TTAC commentator Xander Crews responded to this morning’s post about a $5k surcharge added to the sale of a new Camaro (at least in theory), and the negative remarks about car dealers made by some of our Best and Brightest.
A few things, but first a disclaimer I’m a manager at a domestic dealership.
1. Just as it is considered okay and “fair” for a customer to shop 50 quotes and “beat up” a dealer until they sell a car at or below not only sticker but in alot of cases invoice it should be okay to charge over MSRP on any vehicle. Hell if a dealer wants to charge $5000 over sticker for a F150 XLT he can, just remember as the consumer you have the right to say “no I’m not going to pay that”. So long as it legally and properly displayed, there’s no problem with doing it. It is up to the individual store to weigh the consequences of their actions vs the potential benefits. If they piss off enough people with stuff like that they will lose customers.
2. I know there are a few “nasty” dealers out there. Hell there may even be a ton, but for every “nasty/mean” car salesman or dealer story anyone here can tell I can give you 3 about a customer.
3. As far as I know not a penny of this “bailout” money has gone to any Chrysler, Ford, or GM dealerships. So please don’t pull this “I already bailed you guys out with my tax money” crap. That really sets my blood boiling. I hung up on a customer yesterday after he started cussing and yelling that he should basically be able to buy a truck from us at a $4,300 loss because we already got some of “his” money.
4. I always hear people talking about wanting “fair” and “customer friendly” way of buying cars. Guess what? It will NEVER happen, because there’s no way to satisfy everyone, or even a majority. Lets say all the manufacturers go to a Saturn “one price” style. Then tons of people will whine and complain about price fixing and it’s not “fair” to pay sticker for a car.
5. I really don’t get all the dealer hate. Maybe it’s because I’ve never worked for a “bad” dealer. My store is a major part of the community. We donate both time and money to local charities, youth teams, and many other such things. We have a loyal and happy customer base because we take care of them. Guess what? There’s unscrupulous and bad people in every town and in every line of work, get used to it.
1. You are right. The market has spoken and it says Chapter 11/7.
2. The entire process of buying a car causes this duality of “Buyers are Liars” and “Car Sales People are _______.” The system is set-up to exploit ignorance usually at the dealerships advantage. It’s a buyer’s market so get used to it.
3. If the manufactures were not “bailed out” you would not have cars to sell. You were bailed out.
4. Carmax
5. I’m glad you have repeat business. I recently purchased a car from a dealership that did a very good job at keeping my trust. But they did a lot of leg work. Unfortunately, the “get used to it” attitude will not make me spend 25K at a retail business.
In almost every single case, dealers adding bonus money results in a sharp fall off in that particular models sales 12-18 months later. Also, this particular dealer obviously would approve of price gouging by people during emergency situations. $250 for sheets of plywood, $5,000 for $500 generators, etc. This is the type of convoluted logic that makes people HATE the car buying experience. FYI, the dealer I bought my Charger from, makes it very clear he will NEVER sell a car above MSRP. The whole purchase experience was extremely pleasurable, and if you visit his show room, past customers are their feeling like family. The unfortunate part, he’s likely to be one of the victims of this entire mess, mainly because it is no longer fun to him.
The reason shoppers go through the insanity of “50 quotes and “beating up” the dealer” — is because of this kind of crap!
If a dealer priced fairly and was transparent about the total costs — it would all stop.
I have to agree with the dealer. Supply and (perceived) demand create these surcharges, just as they create the massive discounts we see on other models.
I thought we were all about the free market around here.
The previous thread on this issue co-mingled other grievances against dealers.
peteinsonj
Good point on the transparency. They should label things in a more straightforward manner. Still, you can always walk away if you think it’s nonsense.
First of all, I’m not shopping for a Camaro so I don’t have a dog in this fight.
But, years ago, I was looking at a new Honda S2000 when they first came out. At the time, our local dealers were selling the car with a Big Red Ribbon for $5000 extra on top of sticker.
Was I mad? Not really. I accepted the fact that it was a high demand car, and the supply/demand economics dictated that I either pony up another $5000 or go elsewhere with my money (or do nothing as Mr. Lang suggests, which is actually what I wound up doing).
My point is that the dealer can really charge you whatever they want for the car. You are in no way obligated to pay that sum. You can walk. Always. There are no victims here.
In all likelihood, the dealer has misjudged the demand for the Camaro, and you will see these $5000 add-on fees disappear in a month or two.
This practice seems to be the norm with any popular car’s debut at any dealership, American or foreign.
I went Camaro shopping here in Phoenix this past week. All the SS Camaros are sold out. No dealers have them unless someone backs out of their order and they don’t expect to get another allotment until this summer.
Each dealer had one or two V6s models on the lot. Nobody was selling any Camaro for MSRP right now, $5,000 markup was the norm. Some had other upcharges for “desert protection” or other nonsense.
Like our manager here says, that’s all well and good, we don’t have to pay it and I don’t need a Camaro right now. When I asked a dealer about when the market adjustment would end he replied that probably later in the summer when they have a good stock of Camaros. Even a Pontiac dealer here has had a G8 GXP on their lot for months still has it marked up to $50k.
It just seems funny that if you have a popular car that people actually want to buy from you that you would potentially turn off buyers with price gouging. Doesn’t it make more sense to try to move as many of them as possible?
But then again the people who want this car (the SS) anyway seem perfectly willing in this city to pay whatever they have to get it now.
While dealers haven’t gotten any money from government as of yet, that hasn’t stopped from asking for $5-20B in loan guarantees.
Loan guarantees being requested by auto dealers: $5 billion to $20 billion. This is still in the works. But the National Automobile Dealers Association is working on a request for federal loan guarantees to make sure they can get the cash they need to finance their inventories. NADA vice president and general counsel Andrew Koblenz said the range is likely to be in the $5 billion to $20 billion range.
http://money.cnn.com/2009/02/18/news/companies/auto_bailout/index.htm
Mr. Xander Crews … just a couple of questions.
Have you ever every used a 4-Square on a customer?
Ever had your salesmen tell a customer you require a (tie-down) deposit before you can consider their offer/counteroffer?
Ever told a customer who was almost – but not quite – ready to buy that another customer was making an offer on the same car when in fact there was no such customer?
Ever TO’d a hesitant prospect to a hard-charging, cigar-chomping closer?
Ever walked a trade-in quote from your used car manager back to the showroom and told the customer the trade-in value was another $500 less than what the used car manager told you?
Ever referred to a customer as a “lay-down” behind their back?
I could go on but the point being, if in fact you’ve never done any of these slimy things, then maybe you are the rare exception and not one of the “bad” dealers you referred to.
I for one would have to see a lot more evidence to believe it though.
But, if you have pulled any of this nonsense, then please step down from your high horse and get real.
The games listed above are a big reason there are so many “nasty” customers out there who have the unmitigated nerve to price-shop and to do their homework …. they have a complete but well-earned lack of trust earned over many decades.
1. Just because it’s legal, doesn’t mean it’s okey. Surely, you must understand that no one likes to be cheated? And just because some sucker does actually pay 5k over sticker price, it doesn’t mean he wasn’t suckered into the deal. You should also be able to understand that all negative dealer bashing is counter-productive for the dealer image? So, why continue with a policy that people believe is almost fraudulent?
2. For every nasty dealer out there, representing “X-Brand”, people feeling cheated will choose “Y-Brand” the next time instead, no matter if that dealer is good or bad. A nasty dealing experience hits back, not on the dealer, because the buyer will simply walk away. It hits back on the brand. Which also would be a counter-productive behaviour for the dealer. People talk of their experiences, and a nasty experience will taint the brand in question.
Yes, there has to be a win-win. But people doens’t like being cheated. People likes to believe they have actually made a bargain. A good dealer experience makes them keep comming back. This isn’t metaphysics…
When I read the original article I did not have a problem with dealer pricing the car however they saw fit. It was the way the price was jacked up.
$1000 for nitrogen tire filling!!!! That speaks volumes towards this dealership’s view of their customers. If you want to add a 20% surcharge for a hot car go ahead and do it but do it up front.
reality sucks
Thought: do we need traditional dealers? Even Saturn style dealers? Maybe no. Hear me out.
GM Ch11 + Zip/Flex Car &/or how Enterprise “We’ll pick you up” delivered test drives + internet pricing + web based car optioning + flexible manufacturing + lending tree financing = I call for an at home, by appointment test drive (salaried GM employee), or via a Flex/Zip Car web site (credit card deposit) + I build the car I want online + all mfgr credits are applied, flat pricing + car is delivered via flat bed (locked with keys in the car) + I take delivery with a confirmation number + OnStar unlocks the vehicle when I get home from work and I take my used car to CarMax.
