If You're Getting Owned at The Dealership, You're Not Alone

[gregus73]

I experienced the same when I bought my 2021 Suburban Z71. The dealer was asking 10k above invoice.
However if your trade is in demand, you will get a much higher trade value.

I was able to get 60k trade for me my 2020 GMC Sierra, and I paid 62k. Had lots of highway miles.
In the end, I paid 2k above MSRP for the Suburban. The high trade value made it worth it. They tossed in 85k warranty and 85k maintenance plan.

Glad that I bought my JLUR in March before this.
I would still shop around, it took me 4 dealers to find the best deal.

Sponsored

 

[aldo98229]

I love Jeeps. But I am under no illusions: FCA is one of the most unethical, dishonest automakers out there.

In its short decade of existence, FCA has accumulated an unenviable list of federal investigations, charges, prosecutions and court settlements ranging from bribing union leaders, to willfully fudging sales reports, to breaking emissions regulations, and many other misdeeds.

IMO, FCA’s dishonesty comes from the very top. The Agnelli family, who owned Fiat for 100 years, came very close to losing everything in 2002. They hired Sergio Marchionne to straighten things out and save their fortune, which he did. But then they turned Sergio into some sort of Mafia-style Mr Fix It.

When Fiat took over Chrysler in 2009, it brought with it a culture of corruption that just wouldn’t fly in this country. Hence the ensuing litany of federal charges, prosecutions and settlements.

The way in which Marchionne swindled N.A. dealers into Fiat franchises is shameful.

I’ve been buying Chrysler products for almost 40 years; Jeeps for 25+ years. From a product standpoint, these are some of the best Jeep has ever put out. But at the same time, FCA shows a disregard for dealers, customers and union members to a degree I’ve never seen before. The only stakeholders FCA has consistently seem to care for has been investors.

All those fat profits, most of which are generated in North America, have been disproportionally funneled to repaying investors, leaving dealers, customers —in the form of honoring warranties and providing customer care, and regular union members, in a lurch.

I hope Stellantis fixes these issues. The new CEO, Carlos Tavares, has a reputation for being a straight shooter. He has his job cut out for him.

 

[RubiSc0tt]

The only way to get a good deal right now is to do a factory order through a high volume discount dealer.

This is exactly what I did. From my research, it has to do with dealer allocation vs. inventory, dealer holdbacks, etc. There are some really good threads about it over in the pricing forum.

The price discounts are hugely different if it's a "buy off the lot" versus "order and wait"

Right now the buy off the lot is challenging due to shortages of vehicles due to the semiconductor shortages.

The order and wait you can still get significant discounts but the wait is longer then it was and often keeps getting pushed back.....

I've noticed that there are A LOT of people who just walk onto their local lot, know nothing, and say "I WANT THE RED ONE PLZ."- then they complain once they find out they overpaid. Part of the purchasing process as a consumer, is research- and you need to know your numbers. And if you don't and get hosed- that's just as much on you as it is on a dealer who may gouge you.

Hilariously- my buddy drove from upstate NY 14 hours to get his Gladiator. The Dealer in St. Lous area gave him $26k on trade for his JKURH, and sold him the JTR for $45k out the door. It was a good road trip and story and I wish I could have went.

Dealerships claim to make all of their money mostly from servicing vehicles ...

For what it's worth- I've posted this elsewhere, but I worked for a marketing firm that did websites for dealerships. Even as a developer and a Jeep enthusiast, Part of the training to get familiar with the industry said that 80% or more of a dealership's PROFIT has to come from parts/ service, or the lights don't stay on.


I've bought 6 cars since I turned 18: 3 Jeeps, a Ford Ranger, a Dodge Charger, and my wife's Toyota Rav4. Out of all of those, I've looked at hundreds. there's only 2 times I felt like the sales person knew their stuff, valued my time, and worked with me. I bought the vehicle both times because they were able to hit my numbers- which I knew pretty well walking in because I did a bunch of research on invoice vs. MSRP. As long as they're hitting my number range and the value seems correct, and (maybe most importantly) they're respectful of my time- I'll likely buy. good salespeople will work with you to make the deal. Shitty ones will try to gouge you. Unfortunately there are a lot of the latter out there.
Props to the Sales guys in this thread, because it seems like you get it. We need more out there like you.

 

[aldo98229]

This is exactly what I did. From my research, it has to do with dealer allocation vs. inventory, dealer holdbacks, etc. There are some really good threads about it over in the pricing forum.


