Ford, GM Warn Dealers on Pricing

[Black Label]

13 minutes ago, rperez817 said:

 

That's great to hear Black Label! I wish you a warm welcome back to the DFW Metroplex when the time comes, and hope your experience with Hooks Lincoln and other car dealerships here is a positive one. 

Thank you, sir! 

[akirby]

23 minutes ago, Black Label said:

Lincoln dealers does not get holdback, correct?

As far as I know they do but the terms might be a little different.

[Black Label]

29 minutes ago, rperez817 said:

 

Yes sir Black Label, that is correct. Why Invoice Price Is Not the Dealer's True Cost (realcartips.com) 

I have definitely reminded dealers in the past about holdback, incentives, bonuses, etc., and told them to stop crying and let's make a deal lol. 

[akirby]

26 minutes ago, rperez817 said:

 

Thank you akirby, that's what I thought. It confirms what you mentioned earlier about the surprise that some customers have encountered with marked up vehicle pricing on retail sold orders after the order went through. That's bad behavior by dealers, not manufacturers.

To make it worse a lot of dealers are either clueless about retail price protection or are just trying to milk more profit by telling customers with orders that their price went up.  Several customers had to get the documentation from ice-capades to prove to the dealer that their price was protected.

[muggerzh]

General thought, if dealers sell at MSRP but the market pays more, then purchasers can resell and make money.  i guess i am saying that the market is what it is and prices is what someone is willing to pay, so Ford is being a little silly not charging more themselves.  They must view it as marketing - we didnt gouge you when we could have....

[akirby]

45 minutes ago, muggerzh said:

General thought, if dealers sell at MSRP but the market pays more, then purchasers can resell and make money.  i guess i am saying that the market is what it is and prices is what someone is willing to pay, so Ford is being a little silly not charging more themselves.  They must view it as marketing - we didnt gouge you when we could have....

They don’t want to raise prices for dealers who are selling at MSRP or below and they don’t want to raise them now and have to lower them later.  The lack of rebates is enough.

[ice-capades]

45 minutes ago, muggerzh said:

General thought, if dealers sell at MSRP but the market pays more, then purchasers can resell and make money.  i guess i am saying that the market is what it is and prices is what someone is willing to pay, so Ford is being a little silly not charging more themselves.  They must view it as marketing - we didnt gouge you when we could have....

 

Ford's pricing is done to be competitive between comparable vehicles from other manufacturers. It also represents an opportunity for Ford to raise prices any time a competitor does which is why Ford labels price increases as a "competitive pricing action".

 

FYI... When British Airways and Air France were first flying the new supersonic Concorde, every seat was sold but the airlines were losing money, even at the substantial fares they were charging. A few years later, they started examining the Concorde customer base, how tickets were sold, etc. It turned out that the vast majority of the tickets were purchased through corporate travel offices, authorized executive secretaries and administrative assistants, etc. They then took a survey of the actual Concorde passengers and asked them how much they thought a ticket cost to fly Concorde. British Airways and Air France were astounded with the survey results that showed passengers estimated that the Concorde fares were more than double what the Concorde tickets cost. As a result, the airlines immediately doubled the Concorde fares knowing that it would have no impact on sales!     

[muggerzh]

14 minutes ago, ice-capades said:

 

Ford's pricing is done to be competitive between comparable vehicles from other manufacturers. It also represents an opportunity for Ford to raise prices any time a competitor does which is why Ford labels price increases as a "competitive pricing action".

 

FYI... When British Airways and Air France were first flying the new supersonic Concorde, every seat was sold but the airlines were losing money, even at the substantial fares they were charging. A few years later, they started examining the Concorde customer base, how tickets were sold, etc. It turned out that the vast majority of the tickets were purchased through corporate travel offices, authorized executive secretaries and administrative assistants, etc. They then took a survey of the actual Concorde passengers and asked them how much they thought a ticket cost to fly Concorde. British Airways and Air France were astounded with the survey results that showed passengers estimated that the Concorde fares were more than double what the Concorde tickets cost. As a result, the airlines immediately doubled the Concorde fares knowing that it would have no impact on sales!     

price elasticity.

let me try a different tact - Ford offers a slight premium price for people who want to get scheduled more quickly, very doable and most customers would see it as reasonable.  Then it goes away when supply improves.  that is the same as paying more than msrp for a vehicle on the lot.

[BigUnixGeek]

2 hours ago, akirby said:

But the invoice is not “fake” - it’s real but it doesn’t represent the final dealer cost.

 

Ok, not fake.  How about meaningless.

[Black Label]

14 minutes ago, BigUnixGeek said:

 

Ok, not fake.  How about meaningless.

