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Oh, I'll pay for features I do want. Not the price they list, because it's marked up like crazy. But, I will pay for stuff I wanted already. If I didn't want it? Not gonna pay for it.
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I went into Crossroads Ford On the last day of the month, on a Saturday, and hour before they closed. I did my research and I knew what I wanted to pay. Their first price they gave me was lower than the number I had in my head. I gave them a new number, just because I felt I had to negotiate. I was told that they lost money on the truck. I tried to call BS on that, but the sales man said they lost money on that truck, but by sell more vehicles they made more money on other vehicles…I didn’t quite follow the logic, but I thought I got a good deal
I went into Crossroads Ford On the last day of the month, on a Saturday, and hour before they closed. I did my research and I knew what I wanted to pay. Their first price they gave me was lower than the number I had in my head. I gave them a new number, just because I felt I had to negotiate. I was told that they lost money on the truck. I tried to call BS on that, but the sales man said they lost money on that truck, but by sell more vehicles they made more money on other vehicles…I didn’t quite follow the logic, but I thought I got a good deal
This is certainly plausible. When I bought my Mazda 5-6 yrs ago, I was lucky that my cousin's friend worked in the internet sales division. This particular dealership did very high volume. If they met the sales targets, the dealership got a large bonus from Mazda. It was worth it to them to sell some vehicles at a loss in order to meet the overall target numbers. Obviously they'd love to make money on each car and hit their targets, but it was more important to ensure they didn't miss a target.
He stayed there for about 6 months and then moved on, swearing to never work in car sales again. He said it was such a sleazy business.
I went into Crossroads Ford On the last day of the month, on a Saturday, and hour before they closed. I did my research and I knew what I wanted to pay. Their first price they gave me was lower than the number I had in my head. I gave them a new number, just because I felt I had to negotiate. I was told that they lost money on the truck. I tried to call BS on that, but the sales man said they lost money on that truck, but by sell more vehicles they made more money on other vehicles…I didn’t quite follow the logic, but I thought I got a good deal
This is called a Stairstep program. Manufacturers like to do them but dealers HATE them. It causes wild swings in prices for the same car at times and forces this end-of-the-month craziness. Basically, the program can be something like this:
- If a Ford dealer sells zero to 50 Fusions in a month they will not get an extra incentive.
- If they sell 51-75 Fusions then they will get a $100 incentive, PER CAR, on however many they sold. (So if they sell 65 Fusions that month they get $6,500.)
- If they sell 76-100 Fusions they get $250 per car. So if they sold 88 of them it amounts to a check of $22,000.
Get the idea? These programs come and go and consumers never know which model has a program going at any particular time. One month it can be Fusions, the next month it can be on F-250's, etc.
So if someone walks in on the last day of the month and gets a smoking deal it might because the dealer is close to the next tier on their incentive program and they are willing to take a loss on a few units to get there.
Why would a dealership order a vehicle specifically from their distributor when they may be carrying the exact configuration in stock?
Any dark secret to it? I have a number of dealers suggesting that ..... can't figure out why?
Well this is a reach but there are a few circumstances that might cause this behavior:
1) The car on the lot is a "demo." Sometimes there are programs where a dealer can get $50 or something for everyone that test drives a car. Maybe this car was in that program, and the program ended so the next car can't qualify for that.
2) They might have it sold but they are waiting on financing to be completed, etc. With some buyers that can take a few days or more depending on how many hurdles there are.
3) What is wrong with having 2 of the same car, anyway? If it is a popular seller then there is nothing wrong with ordering a "twin" to a unit already on the ground.
4) In this case with Toyota, the whole "distributor" relationship is one big sham and it forces some irrational behavior. Like many Japanese business dealings this whole "distributor" program was set up because of lots of back room dealings and shady deals. I don't buy Asian branded cars. (They don't let us sell in their countries so why should I buy from them. At least the Euro's play fair.) My wife's best friend works at her Dad's Toyota store and if most people knew how this "distributor" operated it would make you avoid Toyota. They have a good product to sell for the most part given their overrated quality perception but they absolutely loathe their "distributor." (I keep putting it in quotes because they are basically white collar criminals.)
5) Sometimes you can order a car with an additional discount that you can't get on a car already on the ground. So they may be steering you towards an order to make more profit on that unit. My business can be that way, too, and it's stupid and I have to make sure my salespeople don't bypass what inventory we already have. But the OEM's recognize a sale when the vehicle is "gate released" which is when it crosses the line from the plant to the transporter. This is when ownership changes hands and it becomes property of the dealer. OEM's are much less likely to grant additional concession money on a car that is already gate released and out of their system. They have already booked the revenue for that car and they don't want to go back and change it. (Not real sure why this is such a problem but they REALLY avoid that.)
So that is just a few examples off the top of my head....
Many have mentioned Toyota and I will try my best to very simply explain. I used to work for several auto manufacturers at management level for over 15 years and left the business to be a SAHM and my husband's recent promotion and job relocation to NC. Toyota Motor Sales (TMS) is the main company and has relationships with 2 distributors - Gulf States Toyota (GST) and Southeast Toyota (SET). In the case for NC, SET places a build order to TMS, TMS places the order with the factory and builds it and ships it to SET for distribution to the dealers. For SET and GST, they usually like to order the vehicles stripped down and add their own options such as leather, nav, moon roofs, etc. You can tell what's a factory option on the monroney label (the big sticker with the estimated fuel ratings, and what's PIO - port installed aka SET/GST installed options and DIO - dealer installed accessories like pin striping, window etch, alarms, etc.