I've noticed that there are A LOT of people who just walk onto their local lot, know nothing, and say "I WANT THE RED ONE PLZ."- then they complain once they find out they overpaid. Part of the purchasing process as a consumer, is research- and you need to know your numbers. And if you don't and get hosed- that's just as much on you as it is on a dealer who may gouge you.

Hilariously- my buddy drove from upstate NY 14 hours to get his Gladiator. The Dealer in St. Lous area gave him $26k on trade for his JKURH, and sold him the JTR for $45k out the door. It was a good road trip and story and I wish I could have went.

That’s what I did. Found a hell of a deal 1,000 miles away; flew out and drove it home. I’d do it again.

Four years ago I moved from Los Angeles to this city of 89,000 souls. I am used to large metro areas where dealers fight for my business.

A couple weeks ago I walk into the only Jeep dealer we have in this town. I ask to look at the 4Xe. They only have one. The “Internet Manager” is staring at his Facebook page on his phone. Barely looking up, he tells me that every Jeep on the lot has a $10,000 markup. I get up and leave. He goes back to looking at his phone.

As I walk back to my Jeep, I see a salesman showing a well equipped Rubicon to two smartly dressed young guys. MSRP + markup had to be close to $70,000!

I can’t understand why anyone would even entertain shopping at a dealer with $10,000 markups on everything on the lot. My guess is they were unexperienced, they weren’t serious buyers, or they were so lazy that they thought paying $10,000 over sticker is preferable to searching online and flying out of town to buy a Jeep.

 

[RubiSc0tt]

I can’t understand why anyone would even entertain shopping at a dealer with $10,000 markups on everything on the lot. My guess is they were unexperienced, they weren’t serious buyers, or they were so lazy that they thought paying $10,000 over sticker is preferable to searching online and flying out of town to buy a Jeep.

I've explained this process before, and the only thing that would shock most more than the mental gymnastics people use to justify to themselves they're not getting ripped off, is the money they leave on the table.

 

[OINC]

You know. I would love to take out negotiations. It doesn’t matter if we do $5,000 off msrp or $15,000. Someone always says we can do better. I have no problem showing a customer the invoice and showing them what net net is on the car, what the dealer actually pays. Most of the time we are very close to the net price. What drives me crazy is we had Silverado’s at $18,000 off of MSRP last year and I can’t tell you how many people called wanting another $2,000. You calf damn near give the car away and some people are going to offer less.

Part of that is the historical perception (which is largely the fault of car dealers themselves) that dealers/salespeople are out to screw buyers over as much as they possibly can on price, so if you're offering $18000 under MSRP as an initial offer you must be able to go lower.

Also, some people try to negotiate at Best Buy. My ex worked in sales in a clothing store and had people trying to negotiate there too! Some people will always try to be a-holes.

I think when I look back on this particular vehicle purchase, once I exclude the INTERMINABLE waiting for my Jeep to be built (three weeks in D today), it will be quite pleasant because I was able to email my wants to several dealers, get their prices on it, and choose based on price and other factors. No negotiation, no sitting in a dealership with the salesman going back and forth to the finance manager, none of that nonsense. Simple, easy, and not stressful. And based on this forum, I feel like I got a fair price, so we both "won".

Several manufacturers tried no-haggle pricing but it didn’t work. Saturn came the closest to success. But it turned out that over time, timid buyers congregated in Saturn dealers to get a hug and buy products that were as generic as you could find.

Correctly, dealers are not large enough to affect pricing on the manufacturers. The economist’s best case for the use of independent dealers is that demand and supply vary significantly from region to region, and small fluctuations on a $30,000 or $50,000 purchase can represent thousands of dollars gained or lost.

I don't think it can come from manufacturers. I think it has to come as a grassroots dealer effort, with a dealership in a given area realizing they can make a lot more money by being transparent, up-front, honest, and low stress, having success, and then being copied by other dealerships.

CarMax and Carvana are incredibly popular for used car sales. Not sure why that model wouldn't also work for new cars.

I'm going to stick up for the downtrodden middle men out there, and in particular the little guys like Walmart. I'll concede that if your "value-add" as a middle man is simply getting in the way of a transaction and affixing your commission, you are not doing much and probably deserve the eventual disintermediation that is coming your way. But middle man companies like Walmart that aggregate consumer demand and use it to extract price concessions from vendors are lifesavers for lower- and middle-income Americans who live paycheck to paycheck. Several of my friends from grad school went to work for packaged consumer goods companies, and they all hate the annual trip to Bentonville to get hotboxed over the unit price of toothpaste or detergent.

