dealer markup

[OAC_Sparky]

Of course you never have any ill will with the people that you actually make the sale on.

 

It's the other 20 that said "fuck you" and left.

 

Look at Mustang boards, look at this board, look at the TBird boards. They're full of them.

 

People that refused to be gouged.

 

I'm not bashing on dealers, but jeez, guys, sometimes you're your own worst enemies.

 

I don't think the point that I'm trying to make is difficult to comprehend.

[Bluecon]

It is just supply and demand. Nobody is complaining when they receive a big discount.

 

If the dealer sells a car that people are willing to pay 60k for, for 50k then the purchaser could put that vehicle on EBAY and make 10k. It is only supply and demand. If you want to buy a ticket for the World Series tonight, nobody is going to sell that for face value.

[retro-man]

Not that my opinion will make any difference (the Ford sales people on here seem to have the combined IQ of a sack of hammers), but let me just add my own experience:

 

- 1999 or thereabouts: First saw the concept New Thunderbird in the rags. Now, I've wanted a Thunderbird since I was about 10 years old, and I think the '55 is the most gorgeous design ever penned.

 

- Nov. of '99, went down to my local Ford dealer and got on the waiting list (like the magazines advised). Put $500.00 "earnest money" down. I was the third person on the list for the dealer's first-year allocation of 7 cars.

 

- Kept in regular touch with the dealer through the various waits and delays (the August '01 fan supplier fiasco, etc.)

 

- Feb. '02, signed sales order and was assigned order number.

 

- March '02, took delivery of my red-on-red T-Bird. Dealer charged (to my dismay) a $3,995.00 "market adjustment". Basically, it was "Here, we've got the car of your dreams, now bend over!" (Listen not just to my story, but to the terms I'm using to describe it. These are more indicative of the actual "experience".)

 

- So, I've had the car for some years now. I'm really glad I bought it. I had to buy it. However, the car has had less than steller reliability - in fact, it's the 2nd most unreliable car I've ever owned. And we all know the commercial history of the car. It has had some problems that the dealer service manager just couldn't fix, and I've just gotten the shrug. (This is not being "treated like royalty" - let's face it, they have any number of tarted up F-250's that sell for just as much as my car.)

 

- The whole thing with the "market adjustment" has just kind of festered for 4 years (I don't know - maybe the shitty reliability and the ho-hum dealer service plays into it too) to the point where I will probably go out of my way not to buy from this dealer again. And the T-Bird was the 2nd new car I had bought from them. And, although I am a Ford lifer - from childhood through my first car (hell, even my dad's first car was a Ford), through the majority of the cars I've owned - I will probably not go out of my way to make my next purchase a Ford. The luster is completely off the brand, thanks to my Thunderbird experience. You can credit a lot of that to the dealer markup.

 

I don't think it is illegal to mark up vehicles this way. I just think it is stoopid, short-sighted, and very poor business. You take your enthusiast customers and bend them over the barrel, then come on here and tell us how much they love it! My God, you're stupid! You can rationalize this with all the market theory you want. A lot of shitty policy is perpetrated on the world behind the banner of "the market". If your vision isn't a little broader than your own immediate self-interest and some Econ. 101 blather, you will find yourself out of a job sooner or later. Listen to what your customers say, or you won't have any.

[marc-o]

I don't think it is illegal to mark up vehicles this way. I just think it is stoopid, short-sighted, and very poor business. You take your enthusiast customers and bend them over the barrel, then come on here and tell us how much they love it! My God, you're stupid! You can rationalize this with all the market theory you want. A lot of shitty policy is perpetrated on the world behind the banner of "the market". If your vision isn't a little broader than your own immediate self-interest and some Econ. 101 blather, you will find yourself out of a job sooner or later. Listen to what your customers say, or you won't have any.

 

I think that sums it up nicely.

 

I can see a market adjustment of a thousand or two, but anything more than that and you're clearly milking people for all they are worth. Sure you can get your money and you can satisfy those customers who CAN afford it, but those could just as well be the people who will trade it in for the next best thing - your best customers? Probably not, but I could be wrong, if you can make 15 large in one sale and never see that person again, things aren't so bad.

