla's and Sentra's and Civic's.
But if it is that situation already why change what seems to be working ( for Toyota, Honda, Nissan anyway ). As noted above several times buyers like to shop to make sure they are getting good value. Within a very narrow range these 'bread & butter' vehicles are essentially one-priced anyway.