Future sales model: 1,
Traditional dealers: 0.
Now… poke holes in this. What doesn’t work?
If someone wants to pay an extra lump of money to be one of the first guys to own the new Camaro then I say so be it, however.
About a month ago I went with my brother-in-law to a Honda Cars of McKinney where I found an 09 Honda Fit Sport for 20k. Every car (including the one I could not talk my BIL out of had stupid markup on it and I took a picture cause I didn’t think anyone would believe me).
$395 for wheel locks
$495 for floor mats
$1300 for running boards
$495 for window tint
$495 for paint sealant
…
…
there was an average of 5k dollars added to EVERY car on the lot, including the Ridgeline that my BIL just had to have!
I personally would shoot my self in the foot before I would every buy a car there.
Ingvar
I don’t understand how mark-ups, in general, are fraudulent ($1k nitrogen in tires notwithstanding).
In this case, dealers believe there are more buyers than Camaros available. They should be allowed to charge as much as the market allows.
It’s not like we’re talking about grain here or drinking water. It’s a new car, and a pretty frivolous one at that. No one is holding a gun to anyone’s head.
I’d like to jump in here and mention the party that is really getting screwed here— GM.
Sure, the dealer is happier selling 1 Camaro at 5k markup. GM is happier selling 2 Camaros. Markups on cars like these tell people to wait until the supply opens up. By which time they’ve cooled off on the car and bought a Fusion or something responsible.
And if they were really really selling that hot, they wouldn’t be on the lots, now would they?
What hurts them the most with this kind of activity is when the majority of us are so far upside down on our car loans because of 500 dollar paint sealant and extended warranty we will never use, that we cannot go out and buy a new car even if we wanted… even if we can actually get approved to…
This is the boat I’m in right now. I’d love to have a new truck, I actually NEED to have a truck right now and when Trophy Nissan called me to ask if I’m in the market I told them NO because I’m to far upside down on what they sold me last time!
While I understand that the Camaro is a much needed rainmaker for Chevy dealers, I would have to agree with most comment here about how most dealers deserve the aggressive customers they get. After years of perfecting the art of financial obfuscation, dishonesty about their products and emotional strong arm tactics, its no wonder most car shoppers would like to take base ball bats to car dealerships.
As a car buyer I admit to using all of tactics at my disposal to get the best deal for my hard earned cash. If that offends dealers that’s OK – the feeling is mutual – we’re both there to do business and test the market, not to make friends.
OK, two more scenarios for the “dealer is screwing me” crowd.
Scenario 1 – Remember years ago when our homes were appreciating? Some of you must have sold your home for more than you paid. Well my question is, why didn’t you just price it at invoice (what you paid) + $500 so as to be fair? But you didn’t do that, did you? At the time, the supply/demand curve allowed you to extract an extra profit from the sale. And you took advantage.
Scenario 2 – You bought Ford stock a few months ago at $1.01 and want to sell it to me today at $5.75. I say you should sell it to me at invoice plus a small markup, otherwise I might think you’re greedy. So let’s say I’ll pay you $1.06 for that stock today. But you wouldn’t do that, would you? Not when the supply/demand allows you to extract $5.75 per share.
Do you think either scenario is fair, in your pespective? Isn’t that what you’re basically asking these dealers to do?
I’m not defending the dealers, and I’ve run into enough bad dealers myself, but this particular tactic is basic economics. And again, you don’t have to buy the car.
@BobJava: I didn’t say people really think mark-ups are fraudulent, I say it’s what they believe, what they feel… The ones paying mark-ups are suckers, the ones watching the deal is watching a sucker getting suckered, by a dealer at that. Neither of which speaks any confidence on the dealership. it’s a lose-lose.
Thanks for the replies guys. To TaurusGT500 actually no we don’t 4 Square or anything like that. Everything is printed off and explained very clearly like this:
MSRP
Discount
Rebate
Trade Value
Sale Subtotal (Taxable Value)
Inspection
Registration
State Sales Tax
Doc Fee (Only $50 here)
Payoff on Trade In
Total Financed/Drive out
Payments are given to the penny for 36, 48, 60 and 72 months at 3 different rates with 3 different amounts down including $0 down. We have nothing to hide so we dont’ feel the need to.
Do we hold on trades, yes. Sometimes you have to just to show a little (and believe me it’s little) profit on a deal. We don’t have 500 pound guerrila closers however. And we don’t pull the “well someone else is on this car, hows about yous guys buy it today” stuff. I mean come on, everyone knows that if this red Mustang V6 is sold there’s a ton of others out there like it.
As far the “nitrogen” tires and stuff like that, I 100% agree it’s crap. But you know what, someone must be buying it. And you always have the power to say “no”.
To celebrity208 and some others.
I think it would be great if we COULD go to 1 price shopping. I tell my sales guys OVER AND OVER you aren’t selling price, you aren’t selling incentives, sell the car but right now that really isn’t the truth. I would be completely open to one price, everyone pays the same dealing so long as their was a fair profit margin in it.
Not to be mean and poke holes in celebrity208’s model but:
1. It would be incredibly inefficient to do at home test drive appointments. The vast majority of the public wants to see various models, options, and packages. It just wouldn’t work. And if you think for one second that the manufacturers are going to shoulder the additional expense of salaried salespeople you must be smoking something.
2. Trade in’s will be an issue. If there’s a CarMax in the immediate area that’s great, but what about all those that aren’t near a CarMax? What if you aren’t happy with what CarMax gave you and can’t sell it on Craigslist or autotrade or other such places.
3. People will, and I promise you they will, complain about this new “internet pricing”. “I remember the day when you could take someone down on the price of a car, now no one will deal on them” is what alot of people will be saying.
4. You will see a rise in the transport fees if you do “at home” delivery. If you have to truck them all to a centralized depot then send out smaller delivery trucks to homes/workplaces guess who’s going to incur this additional expense? It won’t be the manufacturers. And neighborhoods usually don’t have enough room for a huge transport to pull up to a house, or maybe I just don’t live in a large enough one myself.
So then the next idea would be to have “Manufacturer Delivery Areas” where your nice new vehicle is delivered and you come pick it up there. While there an employee shows you all the nice new features of your vehicle. Oh and you can also get your car serviced there if something does go wrong. And dangit you got turned down by lending tree, or the terms weren’t competitive, but the good news is the manufacturer’s delivery area has a finance officer available to arrainge a loan for you…hey wait a second….this sounds like a…..
I’ve called on over 150 GM Dealerships during my career, not one of them ever did the market adjustment thing. When asked Why not ? Everyone of them said cause a happy customer is good for at least one referral in the next month. Is market adjustment legal, yep. Is it short sighted, yep.
I think that the first respondent, Antone wrapped it up nicely…
It’s a buyer’s market so get used to it.
If your dealership wants to stay in business for the foreseeable future, then you will have to think of new ways of selling your car inventories.
Simple as that; nothing more or less.
As far as your complaints about customers go – Why are you telling me your problems?
My company agonizes over changes in customer demands and expectations – and we try to figure out how to give them what they want – at a profit, of course.
If all we did was sit around and convince ourselves that the customers are ‘all wrong’ then we’d never change as an organization. From the sounds of it, your company has not changed much over the years. I’m sensing the frustration (genuine, I’m sure) that the old ways are not working.
I’ve got a red v6 due in a couple days msrp$28075,
invoice$26865.20 yes I know there is holdback, but not a lot of markup. You can have it or any v8 i’ve got coming for msrp.
You’d think that people would learn from history.
I remember stories of people paying way over sticker for the privilege of owning an early Chrysler PT Cruiser.
I wonder how they feel today.
If people want to pay a ridiculously inflated price just for the privilege of being first on the block with a particular vehicle, they can be my guest…just proves that P.T. Barnum was right.
cardeveloper :
May 5th, 2009 at 11:40 am
In almost every single case, dealers adding bonus money results in a sharp fall off in that particular models sales 12-18 months later. Also, this particular dealer obviously would approve of price gouging by people during emergency situations. $250 for sheets of plywood, $5,000 for $500 generators, etc.
Yes, because God knows there are no other car options out there. A dealer can try to mark up whatever car he wants as much as he wants, just don’t expect my business. There are way too many good cars out there to pay extra for a “gotta’ have it” car to quote C&D.
If dealers can get away with adding 5 grand to a car that:
1) has been reported to die shortly after leaving the dealership
2) has magnets cheaply glued onto the calipers to compensate for inbalance
3) has been reported to get cracks in the body work when driven at high speeds
I say go for it. Problem is with the sucker willing to buy it.