How so? Is there another way for consumers to know what the price the dealer is charged, irrespective of rebates, holdback, etc.?

[akirby]

36 minutes ago, BigUnixGeek said:

 

Ok, not fake.  How about meaningless.

 

It's far from meaningless once you understand holdback.  But about holdback - why would you expect a dealer to sell you a vehicle for less than invoice (not counting factory incentives) when the most they will make on an invoice sale is around 3%.   On a $40K vehicle that's only $1200.    Best Buy makes $1200 on a $3K TV.   Out of that meager profit they have to pay the sales force, office staff, etc.   Dealers who sell below invoice (not counting plan sales where Ford pays them the difference) are bad business people, even if they are making money elsewhere.   I believe everyone should make a decent profit and invoice is the absolute minimum in my opinion.   Of course others will say who cares give me mine and I don't care but that's not how I operate.

[Black Label]

16 minutes ago, akirby said:

 

It's far from meaningless once you understand holdback.  But about holdback - why would you expect a dealer to sell you a vehicle for less than invoice (not counting factory incentives) when the most they will make on an invoice sale is around 3%.   On a $40K vehicle that's only $1200.    Best Buy makes $1200 on a $3K TV.   Out of that meager profit they have to pay the sales force, office staff, etc.   Dealers who sell below invoice (not counting plan sales where Ford pays them the difference) are bad business people, even if they are making money elsewhere.   I believe everyone should make a decent profit and invoice is the absolute minimum in my opinion.   Of course others will say who cares give me mine and I don't care but that's not how I operate.

That is why I normally pay invoice. However, on my 2020 Nav, I got it $900 below invoice. I have heard Lincoln dealers get no holdback, but probably get rebates and/or a bonus for selling x number of vehicles in a month/quarter. I also sell it to them as I will be using their service department, and my purchase will be offset by the many folks willing to pay based on a selling price below MSRP. 

[akirby]

23 minutes ago, Black Label said:

That is why I normally pay invoice. However, on my 2020 Nav, I got it $900 below invoice. I have heard Lincoln dealers get no holdback, but probably get rebates and/or a bonus for selling x number of vehicles in a month/quarter. I also sell it to them as I will be using their service department, and my purchase will be offset by the many folks willing to pay based on a selling price below MSRP. 

Sometimes there is unadvertised dealer cash that can lower the price and they certainly get money back in some form or another.

[Black Label]

1 hour ago, akirby said:

Sometimes there is unadvertised dealer cash that can lower the price and they certainly get money back in some form or another.

Absolutely. They won't lose money, so as low as I can get is fine by me. I've had salespeople give me the sob story of not being able to feed their families while I am shelling out tens of thousands, and with my Nav, close to $100k. Yeah, okay. 

[road turtle]

6 hours ago, akirby said:

Hurricanes and gas shortages affect critical supplies that people can’t do without.  Buying a new vehicle is completely voluntary.

I will definitely disagree.  This made up term gouging actually has a use in controlling inventory.

 

When Hurricane Sandy blew through the east coast, one enterprising gas station rented a generator to run his entire station, staged fuel carriers outside the hurricane zone and raised his prices to cover his costs and make a profit.  NJ forced the station to close, so nobody won.

 

If I have to pay $2.00 per gallon, I'm going to fill up my cars and gas cans.  If I have to pay $7.00 per gallon, I'm going to put enough gas in the car to get around for a week or so, and only enough gas cans to run the generator for that same week.  Same thing is true for plywood, raise the price and people will move heaven and earth to get wood where it needs to be.

[BigUnixGeek]

7 hours ago, akirby said:

It's far from meaningless once you understand holdback.

 

Holdback is one of the things that makes invoice meaningless.  Invoice is as arbitrary a number as MSRP.  MSRP is what Ford thinks customers should think customers should pay.  Invoice is what Ford thinks customers should think the dealers pay Ford.  If all of it were transparent, that would be different, but then there wouldn't need to be the charade of holdback and all that.  I don't expect my dealer to lose money on a sale.  I'd be happier if the whole thing were more transparent.  I don't know what my local supermarket pays for a box of Cheerios either, but I don't hear them bragging about selling at a price relative to "invoice" and assuming people will think that's what they pay, because that's what an invoice is, and most businesses don't have all this holdback and other crap.  There's the lie.  They're taking advantage of a poor assumption and an understandable ignorance of the overdone complexity of the auto industry.

[akirby]

4 hours ago, road turtle said:

I will definitely disagree.  This made up term gouging actually has a use in controlling inventory.