 

Ford (or any manufacturer) should discourage the practice by limiting availability to dealers who tend to do this. Waiting lists might not be fun but they are a lot fairer.

[J-150]

BINGO!!! I don't think personal responsibility is in J-150's vocabulary.

 

 

 

Why do you think I need to take responsibility? I refuse to pay over MSRP for ANY car. If that means telling Ford and their dealer network to fuck themselves, so be it.

 

 

 

 

It seems to me that it is OK with you for a dealer to discount a car but not OK to charge over sticker when the market commands it. Where do you get off?

 

 

Asshole, its the law. Go read a book.

 

Where do you get off advocating that dealers break the law? Oh thats it. You work for one. That explains it.

[akirby]

It's NOT the law. You're confused. And bitter. Get over it.

[bec5150]

What it all comes down to is this...the price of a car is exactly...EXACTLY what a person is willing to pay for it at that moment. It's just that simple.

[retro-man]

Buyer's remorse happens naturally enough. Dealers are stupid to cultivate this unpleasant feeling by making their customers feel like they've not only been extravagant - they've been fleeced as well. Personally, I will not be back for more. The T-Bird was my 2nd new car from this dealer. They could have sold me 3 or 4 more cars before I'm through, and maybe gained a few referrals as well.

 

I'm a fairly loyal person. We've bought 5 Honda Accords for my wife since 1983 - all from the same dealer (Honda Auto Center of Bellevue), and from the same sales person (Ed Adler). He has treated us well from the beginning, and the dealer, their service department, (and the cars) have never given us cause for regret.

 

Evergreen Ford has lost that. All for the quick high. Greedy and stupid.

Edited October 25, 2006 by retro-man

[xr7g428]

Since this is a Ford web site, the stupid part is that Ford is leaving so much money on the table. The Ford GT could have been priced $50K higher and still sold out. The Shelby should have been priced at the same money as the Saleen S281SC: $57K. This would have put the money in play for Ford and helped fuel the product development process. It is easy to lower prices....

 

I asked the people at Saleen if the Shelby would hurt them. They said no, that the price inflation on the Shelby made buyers feel better about buying the Saleen at sticker. And of course, all of the Shelby's were spoken for on day one.

 

So for every potential buyer attracted to Ford by the Shelby, Ford will get a black eye for pricing the car far below the market. Dealers 1 Ford 0.

 

It is obvious that the Ford dealer base has little interest in the integrity of the brand. Market price adjustments and the current product allocation system have been very damaging to the brand. When customers feel they are being cheated and manipulated, even when they buy, they are unlikely to become loyal customers. I believe that in most cases they will go out of their way to share the experience with their friends acquaintances, and family.

 

We all agree that Ford must build "gotta have" cars. Gotta Have cars are priced at a premium that customers will gladly pay. These are the cars that can deliver the kind of profit margin that makes it possible to build in the US and cover the obligations to the retirees and current employees. This only works when the dealers are in on the program and don't make them "can't have" cars.

[retro-man]

Since this is a Ford web site, the stupid part is that Ford is leaving so much money on the table. The Ford GT could have been priced $50K higher and still sold out. The Shelby should have been priced at the same money as the Saleen S281SC: $57K. This would have put the money in play for Ford and helped fuel the product development process.

I'm inclined to agree. This would be by far the better way to go.

[bec5150]

I'm inclined to agree. This would be by far the better way to go.

I don't agree. The one thing the Mustang is supposed to be is affordable. Furthermore, the latest rendition of the GTO showed what happened when you priced a vehicle too high. Come to think of it, the latest rendition of the T-bird proved the same thing.

Edited October 25, 2006 by bec5150

[J-150]

I don't agree. The one thing the Mustang is supposed to be is affordable. Furthermore, the latest rendition of the GTO showed what happened when you priced a vehicle too high. Come to think of it, the latest rendition of the T-bird proved the same thing.

 

 

I agree. This has been one of the big selling points for the car from Ford themselves.