I usually chuckle when I see dealer markups and then walk on.
I have no problem with a dealer charging ridiculous markups – if someone is willing to pay that for a depreciating asset, more power to them. But let’s be honest – I’m just bitter because I don’t have the kind of disposable income where it wouldn’t matter to me to pay it.
I think it’s foolish to pay mark-ups and I sure wouldn’t. But that’s no reason for a dealership to be disallowed from doing so in the hopes that some other person with more money than me will be willing to part with their hard earned cash.
I’ll bet those markups are gone within three months. Repeat after me: it’s just a CAR.
I don’t want my post above to be interpreted as approving of the sleazy practices of some dealers. The idea of marking up a car $1000 for nitrogen filled tires would immediatley cause me to cross that dealer and potentially that brand off my list the next time I’m car shopping as well as cause me to tell my friends, coworkers, and anybody else who would listen what I think of that dealer. I’m just defending the dealers right to charge whatever he thinks the market will bear. As far as brand damge that some of these practices can cause, that is why toyota restricted the amount of dealer mark-up when Scion, particularly the xB, was the hot new thing.
As extinction begins its inexorable work, the Thunder Lizard howls mightily one final time.
I’m buying my next car direct from the manufacturer’s website, or maybe from Amazon.com. The process will be as simple and uncomplicated as purchasing consumer electronics or an MP3 file. I’ll sell my old car the very same way, via Craigslist or eBay. I’ll never have that PTSD-feeling of “did I just get ass-raped? Because it sure feels like it…” after days or weeks of dealing with a dozen or more whiny slimeballscar dealers.
There was a time when people paid dealer premiums for PT Cruisers too.
–chuck
If a dealer priced fairly and was transparent about the total costs — it would all stop.
As a former car salesman who offered transparency and fair pricing all the time, let me assure you that it doesn’t change a damn thing.
Consumers don’t understand “fair”; they only understand “better”. I used to spend hours helping people, only to lose deals over $100 because they used my price as a bargaining chip elsewhere.
You can rightfully argue that the dealers brought this on themselves years ago. But many have tried to change, and it is the public (egged on by Consumer Reports) which perpetuates the dog-eat-dog mentality. If “fairness” is so important to you as a consumer, just pay MSRP to the first salesman who deserves it!
The dealer’s remarks above are 100% accurate, and I can feel his frustration.
Good Luck finding funding at MSRP plus 5K.
No one’s buying that paper.
Addendum: I think that one of the reasons for such ire toward the dealerships is that the model for selling cars is so damned outdated anymore. For the life of me I don’t understand why we have to go through the rigamarole of shopping and buying the way we have to buy cars.
Of course, the reason is because of the great legislation that our politicians have put into law as a way of shielding dealers from competition.
The way I would like to buy a car is to have a factory controlled store/depot where I can go, test drive and buy a car. I think that Apple has given a good model for new, profitable vertical integration that works – and is more profitable for the manufacturer. You can control the product, the experience, the message and the pricing much better. Imagine how much more profitable GM would be if it, instead of a dealership, got to profit the additional $2,000 – $5,000 per vehicle that’s passed along due to dealership ‘overhead’.
I always chuckle when a salesman says, “hey, we need to make a profit to keep the lights on”. I think to myself, “Not my problem, buddy. Your business model is broken, but that doesn’t mean my budget needs to be.”
All this hateful talk, knowing that Dom DeLuise, as seen in “Smokey and the Bandit II,” and “Cannonball Run” and “Cannonball Run II” has died.
CAN’T We ALL just get ALONG!?
I’m with Ingvar — just because you can do it doesn’t make it okay.
I am actually surprised how angry this post made me. No wonder car dealers are feeling the burn, with an attitude like this.
No sympathy at all. I don’t care to empathize with people who see their customers as rubes.
For every idiot that pays the $5K over sticker, that’s $5K more in profit they can afford to lose when I’m buying a car from them.
Just remember, in a free market, bulls make money, bears make money and pigs get slaughtered.
Here’s a whimsical analogy:
The grocery store (Ralph’s) closest to my house has doubled the price of Wheat Thins over the last year, along with increases in other items I buy regularly. I now go to Trader Joe’s to get off-brand Wheat Thins at the price I like, along with other things I’ve discovered that Ralph’s doesn’t have. I rarely go to Ralph’s now.
The free market’s a bitch when you get greedy.
If someone is peeing their pants bad enough for a new Camaro to let themselves be taken advantage of to the tune of $5K then they deserve it. In my mind this just story adds to the already expanding list of why I would never buy Detroit iron.
1) Substandard quality
2) Inadequate design
3) Poor Pricing compared to competition
4) Pathetic service
5) Shoddy dealership practices
Once upon a time I bought a Cavalier Z24 and was treated like utter shit for the duration of the lease. Needless to say, I never set foot in a GM dealership again until the other day. Conveniently, an Audi dealership sits near it so I popped into both. The GM salesman came up and asked me “What can I help you look into today?”
“Hi, remember me? No, how could you? It’s been 10 years. I leased a Cavalier Z24 back in the late 1990’s and you treated me like crap. Today I have all the money in the world to burn, and I want to slide into a CTS-V or maybe a Vette, but I just, I….I CAN’T bring myself overlook the time you treated me like shit….Remember that? ‘Member? Off to the Audi dealership I go, TOODLES ASSHOLES!!!!”
I tend to think of this from a dealer’s perspective. It’s not as if they have access to hundreds of a new high-demand vehicle. They may only get a small allotment. I see nothing wrong about them trying to maximize profit as long as they don’t pull tricks like the lifetime nitrogen scam mentioned in the original post.
I say that if you let yourself go into any dealership and get screwed on a purchase, then you should have done your homework and stood your ground on the deal you wanted. Any dealership is going to work hard to make every last dime they can, and yet so many people still refuse to learn how to deal with these guys. Unfortunately they’re not all friendly, and sometimes do underhanded things to get their money. Make your offer and tell them to make it work or stick it. That’s it. I do see a lot of people pinning it just on the domestics, and that’s a load of crap, the foreign brands do it too.
And I read a comment about CarMax’s business model, that doesn’t work for everyone, either. Some people want to negotiate, and CarMax’s fixed price doesn’t always give you the best value. Just like anything else, you’re better off shopping around and sticking to your guns when you’re finally ready to deal. I have never had any trouble doing business that way, if a dealer wants the sale, they’ll make the deal. If they don’t want it that bad, I don’t need their car.
The real morons are the people who shell out the money for a new car marked way over MSRP. Dealers wouldn’t be trying it if they weren’t having some measure of success. I point the finger at Baby Boomers… you know, the same folks who keep Corvettes in production (for now.)
Normally second largest purchase after home that a typical person will make, and so it pays to keep one’s wits about them. Recently bought new truck and so once again in my life I had the pleasure of submitting myself to the process.
Say what we will about sneaky unscrupilous dealers or insufferable grinding buyers, it’s a business deal and one has choices. Ended up buying truck from dealer at a satisfactory price and (gasp)it was pleasant transacting with the dealer. Plus (double gasp) the subsequent dealer service dept. experience has been 100% stellar.
Checked out six dealers offering Ford, Dodge, Toyota and Nissan trucks and all but one were entirely helpful, responsive and professional. The one exception was like a bad movie with jacked up prices, unknowledgable sales guy, and the ubiquitous “closer” from central casting…experience more comical than irritating.
Happy car hunting!
What a dealer does, he does to the brand as well. So, if a Chevy dealer thinks he can add $1k to the price of a Camaro for nitrogen tires, I’m all for letting him do it. But I’ll be damned if I won’t darken the door of a Chevy dealer because Chevy permits such shenanigans.
It’s not worth it to individually sort out the good from the bad when it comes to dealers.
Love how the guy tries to distract from the price-gouging point. -bleeding-heart charity bs, bailout-david-copperfielding and all.
Dealership guys are less ethical, honest and trustworthy than Eric Cartman.
—
too bad they’re too stupid to study a little John Nash -or at least watch the bar scene epiphany from “A Beautiful Mind”
3. As far as I know not a penny of this “bailout” money has gone to any Chrysler, Ford, or GM dealerships. So please don’t pull this “I already bailed you guys out with my tax money” crap.
That’s actually false. If GM/Chrysler didn’t receive any bailout money, they would have been through C7 already. The dealers would have been in even worse shape.
So, indirectly, they got bailed out too.
Hey if a dealership can find customers stupid enough to pay such charges, more power to them. But don’t cry about those manufacturers cutting you loose when they go through bankruptcy. Because your shoddy practices helped them get into this mess.