In my experience, if you research into the recalls, you will find most of the problems are related to SET and GST items not original Toyota. Not saying that there are none from Toyota but most are related to SET and GST. Both GST and SET have their own customer experience centers to specifically assist with their items and customers have a tough time differentiating between what on their car is from TMS and from SET/GST.
The website for Toyota detects from your IP address where you are searching/building your car and tries to only let you build a car that is made for your region. Sometimes it does get confused or you can also trick it to build a car that just isn't build for your geographic area. Example- heated seats and snow tires for Florida customers. You can special order a car, but takes 3-4 months for it to put in queue to build and then another 30 for shipping depending where and how it's coming. But it's highly discouraged from Toyota HQ since it's also Murphy's law that damage happens during shipping to the dealer. Once the vehicle is built, the car is the allocated/ wholesaled/ sold to the dealer. Once the dealer accepts the purchase then car is shipped to the dealer. Then if for whatever reason customer won't take delivery whether it's damaged or customer doesn't qualify for loan, or bails on the deal the dealer is stuck with buying a car that's not part of the normal build order. Sucks for the dealer because he could have just laid out 30k and won't get it back until he finds a new customer to buy it and during that time he's probably financing the car with the manufacturer and paying floorplan.
So being the factory loyal person I am, I would want to make sure that everything on my car was on the monroney label that was built from the manufacturer, not PIO or DIO. Especially, if it's related to anything safety, electronic or cutting into the body of the vehicle. If it's something silly like pin striping, mudguards, door edge guards, that's fine but I'm also not paying $200 for pin striping when it's less than $10 for a roll of pin striping tape and 30 min. for someone to put on the car.
Yes, lots of games in the car business. But dealers also can't sell the cars at cost, they have employees to pay and utility bills to pay in multi million dollar facilities along with hefty franchise fees. No different than going to a builder to buy a semi custom home where everything is an add on and the sales person gets paid on how much they can up sell you on custom cabinets or wood flooring, and then shopping for a mortgage. And we sit back and hope and pray that the house appreciates. With a new car, you know price drops 1/3-1/2 as soon as you sign the dotted line and drive off the lot.
I hope this helps. I've skipped over a lot of steps. But I hope you get the idea of the behind the scenes. Not saying it's right or wrong. But for the case of Toyota. When Toyota first came to the US they needed help selling their cars and SET and GST stepped up to the plate and helped Toyota get into the US market.
With a new car, you know price drops 1/3-1/2 as soon as you sign the dotted line and drive off the lot.
I think there's some great info in your post, but a 30-50% depreciation the moment it's driven off the lot is incredibly dramatic. I've bought many cars new, owned them 4-5 years and put tens of thousands of miles on them and still got better 60% than of the original MSRP as trade-in allowance on them, much less resale to private party. Please be more careful with numbers when you post an otherwise convincing post like that, because you really had me going and I do think you were being sincere, just misguided on the depreciation myth.
I think there's some great info in your post, but a 30-50% depreciation the moment it's driven off the lot is incredibly dramatic. I've bought many cars new, owned them 4-5 years and put tens of thousands of miles on them and still got better 60% than of the original MSRP as trade-in allowance on them, much less resale to private party. Please be more careful with numbers when you post an otherwise convincing post like that, because you really had me going and I do think you were being sincere, just misguided on the depreciation myth.
I'm glad you made that point. The only real depreciation that occurs simply by driving it off the lot is the amount you overpaid. You could argue that if you get a good end of the month deal, you might actually get a small appreciation for driving it off the lot. The thing to remember is that the same thing happens when buying a used car at retail. The depreciation is really just the difference between retail and wholesale. It's all kind of moot though, the value doesn't really matter unless you want to sell.
Last edited by BullCity75; 08-17-2014 at 06:55 AM..
I was not being dramatic maybe giving the extreme scenario. Depreciation all depends on the brand, model and condition. Most people know what brands depreciate quickly and which hold up. You sound like you know what brands to buy to protect your investment.
By condition meaning not just the condition of the vehicle when the client trades the car into the dealer. But the economic condition in the car industry (new car incentives, gas prices, cash for clunkers, change in body style, reviews, accolades, etc). Is there a need for that particular car at the auction? Is there absolutely no demand because it's suddenly the Oldsmobile, Daewoo or Saturn that no longer has manufacturer or dealer support? Or an Aztec that was touted as such a wonderfully functional vehicle but reality so hideous that rental agencies bought them at bulk because it was so cheap to buy? Or is it a hot vehicle overseas that used car exporters can ship out and make ridiculous amount of money on. Or is the car worth more in parts than whole because it's a high theft car?
Or example of a BMW holding on to its value largely due to their strong used car program through the manufacturer. Hyundai at one point was trying to do some kind of used car price guarantee but I never followed the story to see how it panned out.
Yes, I agree that private resales often do a little better than dealer trade ins. If the seller has the luxury of time then it's the way to go. At the end of the day depreciation really doesn't matter unless it's time to sell. There are folks that drive the car into the ground and don't care what it's worth because they see it as a tool to get from point a to b.
Made the deal on the phone/email, and went to Stearns in Burlington to get the car. I would have stayed local, but the local guys didn't have the cars I wanted. Either too Spartan, or too overloaded.
I found one that was just right.
All in all, an excellent experience in all respects, from my computer to the dealership, and I had control over the proceedings. The final cost was agreeable, and fixed before I got to the shop.
I can do the horse trading, too, and it doesn't bother me.
But, again, never buy because you have to buy, but only because you want to buy.
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