On the surface lower prices sound great for lower-income households, but where do those price concessions ultimately come from?

You need to "shop for a dealer" as much or more than "shop for a car".

SO much this!

 

[aldo98229]

CarMax and Carvana are incredibly popular for used car sales. Not sure why that model wouldn't also work for new cars.

Because unlike new vehicles, not two used vehicles are the same. Mileage, condition, ownership history, combination of color and equipment, are all variables that make each used vehicle unique to a degree, directly impacting its value. This gives dealers a lot more latitude in determining used vehicle prices.

New vehicles are commodities, so values are more prone to fluctuate due to external causes, such as supply and demand. Add to that the fact that MSRPs are artificially set and, often times, out of whack with reality.

 

[OINC]

Because unlike new vehicles, not two used vehicles are the same. Mileage, condition, ownership history, combination of color and equipment, are all variables that make each used vehicle unique to a degree, directly impacting its value. This gives dealers a lot more latitude in determining used vehicle prices.

New vehicles are commodities, so values are more prone to fluctuate due to external causes, such as supply and demand.

There are plenty of other commodities that are sold as fixed prices, and yet their prices also fluctuate with supply and demand (and other external causes like Black Friday). TVs, appliances, computers, etc. I simply don't buy that argument.

ETA: as we are currently seeing, used car prices are also definitely directly affected by supply and demand.

 

[aldo98229]

There are plenty of other commodities that are sold as fixed prices, and yet their prices also fluctuate with supply and demand (and other external causes like Black Friday). TVs, appliances, computers, etc. I simply don't buy that argument.

It is a matter of how much your time is worth.

You can save thousands of dollars haggling over a car; the most you can save haggling over a TV is what, $50? So most people just pay up and take it home.

Vehicles are unique in that they are the most expensive mass-produced goods —along with boats and planes. So the incentive to negotiate will always be there.

 

[csjlu]

On the surface lower prices sound great for lower-income households, but where do those price concessions ultimately come from?

A more efficient supplier.

 

[OINC]

A more efficient supplier.

And how does the supplier usually become more efficient?

 

[OINC]

It is a matter of how much your time is worth.

You can save thousands of dollars haggling over a car; the most you can save haggling over a TV is what, $50? So most people just pay up and take it home.

Vehicles are unique in that they are the most expensive mass-produced goods —along with boats and planes. So the incentive to negotiate will always be there.

Again, I think the incentive to negotiate exists only because traditionally that's been how that works, largely because dealerships DO have such a bad reputation of trying like mad to screw people over. If dealerships posted firm, fair, no-haggle prices, I think most people would be grateful not to have to negotiate. It would be a leap and a giant cultural shift since it's been "haggle with the dealership" for so long that it seems impossible that it could be any other way... but it could.

 

[aldo98229]

Again, I think the incentive to negotiate exists only because traditionally that's been how that works, largely because dealerships DO have such a bad reputation of trying like mad to screw people over. If dealerships posted firm, fair, no-haggle prices, I think most people would be grateful not to have to negotiate. It would be a leap and a giant cultural shift since it's been "haggle with the dealership" for so long that it seems impossible that it could be any other way... but it could.

That has already been tried and hasn't worked for a variety of reasons.

As long as you can buy the exact same vehicle from dealer A, B or C, unless all agree to hold on to a price, which by the way would be price-fixing and therefore illegal, no one can stop consumers from haggling.

Dealers would love nothing better than charge full MSRP and be done; it is buyers who drive the haggling.

Mercedes Benz tried to enforce no-haggling pricing 20 years ago; it got sued by dealer and consumer groups for price-fixing.

 

[csjlu]

And how does the supplier usually become more efficient?

Labor efficiencies, procurement, real estate consolidation, technology. But also some consolidation among dealers too. No dealer is big enough to exert sufficient influence on a manufacturer. They are price takers, not price influencers.

 

[oceanblue2019]

Actually they did admit it. They decided to delay production of new chips and concede market share losses to competitors, rather than produce low quality chips.

Semi production is different these days. Foundries have the leading edge process technology. Licensed IP means chip customers can switch providers if output is poor. Nobody is captive anymore. Market share losses are fast and real for bad semi output…just ask any Intel shareholder, during the most steroidal bull market of all time.

Some people don't listen but spew their opinions as facts. I just choose to ignore them as you can't reason with stupid.

Your assessment of the semi world is 100% correct. The shortages are due to shutdowns and restarts. QC will not be an issue as the sampling run on chip production either passes or fails - there is no shades of grey.

Sponsored