Here’s the thing. The current dealership way of selling cars isn’t desired. It doesn’t seem to help the manufacturer (can’t really close stores without lawsuits or bankruptcy) and you have to haggle and check everything if you are a buyer.
Wouldn’t be better if the stores were all owned by the manufacturer? All cars are sold at what they were sold to dealers or a tiny bit more. So it’s already a good price, there is no need for markup as the manufacture wants to sell on volume and there is no incentive to up the price.
No real job loss since the stores would still be in business but just run by corporate.
Trades are just handled like Carmax does now.
Seems like a much better way of doing business for everyone.
I went through this when the Solstice came out. It was supposed to be under 20K, but dealers marked it up to mid-20s. They said things like: It’s a beautiful car. It has great handling. It’s built well. It’s in high demand. Why shouldn’t we mark it up?
The trouble is, none of those things apply to the “dealer”. It is a nice looking car, so maybe the designer should get a few extra bucks. If you accept that it had good handling, then the engineers should get a few bucks more. If the assembly line guys built it well, then maybe they should get more. It was new and in high demand, so the company could have set the price higher. What did the dealer do to deserve one cent above MSRP? Nothing, nada. If people want to pay more for the early cars, then car companies ought to set up a direct line for anyone who wants to pay over MSRP. The over payment should be divided up among the people who actually added value to the process.
Just for refence, I ended up buying an S2000. I negotiated below invoice and didn’t feel bad about it because the dealer had 5K markups on the new Civics. The S was more expensive, so it wasn’t a money issue. It was purely that I could not give a dealer extra money for making my life more difficult. I’m sure dealers feel great when they score an extra 5k, but it costs them more in the long run.
“Hell there may even be a ton, but for every “nasty/mean” car salesman or dealer story anyone here can tell I can give you 3 about a customer.”
““Hi, remember me? No, how could you? It’s been 10 years. I leased a Cavalier Z24 back in the late 1990’s and you treated me like crap. Today I have all the money in the world to burn, and I want to slide into a CTS-V or maybe a Vette, but I just, I….I CAN’T bring myself overlook the time you treated me like shit….Remember that? ‘Member? Off to the Audi dealership I go, TOODLES ASSHOLES!!!!”
Point made.
I love this. Dealer claims he is “wronged” because he foolishly tacks 5000 dollars onto the price of a new Camaro.
Don’t ask for a dime of taxpayer money when you go under. We don’t want to hear it.
And while we are on the subject, finance customers from your own damn bank account rather than using tax dollars to provide financing and rebates. Don;t take money from the manufacturer, dip into your own stash. If you can get 5 K a Camaro then you don’t need help from GM on the finance end.
I’ve had enough coddling of the whole auto business from parts supplier through assembly to management and the dealers. They are just cars, a commodity today, and we have plenty of choices. Like not paying 5 K more for a retro car.
Whether it be the 8 “discounts” listed in the paper (of which I will qualify for 3) or a second sticker, the car buying experience starts off adversarial before I ever get to the dealership.
Why should it be that our first contact is you (the dealer) taking a swing at me?
Yes I can walk out after you (the dealer) have attempted to deck me, but why have you chosen to run your business in this manner? If you are fortunate enough to have a vehicle I and others have shown an interest in, what do you do? You invite us in to a “Spit Teeth” session at my expense.
For the most part, the dozen “imports” avoid this. Why is it so hard for Detroit to grasp this is not the way to run a dealership?
I’d rather just buy a car direct from GM or a GM owned shop. Why can’t this happen again?
I do long for the day when I can fill out a simple form on the internet and complete the transaction without ever having to here the words “I’ll have to check with my sales manager on that one…”
Meanwhile… dealers are free to continue their ridiculous business practices and I’m free to shun the ones that do.
“For the most part, the dozen “imports” avoid this”
You’re kidding, right?
It’s a standard business transaction and yet car buying/selling has it’s own place in the behavior involved. Quite honestly I consider a home purchase less fraught with anxiety than buying a car.
In this case if the dealer can get 5k above list for a new Camero than so be it, and I would probally be inclined to to the same if I were in the business. So any buyer absolutely having to have a new Camero today…it’s your choice. And the seller is possibly well advised to get it while he can…pretty much as in any other business.
Note mark-ups on art, PlayStations for kids, apparel, the price of a plumber’s service call, the latest software. Yet we have an abundance of choices and a dicerning buyer with diligence can almost always find what they need or want at an acceptable cost.
Reputation is earned.
Here’s a link to a local Chevrolet dealer whose actions revealed more than he wished to be known.
http://www.theledger.com/article/20090504/NEWS/905045040/1003/NEWS01?Title=Michael-Holley-Is-Arrested-Again
CHARGES with fraud, THEFT
Michael Holley Is Arrested Again
Ex-auto dealer is accused of stealing $114,000, check kiting for $144,000.
By Kyle Kennedy
THE LEDGER
Published: Monday, May 4, 2009 at 8:46 p.m.
LAKELAND | Former auto dealer Michael Holley was jailed again Monday on new charges of fraud, theft and money laundering, according to the State Attorney’s Office.
Investigators say Holley, 49, conducted a scheme in which he took more than $114,000 due to Jim Moran and Associates, a financial services and consulting firm for auto dealerships.
Holley also had a “check kiting” scheme that resulted in losses of more than $144,000 to Bank of America, investigators said.
The new charges stem from an ongoing investigation of Holley, who is accused of defrauding customers by not paying off their trade-in vehicles. Total damages in that case have been estimated at $585,000.
Holley’s lawyer, John Liguori, said the new charges resulted from information voluntarily provided by Holley to the State Attorney’s Office.
“We would have been more than happy to meet with the State Attorney’s Office to have him surrender if they wanted him re-arrested,” Liguori said Monday. “This is the perfect example of why it doesn’t serve the interest of individuals to cooperate with law enforcement to the fullest extent on the promise of lenient treatment.”
From July to October 2008, Holley is accused of having stolen payments for customers’ warranty products due to Jim Moran & Associates, investigators said. The suspected illegal transactions occurred at three local Chevrolet, Kia and Pontiac dealerships owned by Holley, with damages totaling $114,530.56.
Beginning in April 2008, Holley also conducted a “check kiting” scheme by writing bad checks against deposits he made to his Bank of America and Colonial Bank accounts, investigators said.
Holley is accused of depositing checks from his Colonial account into the Bank of America account (or vice versa), and then writing checks back to the Colonial account before the original deposits cleared.
As a result, Bank of America suffered a loss totaling $144,266.73, investigators said.
Patricia Dees, the former controller for Holley’s dealerships, told investigators that Holley checked the accounts every morning and would “personally direct her how many checks to write, from which account to write them, and which account to desposit them into.”
“These deposits consisted of money which was obtained through the numerous thefts and schemes conducted against multiple victims,” according to the affidavit.
Holley was arrested Monday morning on two counts of scheming to defraud, two counts of grand theft and one count of money laundering. All are felonies.
Under a condition of his arrest, Holley can not be released until the bail funds are determined to be from a legitimate source. Liguori said he expects Holley to be in jail for two or three days.
He was first arrested in December on suspicion of bilking customers and posted bail, but turned himself in to authorities in February on additional theft charges.
1. Surely you must know that tacking $5000 on to a new model most likely WILL piss off a lot of people. So why bother? It just seems that you’re waiting for some sucker to bring a briefcase full of cash for sticker and tell you “keep the change”. You may have the power to charge whatever you want for a car, but you should also know (as a business man) that it leaves an initial bad taste in a lot mouths. First impressions are everything.
2. I can’t fault you there. There are a lot of nice dealerships and salesmen (case in point, the salesman I bought my current car from recently has and still is taking care of me) out there. And I’m pretty sure you could tell a lot of “bad customer” stories too. Hey, you work there, so you should know. I can only tell you about my experience…little number as they may be, they are still significant and leave either a god or bad impression that will decided whether or not I do business with THAT particular dealer.
3. It may have been wrong for that customer to pull the “bailout money” line on you. But as long as you know that your manufacturer incentive money comes, indirectly, from your own tax paying pocket. Without that stimulus/bailout money, you’d probably be looking for a job. Be thankful and quit whining.
4. Carmax (to echo a comment above) and a few dealerships support this practice. Something wrong with yours as to why you don’t?
5. Keep donating to your community and all the other charitable things you do. Bear in mind to attract new customers your attitude matters a great deal. If one customer is dissatisfied he’ll tell someone, then that person will tell two and so on and so forth…
I’m really looking forward to cross shopping a Camaro and a Challanger in about, say… 12-16 months?