[retro-man]

I'm not talking about the Mustang. I'm talking about the Shelby GT, etc.. As for the GTO, price wasn't its only problem. It suffered from generic styling. If it had captured the spirit of the old Goat in the way that the Mustang, or the upcoming Challenger do their ancestors, I believe it would have played out a bit differently. Absolutely, there need to stay affordable level Mustangs. The beauty of the Mustang is that you can get everything from the 6-cyl "secretary's special" to a hairy-chested beast. (But how to flesh-out a lineup is a topic for another thread.)

 

And what I said stands anyway: They nicked me. I ain't coming back. They lose.

Edited October 25, 2006 by retro-man

[xr7g428]

I don't agree. The one thing the Mustang is supposed to be is affordable. Furthermore, the latest rendition of the GTO showed what happened when you priced a vehicle too high. Come to think of it, the latest rendition of the T-bird proved the same thing.

 

If we can put all of the emotions aside, price is a function of supply and demand. If we know the quantity available, the the demand only needs to be equal to the supply. If the car is priced too low, then there will be unmet demand. This is exactly the situation that exists with the Shelby Mustang today. I can not begin to express my outrage that Ford has been unable to meet the demand for the Mustang GT even today. (note the dealer post that offers every other Ford for $100 over invoice, and the Mustang at $350 over...) But I digress. The job for Ford, is to make the price match the demand. Ford needs profits more than they need sales. You can't replace the profit on an Explorer by leaving money on the table when you sell a Shelby Mustang.

 

In the case of the GTO, the demand for a GTO at the price Pontiac was asking was less than Pontiac had hoped for. In my opinion, it is because the car was a GTO in name only. There was nothing about the car that made me feel like I was looking at a GTO. As it turns out, there is more to making a car a GTO than a V8 and rear wheel drive.

 

In the case of the Thunderbird, you are partially correct, price did play a big part in the story. The sweetness of owning the car faded more rapidly than the bitterness of knowing that you had been spanked by the dealer. Buyers would not recommend the car because the buying experience was so distasteful. there is nothing that can kill a car faster than owners who say it's a nice car, but not worth what I had to pay for it.

 

Some dealers are aware of the value of repeat and referral customers, but most will trade that for a hamburger today. Ford dealers should realize that their business model doesn't work selling a few cars at big margins. They need lot and lots of transactions to fill the service bays and bring in the trades. Retro Man is a perfect case in point. No repeat business, and no referral business. His total view of the dealer (and by extension, Ford) is "that guy that screwed me". In the mean time he will sell a half dozen cars for his Honda dealer...

 

Pricing to meet demand goes both ways. The Mustang is intended to be a volume seller. This means that a large supply is available. The large supply dictates that the price must be low enough for demand to meet supply.

 

Finally, It is just insane that Ford cannot adequately fill demand for the Mustang GT, Shelby Mustang, the Ford GT, and every other vehicle that people actually want to buy. I am outraged that Ford cannot seem to fill demand. My biggest concern is that Ford given a home run car, will not be able to produce it. It is my opinion that the Mustang could have gone to 250,000 units in 2005 if the capacity was there. There were certainly many many customers that walked away from Ford when they couldn't even find out if the cars that they ordered would ever be built.

[Sporko]

Some very odd responses here. It sounds like some people believe there is some inalienable right to buy a GT500 - even if they can't afford it. I'm no expert in U.S. consumer law but a 2 second google search did produce this:

 

Q: What’s the difference between the MSRP and Dealer Sticker Price?

A: Monroney Sticker Price (“MSRPâ€) shows the:

 

* Base price

* Manufacturer’s installed options with the manufacturer’s suggested retail price

* Manufacturer’s transportation charge

* Fuel economy (mileage)

 

Affixed to the car window, this label is required by federal law, and may be removed only by the purchaser.

 

Dealer Sticker Price, usually on a supplemental sticker, is the Monroney sticker price plus the suggested retail price of dealer-installed options, such as additional dealer markup (ADM) or additional dealer profit (ADP), dealer preparation, and undercoating.

Information courtesy of the Federal Trade Commission.

 

I assume that the Federal Trade Commission would know if additonal dealer markup was illegal. But like I said, I'm no expert.