 

When Hurricane Sandy blew through the east coast, one enterprising gas station rented a generator to run his entire station, staged fuel carriers outside the hurricane zone and raised his prices to cover his costs and make a profit.  NJ forced the station to close, so nobody won.

 

If I have to pay $2.00 per gallon, I'm going to fill up my cars and gas cans.  If I have to pay $7.00 per gallon, I'm going to put enough gas in the car to get around for a week or so, and only enough gas cans to run the generator for that same week.  Same thing is true for plywood, raise the price and people will move heaven and earth to get wood where it needs to be.

Well NJ still won’t let you pump your own gas so……..  Maybe he raised prices far above his added costs.

 

I get what you’re saying about higher prices forcing rationing to a degree but still doesn’t seem right to take advantage of people when they have no choice,  You can ration without doubling prices.

[akirby]

17 minutes ago, BigUnixGeek said:

 

Holdback is one of the things that makes invoice meaningless.  Invoice is as arbitrary a number as MSRP.  MSRP is what Ford thinks customers should think customers should pay.  Invoice is what Ford thinks customers should think the dealers pay Ford.  If all of it were transparent, that would be different, but then there wouldn't need to be the charade of holdback and all that.  I don't expect my dealer to lose money on a sale.  I'd be happier if the whole thing were more transparent.  I don't know what my local supermarket pays for a box of Cheerios either, but I don't hear them bragging about selling at a price relative to "invoice" and assuming people will think that's what they pay, because that's what an invoice is, and most businesses don't have all this holdback and other crap.  There's the lie.  They're taking advantage of a poor assumption and an understandable ignorance of the overdone complexity of the auto industry.

I get that and I don’t disagree but with published invoices you can calculate a dealer’s true cost pretty closely.  If they never published invoice prices at all you wouldn’t have a clue whether that $50k vehicle cost the dealer $47000 or $37000.  In fact the real culprit here are the companies who are publishing invoice prices whether it’s the dealers or places like Edmunds..  Ford doesn’t publish them for the public.

[Black Label]

I have tried to negotiate the final price at the grocery checkout. It has yet to work for me, but I do get vehicles at "invoice", whatever that means to some people. To me, it means I made a good deal on a vehicle purchase. 

[BigUnixGeek]

On 2/9/2022 at 8:09 PM, Black Label said:

I have tried to negotiate the final price at the grocery checkout. It has yet to work for me, but I do get vehicles at "invoice", whatever that means to some people. To me, it means I made a good deal on a vehicle purchase. 

 

And that's what they want you to think, especially when they're the ones using the term to convince you how good a price it is.  But when they say that, they're STRONGLY IMPLYING (because this is what an invoice is in any other industry) that it's the price they pay, which is shady if not downright dishonest.  It's as meaningless a number as MSRP as it's just a number Ford picked out of thin air.

[AtlasBlue350]

Like someone else pointed out, it's kinda ironic that Ford is chastising it's dealers for charging over MSRP when they just announced a $1000 MSRP price increase. I guess it's OK if the factory does it, right?

 

[Black Label]

5 hours ago, BigUnixGeek said:

 

And that's what they want you to think, especially when they're the ones using the term to convince you how good a price it is.  But when they say that, they're STRONGLY IMPLYING (because this is what an invoice is in any other industry) that it's the price they pay, which is shady if not downright dishonest.  It's as meaningless a number as MSRP as it's just a number Ford picked out of thin air.

Okay, I'll bite. What is a good price, to you?

[CBears]

4 hours ago, AtlasBlue350 said:

Like someone else pointed out, it's kinda ironic that Ford is chastising it's dealers for charging over MSRP when they just announced a $1000 MSRP price increase. I guess it's OK if the factory does it, right?

 

I’m not excusing them if they are just raising prices however, my guess is their costs went up also. I just paid over $3 for gas this morning and my groceries have gone up I’d bet over 15% because of inflation over the last couple of years. It’s crazy how much stuff costs right now. 

[ardvark666]

5 hours ago, AtlasBlue350 said:

Like someone else pointed out, it's kinda ironic that Ford is chastising it's dealers for charging over MSRP when they just announced a $1000 MSRP price increase. I guess it's OK if the factory does it, right?

 

It’s not ironic at all. This isn’t apples to apples. It’s not the same thing at all. MSRP increases all the time and Ford can sell their cars with that increase on the sticker before the truck ships. The dealers changing the msrp on the vehicle over what ford sent it to them at is what Ford has a problem with. 
The supply chain shouldn’t support an increase at the retailer. 

Edited February 11, 2022 by ardvark666

[akirby]

5 hours ago, Black Label said:

Okay, I'll bite. What is a good price, to you?

$1 over actual final dealer cost.