Re: $176,100 and counting
I find myself in agreement with forddealer on this one. There are a number of people on this forum who own businesses, and I think I can safely say that none of them sell their products for less than what the market is prepared to pay. In fact, for a public corporation, that sort of behavior could leave the officers liable to the stockholders who would most certainly be after their heads.
Supply and demand works both ways. I like the idea of buying a car for $500 to $1,000 over invoice too, and I do so whenever I can. When the dealer can get a better price for the car, he is equally entitled to. I won’t pay $30,000 over list for a car, but that’s my choice. I chose not to buy the car under those conditions. If someone else is willing to pay that, the dealer would be stupid to sell it for less.
I am not sure how this whole thing of car dealers verses their customers got started. Car dealers are businessmen, and most of the ones I have known are good people and are smart enough to know the importance of their reputation.
Still when you buy a car for $500.00 over invoice (yes, I am aware of holdback, we will include that) do you stop and consider what that means to the dealer. He is paying a floorplan of around 12% to finance his inventory. In a big dealership hundreds of cars sit there, all costing 1% of their price each month just so they can be sitting there so that you can get exactly what you want without having to wait. He has to pay commissions to a sales person and a sales manager. He has the overhead of the buildings and the lights and advertising, etc. And for all his money tied up and time invested he would like to make some profit. Yet when you buy a car for $500.00 over invoice, even with holdback, he probably didn’t make more than a few hundred dollars on a $30,000 to $40,000 transaction.
In retail the normal markup is 50%. When you go into a store and buy something you probably paid twice what the store paid for it. Yet people think they are being fair to the dealer when they expect him to make maybe 1% to 2% on his transaction.
My point here is that we are not concerned with being fair to the dealer when we are in a position of strength (I am as guilty here as anyone). We take as much advantage as we can and think this is fine, but on those rare occasions when the dealer is in a position to make some extra money on the deal, we yell that he is behaving badly and not being fair. Where is the difference?
We also talk about how the dealer should treat his customers well because customer loyalty is important. It is, but lets say a dealer has treated you well in past and this time you go in and get a price (a good one) but discover that for some reason another dealer will sell it for $300.00 less. Will you be loyal to the dealer who has treated you well in the past? Or will you go somewhere else to save a little money? Just how much loyalty do you really have, even when the dealer has gone out of his way to treat you well in the past?
I guess my point in all of this is that fair is fair. The way most people treat dealers is terrible, and what you put out comes back to you. If we want to have better relationships with car dealers, we need to look at how we approach the issue and what beliefs we carry into the encounter. If most people went into buying a car with the concern that the deal be fair for everyone, including the dealer, that it is reasonable for a salesman who works 6 day weeks to make a decent living (Most of them don’t), I think this whole adversarial situation would cease.
Kevin