 

As to the point about gouging and screwing customers, perhaps some of you ought to look in the mirror if you need someone to blame. Here's what a local Ford dealer did with its allotment of GT500's: They collected a list of 140+ people that expressed serious interest in the car. Once the cars were allocated, everyone on the list was called and was told that with a $5000 deposit their name would be put in a random draw to purchase one of the 12 GT500's they had available. 38 people put up deposits. 2 people contacted the dealership management and basically said, "How much would I have to pay to guarantee that I will get one?" Both of these buyers each paid a $20,000 premium to guarantee they could buy a car. To date, both of these owners are absolutely thrilled with their cars.

 

Now if 5 years down the road, these guys feel like it was foolish to pay that extra money, it is the dealership's fault for "screwing them?" Gimme a break.

[retro-man]

Well, aren't you just God's gift to reason and self-restraint? No, of course it's not the dealer's fault if the customer paid too much money and feels bad about it later. But it will still cost the dealer future business and referrals from that customer. Are Ford dealers just so swimming in conquest business that they can afford to piss off their enthusiast and repeat customers? How many Ford dealerships are closing down this year?

[OAC_Sparky]

Well, aren't you just God's gift to reason and self-restraint? No, of course it's not the dealer's fault if the customer paid too much money and feels bad about it later. But it will still cost the dealer future business and referrals from that customer. Are Ford dealers just so swimming in conquest business that they can afford to piss off their enthusiast and repeat customers? How many Ford dealerships are closing down this year?

 

Exactly. trying to justify one short-term profit at the expense of a long term dealer-customer relationship doess not make sound business sense.

 

If the average person buys one new car every 4 years, that's 10 cars. Chances are if the customer has the coin to afford a Shelby, it's more often than that. Don't you want those sales, too?

 

The lesson that needs learned.

[ironhorse]

The problem of being "gouged" is relative. The car business is the only business I know of the the Dealer Cost is known by everyone.

 

Just think about it for a second. If you really knew the cost of your new sofa and love seat,or the actual cost of your LCD TV you same guys would be bitching at the furniture dealer and the Electronics dealer about being "gouged".

 

Sears makes more % profit on a Kenmore washer than a Ford Dealer makes on a Shelby. But since you don't have the "invoice net-to-dealer price" for the Kenmore washer and dryer,you don't complain.

[OAC_Sparky]

Sears makes more % profit on a Kenmore washer than a Ford Dealer makes on a Shelby. But since you don't have the "invoice net-to-dealer price" for the Kenmore washer and dryer,you don't complain.

The problem is that the dryer and the washer advertised in a flyer in California is the same as the flyer in Maine.

 

And when you go into a Sears in Maine the salesman isn't slapping on an extra 10% because you want it today.

 

The MSRP of most items is known, especially at Sears, you can go to www.sears.com and look it up.

 

The MSRP on the cars includes the dealer profit. It's built in. I don't think anyone here is complaining about paying MSRP, it's the "market adjustment" cornholing that people take issue with.

[ironhorse]

That's not true. Retail price is adjusted all the time based on market conditions. That's one of Wal-Mart's secrets. They Watch trends,inventory levels and demand,and make adjustments accordingly.

 

A "Monroney" sticker is exclusive to the auto industry...no other retail outlet uses them. Even Big Mac's are different prices in different places.

Edited October 27, 2006 by ironhorse

[OAC_Sparky]

That's not true. Retail price is adjusted all the time based on market conditions. That's one of Wal-Mart's secrets. They Watch trends,inventory levels and demand,and make adjustments accordingly.

 

A "Monroney" sticker is exclusive to the auto industry...no other retail outlet uses them. Even Big Mac's are different prices in different places.

Are you trying to imply that this dryer:

 

Sears

 

...would have a different sticker MSRP at a Sears in LA than Sears in New York?

[Mr. KABC]

I love the car dealer who acts all innocent...

 

How many times have we, the car buyer, seen that infamous "four square" and dueled with a salesman trying to find out the actual CAR PRICE and not the MONTHLY PAYMENT???

 

For me, it's ad nauseam. I want to grab the shifty salesperson by his lapels and yank him across the desk toward me so that he can hear me better to explain that I already KNOW your invoice price, I already KNOW what your holdback is, I already HAVE financing, I already KNOW what I want, so STFU and stop lying and sell me a car!! They *all* freaking LIE!!