I expect 25% depreciation. Anyone care to go lower?
I really don’t care what ANYONE – be they shopping a $20k compact or a $90k luxury car – pays the dealer. I don’t care what the markups are, or the stupid options.
I care that in 3 years, I will be able to afford an off lease car for practically nothing, with 40-50% down.
Shopping ’05 SLKs right now. It’s fun to watch the dealers when I walk right by the new metal and ask to see their trade ins. CPO is SO the way to go – every time.
My older brother was once a (very good) car salesman, and I have a bit of sympathy for them, though not for the car dealerships. My perception is that the good car salespeople would greatly prefer a one-price system or some other transparent system. They don’t need or want to squeeze people for nickels and dimes, because they would rather help people find the right car for them, develop good long-term customer relationships, and move the products out the door with a minimum of fuss. To them, all of the pricing BS is an obstacle to the sale, not a way of getting some extra juice from a “mark”. The problem is that the dealers, in a fit of misguided “self-interest”, franchise-lawed themselves into a bloated, overly competitive mess that requires them to out-gimmick their competitors to stay alive. They created this customer vs. dealer, dog-eat-dog dynamic, and now they have to live and operate within it.
For what it’s worth, my brother switched from selling Cadillacs to selling Kias because he got fed up with the pricing games – at the time, Kia was still using a one-price model. When Kia abandoned that model, he gave up and left the business altogether. Car salesmen aren’t all evil by nature.
For a VERY FUNNY look at the dealer experience…
http://www.youtube.com/watch?v=RGJdNPiWZzQ
They couldn’t make commercials like this if there weren’t truths to them.
“For the most part, the dozen “imports” avoid this”
You’re kidding, right?
Check the newspaper: Ford dealers advertise a full list of incentives including “Quarterhorse Assoc. Membership.” Just get out of college, in the service, and at the end of a Ford lease? Good, then you will qualify for three of the incentives.
Check out the major “imports” advertising: MSRP, less factory rebate, less dealer participation, Your Price.
Yes, some do a second sticker but those radio ads stating “No Second Sticker!”? Most often an “import” making that claim.
You decide.
Adding a $5k up-charge to the Camaro and up-charges in general are symptomatic of the problem. Instead of focusing on the potential lifetime value of the customer, the dealer is maximizing the value of the transaction. To the extent that it’s all about the transaction, car salesmen shouldn’t be too shocked when prospects sell them out to save $100. Dealers who created this dog-eat-dog situation forgot not to wear their Milk-Bone underwear.
It might be counter intuitive, but car prices are going up for no other reason than the industry knows it has to actually start selling cars for a profit. Or did you all think they were just going to keep selling cars at a loss forever?
Like I said in the previous thread, I have no problems with a dealer selling a perceived sought after car with a huge premium. That’s capitalism. At the same time, I will have no problems if a dealer closes because it can’t sell enough cars. That too is capitalism.
CarPerson–
I’m speaking of the overall dealership experience. Import dealers/sales people can get the biggest jerks around (Honda dealers come to mind).
Really, you have to go up to the luxury brands before the experience improves. It’s not a domestic vs. import thing.
with all due respect this is NOT a buyers’ market
a few weeks in this is a sellers’ market for GM and the Camaro
look at the market… you keep saying that the SS Camaros are all sold out – that is the definition of a sellers’ market
GM and domestics are usually worse than the imports when it comes to ‘market adjustments’.
Coupes are the worst for this given there’s usually pent up demand right at the start and a rapid decline usually after 18 months. This is typical for every ‘fashionable’ coupe from GTRs to Ferrari 430s to 911s.
Let GM have their place in the sun. Because very soon they’ll be in the dark being the last to turn out the lights.
And btw. what in hell is a ‘desert protection pack’?
One would think a place where it’s dry and doesn’t snow and never rains would be the perfect environment for a car.
This sounds right up there with nitrogen tyres. Maybe our dealers here would like to comment on that? Is it worth my $999?
From turbobeetle :
About a month ago I went with my brother-in-law to a Honda Cars of McKinney where I found an 09 Honda Fit Sport for 20k. Every car (including the one I could not talk my BIL out of had stupid markup on it and I took a picture cause I didn’t think anyone would believe me).
$395 for wheel locks
$495 for floor mats
$1300 for running boards
$495 for window tint
$495 for paint sealant
I can’t stand that kind of thing. A markup can be simply negotiated away, but if it’s gouging on installed equipment, it allows the dealership to say: “But it’s already on the car.”
Even worse is that a lot of dealers around here (Houston area) seem to do it to some degree… >_<
Xander Crews, why do dealerships have commissioned salesmen? Their interests don’t seem to be well alligned to the long-term interest of the dealership in selling repair service, etc. because at the end of the deal I never want to come back. Car salesmen never seem to know the product the dealership is trying to sell as well as I know the product I want to buy. From websites like Edmunds.com I have a pretty good idea what options are theoretically available and roughly what win-win deal is possible. I resent all the time wasted dealing with a salesman who doesn’t seem to know either the product or its price. The only defense I know to prevent the waste of time is to show up right before closing.
Sales people arent all that interested in being experts on new cars because they pay so little …typically $75.00 to $100.00 flats…whether right or wrong thats the mindset
You can say what you want about your dealer, and people can come back with numbers and try to justify, explain, or complain about all the little things dealers do to make money. It all boils down to this though.
The reason people don’t like dealerships is because there’s no reason for a dealership to sell at the lowest price possible. There’s no reason for a dealership to give a customer a trade value for their car which actually reflects what it’s worth. The only times dealerships will do this is when they’re faced with a possible sale and give in.
There’s every incentive for a dealership to try and get as much money from you as possible. A successful dealership is one which sells lots of cars for more than they paid for them. Why should I like that? Why would I want to shop there?
I have a basic rule for car buying:
-Try to pay no more than invoice, minus whatever incentives that I can find out about (including factory-to-dealer payments and any special spiff).
-If I can’t, I don’t buy it.
The dealer is just as free to try to sell a car for $20,000 over invoice as my local liquor store can sell candy bars for twice the going rate at the supermarket. My option is to vote with my feet and walk, which I do.
I don’t blame the dealer for trying. But they ought to learn to be smoother about it. It frankly blows me away at how poor they are at handling certain aspects of human psychology. They’re quite adept at bullying and intimidation tactics, but they aren’t particularly good at making people feel good about doing business with them.
Here’s a suggestion to our Chevy dealer: Learn from stores like Bloomingdales and Nordstrom, who do an outstanding job of making their customers almost proud to overpay. If you want Lexus prices, provide the coddling that goes with that.
Why on earth would you want running boards on a Honda Fit? Wouldn’t they just get in the way?
I’d assume a “desert protection package” includes deeply tinted glass (where legal), some “heavy duty” paint protection or sealant, and some kind of protectant for the interior. It might also include that clear stuff on the front end of the car to minimize the “sand blasting” effect. Of course, it’s priced 10 times what the dealer paid for it.
Why on earth would you want running boards on a Honda Fit? Wouldn’t they just get in the way?
The running boards were on the Ridgeline my bro-in-law got, not the FIT. I don’t recall what all dealer options that FIT had on it, but I do remember that they were asking 20k for it… If it was up to me I’d drive to the next closest Honda dealer and get a Civic SI for that price!
Dealers can do whatever they want. They can also enjoy not selling any cars, laying off people, going bankrupt, not being able to pay mortgage, and then eventually hanging themselves in the shower.
I am a big fan of the CarMax/Saturn one-price system, it works for EVERY other factory-made product we buy so why not for cars? Thus my next purchase will be from CarMax, I have no problem spending a little more as long as #1) I know the person standing in line behind me pays the same price and #2) the employee’s aren’t BSing me on point #1. 9 times out of 10 I know way more about the car then the “sales” guy anyway so just take him (and his games) out the equation please.
As for the dealers – like others said let them charge whatever they want… I’m not paying it. Thanks to the power of the internet I bought my last new vehicle for $300 over invoice. It was a custom ordered truck built to MY specs, delivered on time (4 weeks) and I pre-arranged all the financing with an outside 3rd party source (once again all online). It was a seamless transaction with no BS. Took all of 10 mins to do the paper work… and only once did the salesman (fleet manager actually) suggest I pay a little extra to upgrade to leather seating which I kindly declined.
All of this griping about markups is unnecessary. For as long as I can remember, whenever a new car hits the market that is immensely popular they always had a markup. When the WRX came on the market, I never saw one sell for less than $30k. Same goes with the Evo. And the S2000, and the 350Z. And the Mini Cooper. And on and on and on. And when the hoopla over the Camaro dies down and a new car arrives with a lot of fanfare, that’s going to get a markup too.
So what do you do? Don’t rush to be the first one on the block with a Camaro. Wait six months. Wait a year even. Eventually these cars will be sold without the markup. Besides, it’s not like a flood of Camaro sales is going to be GM’s saving grace, is it?
For everyone advocating “end the dealership model,” remember that centralizing the financing, product, and price will probably raise the price for the bargain shopper.
You might not see the same markups, but you might not see the same discounts either. Moreover, there would be much less opportunity to negotiate the price further downward. The inequity of the dealership model is great for someone waiting to pounce on a dealer’s oversupply. If you’re an impulse, beat-the-Jones buyer, you’d probably benefit from centralized pricing and distribution.
For the purposes of customization or getting the exact options and trim you desire, I agree the model is outdated. But that goes far beyond the dealership itself.
To say that this issue hits a nerve is an understatement. Car buying is expensive, emotional and time consuming. The turmoil that is going on with the manufacturers is going to result in fewer dealers, less inventory and much higher prices. Chrysler declares bankruptcy and auction prices for their off lease cars have gone up. This is only the beginning of another change in retailing autos that the consumer may not like.
D996: The variable you’re leaving out of this is the relative longevity and reliability of cars today.
When you run out of milk, you have to buy more, but cars aren’t like milk: I’d guess 95% of the people who are in the market to buy a new car have a perfectly serviceable car already, which means that if the price gets too high, all of a sudden keeping the old clunker doesn’t seem like such a bad deal.
The other thing to remember is that new cars aren’t just competing against other new cars – they’re competing against late model used cars, too.
I’ve bought exactly two new cars (well, trucks) in my life, one in 1985 and one in 1999 and I will never buy a new vehicle again. There’s no point in it when a late model used vehicle is every bit as good and costs thousands of $$ less.
If new car dealers jack the prices up too much they’ll start losing sales to late model used cars and then they’ll have to cut price just to lure customers back in.
Xander Crews is right. The most powerful tool in a buyer’s arsenal is the capacity to walk away.
Smart buyers allow the new model sales frenzy to dissipate before making their move. It also gives the manufacturer time to resolve the inevitable design and production bugs that plague new car introductions. If purchasers are busting down the showroom doors for the latest hot car the dealer has little incentive to accept a low profit offer. On the other hand, with a full storage compound and inventory charges eating him up he may snatch your deal and skin the next rube.
D996
The collapse and closures might result in higher prices, but there are other variables. As has been mentioned here before, people in places like Japan no longer value the automobile as they did in the past. It’s not that they can’t buy one, it’s just that they don’t want or need to buy one.
To a lesser degree in the US, which has less population density, as people move to cities and municipalities tax and fee the hell out of the auto driver/owner, some people will simply opt out of car ownership altogether.
Moreover, you have increased durability of cars and less credit/buying power among the working and middle classes.
Point being, demand could decrease for new cars and keep prices low.
Martin:
Even though cars do last longer the average age of the fleet is almost 9 years, I don’t know the components of that number just that it has been creeping up. At some point pent up demand will bump up against lower inventories and that may quickly increase prices. BTW dealers rarely determine prices, manufacturer dreams up MSRP and then supply/demand takes over. Dealers that are more efficient than their competitor can bring down the price somewhat. Final prices for a commodity like a camry/accord aren’t that broad.
Bob Nothing in this countries existence leads me to believe that we would be a less mobile society.That old cliche “in the USA 100 years is a long time while in europe 100 miles is a long distance” is very apt. Sure we are in a nasty recession but to think America wants to sit at home watching American Idol every night is dreary. We are Americans- drink beer, salute the flag, complain about politicians, cheat on our wife/gf – brings tears to my eyes just thinking about the Clinton years.
Ummm, lets remember that the post (mine) was more about the $999 Nitro Fill for the tires…not so much the markup. Any comment on that Xander?
I don’t have a problem with a markup, but it just seems to be odd in this particular case. I really want GM to sell a jillion Camaros, but it’s just this kind of arrogance by their dealers that really puts a damper on people’s enthusiasm for a vehicle, let alone the buying & service experience. They are not doing themselves any favors, in other words, and they are killing their host faster than the UAW. And, I’m sure they’ll be the first ones to turn around and sue GM for shutting them down!! If it wasn’s so sad it’d be funny as hell.
d996
The average age for getting a drivers license is creeping up, in part due to increased teen driving restrictions.
More importantly, the book Bowling Alone, by Robert Putnam, asserts that we’re less social today than Americans in past decades. And Putnam wrote the original essay BEFORE the internet was big.
In terms of overall health, Americans ARE less mobile. And I don’t think we can underestimate the effect of the internet and entertainment mediums/devices are having on socialization — all of which can be done at home.
In terms of autos, we won’t have less mobility, just less need or want to be mobile. And remember, there are more cars than drivers in most households. I think that ratio will decrease too. I wouldn’t propose that auto purchases are purely an indulgence OR a need, but I think we veered toward the former in the 90s until recently.
All of this could lead to lower overall new car sales.
The few responses that refer to the laws of economics are exactly correct. Supply and demand, in the absence of external controls, dictate price. When a dealer has a lot full of “X” models, that are costing him (or her) thousands of dollars a month in floor plan interest, but there are no buyers, they are often sold at a loss. It isn’t fair to the dealer, but it’s the only way they’re going to sell. Sometimes the manufacturer participates and give incentives to the dealer, the customer, or both. But sometimes the dealer just wants (has) to sell them, and if supply is high, and demand is low, the intersection of the two curves is at decreased price. No customer says to the dealer “I won’t pay that low of a price, because it’s not fair!” There is no fair in economics, there’s just reality. If the car has enough demand, and is in short supply, then a markup is justified. Think of all the Ferrari’s that have been flipped by speculators for substantial profits when there were long waiting lists. The dealer should have made that profit, not the speculator. Unfortunately for them, Ferrari NA bans the practice of markups. The day a customer is forced to buy a car because the price is fair, is the day the dealer should be forced to sell one for the same reason. This is not a public utility or a monopoly. The free market dictates.
I could care less what they charge.
Most likely the enormous mark up on a desirably spec car is intended to move as many rental spec POS for full invoice by association.
Most people that shop Detroit cars are beer goggle impulse buyers, so they fall for this shit.
It is a supply problem. GM’s years long introduction followed by insuffcient production has created this situation. If they had spent money on production capacity rather than product placement and “leaked” photos, they could have come to market with enough inventory to make some money with volume. The dealer is stuck with a meager allocation and only promises of more to come. Promises that in the past have not been kept.
The dealer near me had about 35-40 mostly yellow and red ones on their back lot. Don’t know if they’re charging a premium.
And btw. what in hell is a ‘desert protection pack’?
The Desert Protection Pack sold in Phoenix, AZ is identical to the Cold Weather Pack sold in Rochester, NY.
And both can be washed off with Tide and warm water.
No wonder GM is headed for C11.
Market adjustments like the one they’re putting on the new Camaro reflect their delusions of grandeur when a UAW Janitor made 70,000 dollars a year and GM could sell as many SUVs it could make at 15,000 profit per unit.
“The dealer near me had about 35-40 mostly yellow and red ones on their back lot. Don’t know if they’re charging a premium.”
Camaro’s? That’s amazing since all Chevy dealers will have one or two on their lots by May 6 according to Chevrolet. As a matter of fact, the cars will not be invoiced to those dealers until May 6 or later to ensure that each dealer has one for public viewing this week. In other words, the dealer cannot deliver the car at any price. But that 35-40 story sounds like a fantasy.
“Most people that shop Detroit cars are beer goggle impulse buyers, so they fall for this shit.”
And at least you’re not stereotyping anyone…
This reminds me of people standing in line overnight to get an X-Box 360 an iPhone and the like. Welcome to America, circa 2005.
Wait 6 months and that mark-up will be gone with the wind. Wait another 6 months and it will be a mark-down. Wait another 6 moths and they will have party balloons tied to this same car, sitting in the front of the dealer lot next to the freeway with a big board on the front window saying things like “2009 Model Must Go!!! !!FREE NITROGEN FOR LIFE!!” Free Hot Dogs!
It happened with Solstices, G8’s, Mini’s, S2000, GT500, Z06, Sti and anything that remotely generates a hearbeat at a dealer floor. Just let down of the crack-pipe and put the checkbook and credit card away and go enjoy a BBQ or a walk around the park. Come back in 8-12 months.
It will happen again with the Fiacrhy XTi and so on and so on.
I wish you and your dealership the best of luck…
All I would like to point out is that only 5 years ago Pontiac Dealers tried exactly this with the new GTO… it worked so well that the GTO failed to hit sales targets in ANY of the three years that it was for sale and this proved to be the beginning of the end of Pontiac.
Yes this marketing technique worked so well at Pontiac, I’m glad to see we are trying it again…
If this how a “Good Dealer” treats customers… well.. See Y’all in Chapter 11/7.
O MY GOD that nasty car dealer is trying to make money on me!!!! He can’t do that!!! It’s not fair! Only the furniture store the grocery store and all the other businesses in town can! Not the car dealer!
Xander Crews is 100% right. If you do not like how you are treated at your local dealership, LEAVE.
If some of the posters here knew how much money a dealer really made from a new car sale they would not say a thing. How about investing 40K on stock and 4 months later get a return of $300. How does that sound? It is the same gamble a car dealer makes. And most of the time the deal is a loss these days.
“If some of the posters here knew how much money a dealer really made from a new car sale they would not say a thing. How about investing 40K on stock and 4 months later get a return of $300. How does that sound? It is the same gamble a car dealer makes. And most of the time the deal is a loss these days.”
Do I, an average car-buying customer, care? Nope. Boo hoo, times are bad for dealerships. We know. Times are bad for everyone, believe it or not. Not making money on cars? Raising prices ain’t going to help you there, geniuses.
It also surprises me that dealerships have the nerve to complain about customers being upset with their pricing policies, when they’ve been doing everything in their power to rip customers off for decades.
Is the damn grocery store really ripping you off as much as a dealership? Let’s be honest about this. Do grocery stores haggle with you over the price for tomatoes, going back and forth for hours, then when you finally agree on a price they tell you that you need Extended Tomato Warranty(tm) and Protective Tomato Coating Supreme(tm) and bad things will happen if you don’t pay for these premium services? Do grocery stores pressure you into buying products that you don’t need or want? Do they blatantly lie to you about their products just to make a sale?
And by the way, to respond to that domestic dealer’s point about “please don’t pull this “I already bailed you guys out with my tax money” crap” – f*ck you. The bailout money was spent on pulling your sorry-ass company out of the bankruptcy pit. No, it wasn’t just for GM/Chrysler themselves. Many dealerships (along with suppliers, factories, assembly plants etc) would have been closed by now if not for that bailout package.
Did you forget the whole hoopla with Big 3’s execs flying to Washington and begging for cash, when GM said they only had enough money to run their factories for a month or two? Yeah, we gave them the money to keep their factories open. That Camaro you’re selling with a ridiculous markup? It was built because those federal billions went to pay the workers that assembled it.
toxicroach: “I’d like to jump in here and mention the party that is really getting screwed here— GM.”I’m not so sure about that. Remember, the dealers buy the cars from the manufacturers so they own them and can literally do with or sell them however they like. GM just keeps pumping them out so long as the dealers keep buying them. Hopefully, the dealers will be able to resell them to customers at a reasonable profit. GM really doesn’t care what happens with the customers so long as the dealers keep buying.
As to the egregious mark-ups, it should be patently obvious that the dealerships don’t really want to sell a high-demand, low-supply car for a while until the pipeline starts filling up. It’s sort of a short-term ‘halo’ car that they want to use to lure people into the showrooms to buy some of the other lame, slow-selling crap (more practical as it might be).
Of course, if some schmoe wants to cough up the money for the car, regardless of how outrageous the price, they’ll be more than glad to take it.
Reminds me of one of the last new Plymouth Prowlers (‘Woodward Edition’) I saw on a Chrysler showroom floor with a cool $100k markup over MSRP. That was twice the MSRP. Needless to say, that particular Prowler sat there for a long, long time.
O MY GOD that nasty car dealer is trying to make money on me!!!! He can’t do that!!! It’s not fair! Only the furniture store the grocery store and all the other businesses in town can! Not the car dealer!
Well said! It’s such a competitive business, and never more so than at present, that results in an abundance of choices and options for propective buyers. Many of the posters here give the impression that dealers unlock their doors in the morning without any worries about paying rent or the light bill. Cultivating and retaining customers is as important to the car dealer as it is to software designers or any other business.
So bring on the free hot dogs, balloons, and “NEW CAR BLOWOUTS”.
1. An anecdote: back when Jac Nasser was running Ford (into the ground) he thought “no haggle” pricing was what people wanted. Ford bought out a lot of dealerships and turned them into one-price stores. In Oklahoma City all the larger dealers except one became “Auto Collection” outlets. The sole holdout was quoted in the newspaper as saying “people like to negotiate when they buy a car.” Today, the Auto Collection concept is only a memory, but that holdout dealer is still chugging along.
2. Now folks, let’s not jump to conclusions, maybe $1,000 for nitrogen in the tires is a very fair price. But I’d still like to know: if I want nitrogen in the spare, does that cost another $250? Will my insurance company reimburse me $250 if a tire gets punctured? And if next year I trade the car in, will the dealer allow me extra money on the tradein because it has nitrogen-filled tires?
Oh, and by the way, how can I tell there really is nitrogen in the tires? They don’t look different.
aren’t you guys missing one thing?
time is money
right now there’s lots of people who don’t mind paying $5,000 to be the 1st on the block with a Camaro
‘market adjustments’ are a ploy but in my mind in a bit of ‘win-win’
you take the money of fools or the rich who read the Car and Driver and have that “MUST BUY” factor
if you have a few left over at the end of the month you can sell to people with no or lesser ‘market adjustment’
hey i’m one of those customers who’s grateful the chef didn’t spit in my soup!
the people who buy these ones will feel like they got a real deal buying at MSRP (wow!)
wasn’t the old Mustang GT being blown out for $18,995?
this is the future of the Camaro AT BEST
at worst? you decide
It may seem, as it does to me, crazy to pay any kind of premium over MSRP for any car, especially in that bracket of the market. If you absolutely want a Camaro, even an SS, there is definitely a dealership that will sell it to you at a reasonable price. If not, we all know that Chrysler has tons of Challengers (Including SRT-8’s)in stock. Even if Chrysler goes Tango Uniform, the difference in price from MSRP to the Real-World-Price pays for a lot of maintenance anr/or repairs, not to mention that the aftermarket will not let the Challenger owners down.
The Camaro is hardly a game-changing car, so I think that paying ricockulous surcharges for any unit is dumb but, hey, one votes with his/her wallet… As a man once said:”There’s a sucker born every minute”
The $5000 surcharge seems a bit more “honest”, the $1000 for nitro filled tires is not. However, as many have said, no one is forcing a buyer to pay the surcharges. Sit tight, let supply catch up with demand.
BTW – GM is working to meet the demand:
GM implementing overtime at Oshawa plant
At the same time that dealers are marking up Camaros by a few thousand dollars, there’s quite a bit of discussion over on FastLane about pre-orders and their place in the queue:
http://fastlane.gmblogs.com/archives/2009/04/a_tour_of_the_new_chevy_camaro.html#comments
Hylton Jorssen brought this subject up when he wrote, “Speaking of the pre-order sales, many enthusiasts realize that they could not get their car right away due to the overwhelming demand for this car. They also understood that CTF and “dealer” cars were to be built first so that a) Chevrolet can properly test these new cars and b) new Camaros would be available to test drive at dealerships (see John Fitzpatricks last IDL).
We were willing to wait for this. We saw the benefits of having these cars built before ours. Now that the CTF cars, dealer cars and Avis cars have been built, we want a committment from GM that R6P cars will be built exclusively in the months of May and June. Most of us have signed contracts dating back to September 08 to purchase a 2010 Camaro and we feel we have made sufficient sacrifices by sitting back and letting rental car companies have their fleet before we get our cars.”
This is followed by a lot of feedback (amounting to thread hijack) from other unhappy pre-order “customers” (“victims” might be a better term) and there’s a nice chunk of beauracratese from one of GM’s suits about the situation.
A standout is this note from Paul Tryon, “My wife, adult son, and I went from Oklahoma to Indy to see the new Camaro. We also had previously went from Tulsa to the Hot Rod Power Tour in Little Rock to see the new concept Camaro. We were one of the first ones to order one on Oct. 13th, 2008. We believed that the earlier you ordered the earlier you would be able to receive your new Camaro. We put down a non-refundable $2,500 deposit. We sold in late October her 2002 Monte Carlo SS to help us afford a down payment for this new Camaro. Now we learn that all our prework was stupid because preordering was not necessary that all this preordering was a marketing plan by GM.”
And there’s this from Never Again: “I personally know of 4 people that jumped ship and dropped thier order for a Camaro and bought other cars(1 challengers, 3 mustangs) because of the pre-order BS. I REALLY want this car and I am willing to wait but I do know this, It sure makes me NOT WANT TO BUY ANY OTHER GM VEHICLE EVER AGAIN, and I have always been loyal to GM and own 5 newer GM vehicles right now. If you dont want your loyal repeat customers to be happy then thats fine, we can bring our buisness else where. Sure it may be the “sports car of the 21st century” but if the 21st century is over by the time we get out cars, does that even matter???”
Looks like GM is working hand in glove with the dealer network to turn a silk purse into a sow’s ear. Echoes of the New GTO.
As a former car salesperson, I can attest that some customers are even worse than the sleaziest of dealerships. Some people just have bad attitudes. I’ve shown people the door, simply because the ham sandwich I would have got from the deal wasn’t worth dealing with the person. It’s a strange paradox in the car sales; the worse the customer is to deal with, the less you get paid to do so. I’m not complaining, all sales jobs are about playing the averages. Some dealerships are still old school, but many are trying to change. The problem is the customers often won’t let them, and force even the good dealerships into a defensive position.
I agree that markups are just a part of the free market economy. If you want it that bad, shell over the cash. If not, walk. We aren’t talking bread and water people. It’s up to the dealership to weigh the pros and cons of short vs. long term profits, and it’s not the consumer’s responsibility to save dealerships from themselves.
To say that the customer is in the dark and being taken advantage of is complete bullshit. Within a matter of minutes, any person can pull off of the internet all the information he or she needs to be an informed consumer. Invoice, cost, features and specs, incentives, it’s all out there. If you walk into a dealership and get hosed, it’s your own fault. Do your research, and grow a spine.
The best customer I ever had came in, asked pertinent questions, showed me invoice and dealer cost, and made a reasonable offer. Easy as pie, and a pleasant experience for both sides. The dealers may have started the stereotype, but in today’s information age, it’s as much the customer who is perpetuating the confrontational attitude as the salesperson/dealership.
The problem is some customers who are lazy, self involved, feel they are entitled, and only think short term. “I want what I want, I want it right now, I don’t want to have to work for it, and I want it for free!” But then again, so are some dealerships. Welcome to reality.
kgurnsey,
Some customers, sure. But that’s not an excuse for treating all customers like that.
—
I have known people in the unhappy situation of owning a Breakwind 2000 with a bad transmission or blown engine and insufficient cash to repair it. Add in that they have lost confidence in the vehicle. Along comes the friendly dealer who lowballs them on the broken trade, puts them upside down into a new car with an eternity of reasonable monthly payments and then repairs the origina Breakwind 2000 for a profit.
This isn’t a negotiation between equals… the dealer has the upper hand in terms of time, urgency and knowledge. In some cases, I’m sure, they know the issue with the Breakwind’s problems very well and are poised to do well on any transaction like this. None of this would be illegal… but it also isn’t fair. And you know they’ve been shining the customers on about the reliability of the Breakwind and similar products all along.
the dealer has the upper hand in terms of time, urgency and knowledge.
I would agree with you re: knowledge. But the buyer has the advantage of time and urgency, and usually can gain enough knowledge that the gap isn’t usually much of a disadvantage.
The dealership has to sell cars eventually, or it goes broke. The salesman has to sell cars eventually, or he goes hungry and unpaid, and maybe gets fired.
The buyer, in contrast, can buy something else, somewhere else, or doesn’t have to buy anything at all.
The buyer can also choose when to buy and when to walk. The dealer is stuck there, and has nowhere to walk to…
The Golden Rule — he who has the gold, makes the rules. The buyer is always in charge of the deal if he wants to be and knows how to be.
The dealerships try to keep us in the dark and knock us off balance, but we can choose to do combat and win if we choose. They may pick the battlefield, but we are the ones who have the fire superiority. But we have to know that, and make that choice.
pch101: ‘I would agree with you re: knowledge. But the buyer has the advantage of time and urgency,”
Not in the situation I described above. The entire country is fairly hostile to pedestrians. Even the temporary ones. For most suburbanites, a car long ago made the jump from “a convenience” to “a necessity.”
Not in the situation I described above.
Buying a car is a game. If you go exposing your weaknesses like that, then yes, you’re going to get taken.
Here’s a suggestion — if you have a dying car, don’t try to trade it in. Or at the very least, wait until you’ve haggled the price of the new car, and don’t let the dealer see it until you’ve nailed down the price of the new car purchase. If you give up too much information too soon, you’re going to get spanked.
Pch101:
I would go as far as to say the buyer also has an uper hand, or at least and even hand, in terms of knowledge these days, which was the point I was making above. The interweb is your friend.
I wouldn’t go so far as to call it a game, which to me implies at least one side is getting some perverse pleasure out of the experience, but I would say it is a reality. You can go in prepared, stand your ground (without being beligerant), or you can bitch and whine.
KixStart:
I don’t buy your example. Aside from being a very small percentage of overall buying scenarios (I personally had about one per year like that), there is no reason to rush into a contract just ’cause the old clunker is in the shop. Rent a car, take a taxi/bus home, or take a walk to the local cafe and access the web. Gather some info and go back prepared. There are multiple access points out there for getting Black Book values on your clunker. Can’t strike a deal? Have your trade towed somewhere else.
News flash: Broken cars aren’t worth much.
There is a market for used cars. Dealerships will only pay what the wholesale market will bear. Just because old faithful has some emotional baggage in the trunk, doesn’t mean it’s worth money. Sometimes a low ball isn’t a low ball, it’s just wholesale market value.
I remember getting very frustrated when gas prices spiked and everyone thought, all of the sudden, that trading in the thirsty SUV was a great idea. Like they were the only person who had this revelation. Guess what, supply and demand again. Everyone’s selling, no one’s buying. I got used to the “deer in the headlights” look, when I informed people (as nicely as possible) that thier bling ride was worth about a third of what they bought it for last year, and that it would be cheaper to just drive it. Somehow, I was always the bad guy, but I got used to that too.
Do some recearch, find out what your trade is really worth, not just what you think it’s worth.
I would go as far as to say the buyer also has an uper hand, or at least and even hand, in terms of knowledge these days
I can’t agree, in that the seller is the only party who knows what his absolute rock bottom price is. The buyer may try to discover that price, but he’ll never know for sure whether it was the very lowest price possible.
The seller should also have a better sense of real-world sales prices and volumes than would the buyer. The seller also knows about every incentive, not just the published ones.
That being said, that may not matter all that much. A good buyer should be able to figure out most of that stuff through creative maneuvering.
And I would support the idea that it is a game. It’s more fun for a buyer to approach it that way. Someone who walks in determined to be a victim is going to get his wish. At the same time, someone who thinks that becoming the salesman’s best friend is going to help is kidding themselves. Both of these will types will get taken to the cleaners, but the “best friend” type is too dumb to even know it.
alot of the people don’t seem to relize that if gm would increase production the dealers wouldn’t markup on msrp , and the cost to produce would go down which would bring the msrp down. The ultimate catch 22 , make more to make less money , or make less and kill the car again. I want one but will never pay a dime over sticker.
way to go gm your first chance scince the bailout to really make money,bring back the customers you’ve lost, and you blew it!!! life is not a game and what you spend money on these days sure isn’t . so approaching me with a game isn’t what I want when looking to spend my money ,especialy when I don’t have a copy of the rules. To all you people that think that dealerships buy cars from gm or chrysler or ford are stupuid . Dealerships should be called consignment shops so you really know how they work, that is why the practice of msrp markups hurt the building companies markups make the cars less desired and then the car dies. If GM wants to sell 30k a year then make 35k so people have a choice and the extra 5k will sell to.
just this past saturday my wife and I stopped in a gm dealership and they had one 1lt with the rs package on it that was used in a promotional drive around Minute Maid Park so it is not even new and they want $37600 for it looking online at chevy.com this car should sell for $28995 with the options then take off about a $1000 for the miles that I didn’t put on it $27995 that would still give the dealer an upfront profit of $1800 and then they get some $ off the back end of financing. ALL DEALERSHIPS GET THE BACK END UNLESS THE CAR IS BOUGHT WITH CASH.so the salesman said I am making 10% of $1800 for 30 minutes of work and this is not enough. The Dealership said $1620 + the back end which is 10 to 15% of the finance charge and 3% of the interest. sounds like alot to me considering a good dealer sells 58 cars a month.
It just seems funny that if you have a popular car that people actually want to buy from you that you would potentially turn off buyers with price gouging. Doesn’t it make more sense to try to move as many of them as possible?