 

Even after you pretty much explain to the salesman how the deal is going to go down, they still try to weasel in "rustproofing", "scotch gard", "VIN etching" and other worthless add ons. AND... don't EVEN get me started on those dealers that install some cheap car alarm in the car and refuse to deinstall it if you don't buy it at their grossly inflated price.

[xr7g428]

I love the car dealer who acts all innocent...

 

How many times have we, the car buyer, seen that infamous "four square" and dueled with a salesman trying to find out the actual CAR PRICE and not the MONTHLY PAYMENT???

 

For me, it's ad nauseam. I want to grab the shifty salesperson by his lapels and yank him across the desk toward me so that he can hear me better to explain that I already KNOW your invoice price, I already KNOW what your holdback is, I already HAVE financing, I already KNOW what I want, so STFU and stop lying and sell me a car!! They *all* freaking LIE!!

 

Even after you pretty much explain to the salesman how the deal is going to go down, they still try to weasel in "rustproofing", "scotch gard", "VIN etching" and other worthless add ons. AND... don't EVEN get me started on those dealers that install some cheap car alarm in the car and refuse to deinstall it if you don't buy it at their grossly inflated price.

 

Amen brother!

 

The last vehicle I bought was an F150 for cash. I walked into the dealership and told the salesman that I was there to buy an F150, today, for cash, and if he could move the deal along, I would call the bank and get the money wire transferred right now. I was thinking this would be easy.

 

We sit down in his miserable little cubicle and he asks me what kind of interest rate I am looking for. Thinking he was confused I said ZERO, paying in cash. He told me he could get Zero. He asked me about my trade. Fair enough question, no trade, just need a truck. He asked me what my current monthly payment was. I am still not getting through here some where, so I told him it was paid off. He asked me to fill out a credit ap. I told him I didn't want to borrow money, I wanted to buy a truck. He told me I couldn't buy a truck with out good credit. I have stellar credit, mostly because I don't use it. I left.

 

I went on the ford internet site and located the truck at the same dealership. The fleet sales manager quoted the truck to me. I emailed back where to send the money. He asked where I wanted the truck delivered to. Deal done. As I picked up the truck I told the first salesman that as it turns out, the dealership could still accept cash... who knew? the fleet sales guy tells me that the floor guys can't take a deal to the sales manager with out a completed 4 square and a credit ap. Poor bastard. Sent the fleet guy three more sales since then.

 

You have to wonder how this might be effecting Fords future. Iron horse, how common is this rule?

[Sporko]

Getting back to topic of dealer markup...

 

This obviously only occurs when when there are more buyers than there is product. No one is selling Focuses with additional markup. So lets's not get sidetracked with talk of Sears, Walmart, or washing machines that have nothing to do with high demand cars. It is GT500's and, to a lesser extent, Mustang GT's that are currently subject to these markups. Refering back to my example where a dealership had 38 people wanting to buy 12 cars, I fail to see how refusing to take the extra money offered to guarantee a purchase would have benefitted the dealership. The way I see it, the dealership had two choices:

 

1) Refuse to take the money and tell those customers they may or may not get a car just like everybody else. This will ensure that those 2 customers will either go buy one from someone who will take their money; or they will take their chances and unless they can beat 12-in-38 odds, they will hate the dealership for denying them the car they wanted to pay for. Not much upside for the dealership. Anyone that thinks that these guys will be going around praising the dealership for its integrity doesn't know much about human nature.

 

2) Take their money and make these customers happy now, hoping that down the road their selective memory and lack of personal responsibility won't make them blame the dealership for accepting the money they offered. The customers are happy now and the dealership makes some extra money.

 

Only a fool would pick option 1 if option 2 was available. Certainly nobody trying to run a retail business.

[OAC_Sparky]

To me, this is the bottom line.

 

Many, many people hate Ford dealerships.

 

Every excuse you give people to hate them more is not only affecting you, it's affecting me.

 

So enjoy your blood money, justify it however you want. The next time your electrician, plumber, homebuilder fucks you over, because they "can", please post it here so we can all get a smile. :happy feet: