Why are dealers such a rip off

[Sinovac]

Chip always provides great insight into the topics he presents! And from my experience in buying a FGT at sticker (and ordering the unit the way I wanted, 2 option) as well as my sojourn of purchasing an LS, I would say he is spot on.

In my quests I have called and talked to dealerships across the country and quite simply am amazed at some of my phone contacts. Transfer to new car sales and the phone rings for 8-10 times before anyone picks up the line, ask what color their stock number CC212 vehicle is and they appear to have no knowledge of their own dealership stocking system. The number is right there on cars.com but NO color is listed. Put on hold for 90 sec and then he asks how can he help me. Color I ask. Oh....let me put you on hold while I check... I guess I am in the 5% category.

Bosses can be had for MSRP or less, you just have to work at it. My FGT delivery dealer called ME to see if I wanted his LS allocation under MSRP which I executed. He certainly could have sold the car for more in a heartbeat, but, he values my patronage and my repeat business. My point is there are dealers out there who provide exemplary service. I luckily found one and go out of my way to patronize his dealership even though it is several states away. Dealerships which recognize the 5% of the buying public are out there. Sadly they are in the minority, but they are out there. You just have to actively seek them out. And when found, reward them for their service to the measly 5% of us!

Thanks again Chip for your insight.

I totally agree. Rarely does it take me more than 10 minutes to negotiate the price on a new car. I bought my brand new FGT for about 2k under MSRP in a 5 minute phone conversation. I am loyal to the dealerships that treat me well, even if it costs me a little more to do business with them.

 

[HHGT]

For the record, I have bought both GTs new at under MSRP. In fact I have bought every other new vehicle in recent years (20+) at never more than $300 over invoice. I don't mind sales people, its a little game I play with them. I consider the exchange as a training session - me the trainer, them the student. In fact, if I can not do a deal with the GM (Not the sales manager) or the owner, I will not buy - no matter what it is!

Its a funny thing when you have cash and someone else wants it. Never bargain from a position of weakness, but again as Chip eloquently wrote, I am not the typical consumer.

 

[Chris A.]

....

 

[STUNTS]

Well, it's been a while since I read all posts on a thread, and I read through this one with amazement, laughter, a little sadness but in the end.... got (yes I said, GOT) here to type whatever it is that will come to mind... so lets see what it is...

True to what everything Chip said, loved the actual insight of the ongoings internally with dealerships.

True to the categorizing of of consumers, surprised that it's 5% and 95% thought it would be a little more 20%-80% but that's just assumption on my end

Loved that everyone who commented on their post being deleted didn't actually see that it was put back.... It made me confused but also made me feel a little sharper than the average shed tool and then I saw Chips post where he admitted in the court of GT Law as to what he did HAHAHA LOL Great stuff

So, I've had my great deals with cars but unfortunately and I've mentioned it numerous times here before, not with my GT..... I consider myself the 5% but at times like to be in the 95%, I guess that's because of marriage

The one thing that amazes me is that no one else here seems to ever admit paying way over msrp on their GT??? I know I wasn't the only Duesche bag (spelling, sorry)

Let me get back to the topic...

The one thing where I think everyone is cautious or aware of when buying a car is the IMMEDIATE depreciation when you drive off the lot. This still to this day amazes me.
Pay whatever it is, 10% over, 10% under... drive off and lose 10%-20% of your well earned money you just spent.... Not sure as to why the market has dictated this event but it has and it stays with us, on most if not all daily driver cars anyways.

I understand that if anyone made a product that lasted forever, they would eventually lose sales or go out of business because their product is so GREAT... It's the scam in the lighting industry... They are meant to fail because going to pick up another box of lights for $1.99 is a lot easier than spending 30 minutes and trying to figure out which bulb it is that is causing the whole strand to go out

Now we could argue until we are blue in the face about depreciation on consumer products but its the immediate gratification we get with that product.... I think we get board with cars and don't need to get a new car every other year, but we do, or I use to... This is the longest I've gone without buying a NEW car... 6 years... My GT was the last NEW car I bought from a dealer

Ok, pay 300% over for a can of soda, but you buy that soda knowing what it's for... to soothe your taste and refresh your something or other... and 5 minutes after it's gone, it served it's purpose and did exactly what you expected.. POSITIVE REINFORCEMENT

OK, pay 10% over or under for a vehicle.... super excited for about 3 months (daily driver) 1 year and 9 months later, you're bored and decide to sell privately or trade to a dealer and you still take a bath on it who do we blame? not ourselves, the dealer gets blamed.... so we are pissed and don't want to blame ourselves, after all we the public do still determine the market on most consumer products, don't we???

I don't know, it's all soooo confusing.......

Sometimes I find it easier to just take the blame myself, I guess because of marriage

So what was the lesson?
Maybe that the grass will always be greener on the other side?
To never let stunts type another post again?
TO take this MAC (sorry HHGT) out of my hands now!!!!!

I just don't know.........
:wink

 

[HIRISC]

.........So here's my summary. If you know what you want and will sell your own trade, call the fleet manager and get a price. Don't waste his time. If you require a lot of time, assistance, and hand holding (which most average customers do today), you'll need a sales person and you'll have to pay for it just as you need to pay for a waiter or a real estate agent. But no matter how you buy a new car, even if you pay full list price, it will be the lowest percentage markup on just about anything you buy all year. Compared to the absurdly low markup on a new car, everything else you buy is a "big ripoff" and that car is the best deal you have made in a long time.

Chip Beck

Former Auto Dealer (who got tired of the carping about 6% car markups and now enjoys selling you sodas and car washes at a 300% markup at my Chevron and you are happy to pay it!! Cheers.)

That's one of the best posts I've read - on any Forum - ever.

Thanks for taking the time to share your experience Chip.

 

[SteveA]

Chip, I'll be driving the motor home threw your town this winter a few times and I could sure use some 6% markup diesel.:lol

 

[soroush]

Well, it's been a while since I read all posts on a thread, and I read through this one with amazement, laughter, a little sadness but in the end.... got (yes I said, GOT) here to type whatever it is that will come to mind... so lets see what it is...

True to what everything Chip said, loved the actual insight of the ongoings internally with dealerships.

True to the categorizing of of consumers, surprised that it's 5% and 95% thought it would be a little more 20%-80% but that's just assumption on my end

Loved that everyone who commented on their post being deleted didn't actually see that it was put back.... It made me confused but also made me feel a little sharper than the average shed tool and then I saw Chips post where he admitted in the court of GT Law as to what he did HAHAHA LOL Great stuff

So, I've had my great deals with cars but unfortunately and I've mentioned it numerous times here before, not with my GT..... I consider myself the 5% but at times like to be in the 95%, I guess that's because of marriage

The one thing that amazes me is that no one else here seems to ever admit paying way over msrp on their GT??? I know I wasn't the only Duesche bag (spelling, sorry)

Let me get back to the topic...

The one thing where I think everyone is cautious or aware of when buying a car is the IMMEDIATE depreciation when you drive off the lot. This still to this day amazes me.
Pay whatever it is, 10% over, 10% under... drive off and lose 10%-20% of your well earned money you just spent.... Not sure as to why the market has dictated this event but it has and it stays with us, on most if not all daily driver cars anyways.

I understand that if anyone made a product that lasted forever, they would eventually lose sales or go out of business because their product is so GREAT... It's the scam in the lighting industry... They are meant to fail because going to pick up another box of lights for $1.99 is a lot easier than spending 30 minutes and trying to figure out which bulb it is that is causing the whole strand to go out

Now we could argue until we are blue in the face about depreciation on consumer products but its the immediate gratification we get with that product.... I think we get board with cars and don't need to get a new car every other year, but we do, or I use to... This is the longest I've gone without buying a NEW car... 6 years... My GT was the last NEW car I bought from a dealer

Ok, pay 300% over for a can of soda, but you buy that soda knowing what it's for... to soothe your taste and refresh your something or other... and 5 minutes after it's gone, it served it's purpose and did exactly what you expected.. POSITIVE REINFORCEMENT

OK, pay 10% over or under for a vehicle.... super excited for about 3 months (daily driver) 1 year and 9 months later, you're bored and decide to sell privately or trade to a dealer and you still take a bath on it who do we blame? not ourselves, the dealer gets blamed.... so we are pissed and don't want to blame ourselves, after all we the public do still determine the market on most consumer products, don't we???

I don't know, it's all soooo confusing.......

Sometimes I find it easier to just take the blame myself, I guess because of marriage

So what was the lesson?
Maybe that the grass will always be greener on the other side?
To never let stunts type another post again?
TO take this MAC (sorry HHGT) out of my hands now!!!!!

I just don't know.........
:wink

stunts,

I paid way over msrp for mine

 

[STUNTS]

SOROUSH....... Looks like we can start our own little club What shall we call it?

stunts,

I paid way over msrp for mine

 

[Button]

After reading all these posts I've concluded that Chip Beck is indeed the man. We need more like him. For what it's worth, not all schools are NEA controlled recruitment camps for the masses. I won't say much more as I want to respect the policies of the forum. The free-market works for gasoline, education, cars, chairs, whatever as long as it's allowed to do so. Reading these posts on the forum is a breath of fresh air.

 

[07XL0027]

Neil,

1. You can deal direct with a manager at just about any dealership. I do it all the time. For example, if my sister wants a Mercedes I call a couple dealerships that sell them and ask to speak to the fleet manager. I identify myself and ask the manager how much over invoice he would charge me for a XX series. I require a photo copy of the invoice. The price may or may not be different if I'm willing to order and wait. Any fleet manager is happy to sell cars one at a time BUT.....he does not have time to waltz you all over the lot looking at cars for hours, going on multiple test drives, spend 30 minutes taking your credit application, and then having you go home and "think about it" after he wasted two hours.

2. It's not hard to buy any car. The price is on the window sticker. Pay it and drive away. If you pay full list price the dealer will only make 7 to 10%. Probably the lowest percentage markup on any thing you'll buy all month and that's if you pay full list. Buy a new shirt or pair of shoes and you'll pay a 100% markup and the dealer will not negotiate or take your old shirt in on trade. If it's a very limited production car like the Boss 302 where demand greatly exceeds supply, the dealer may charge more than list. The vast majority of new cars are sold for well under list price.

3. Sales people are necessary because most auto transactions are very time consuming, require trade appraisals, credit applications, test drives, funds verification, etc and add to that fickle customers, 90+% of whom never make decisions in their daily lives and are afraid to make one buying a car.

4. If you choose to deal with a sales person you should know up front that you will need to pay for his services and that he does not own the cars he is selling so he must get any deal OK'd. It's no different than buying a house. You can't "make a deal" with your real estate agent and then be pissed because the home owner does not accept it.

5. What really bothers me is the notion that any new car deal, even at list price, is a "ripoff of the client". The new car business is one of the most competitive and toughest ways to try and make a living. The ONLY car companies that allow most of their dealers to make money selling new cars after paying flooring, commissions, inventory, maintenance, and other costs are Honda, Toyota, and Mercedes. My new car department lost money EVERY YEAR FOR 20 STRAIGHT YEARS!!! I had GMC, Pontiac, KIA, and Lotus franchises. Dealerships need to cover that loss with service, body shop, parts, used car sales, and finance & insurance business. Most dealerships struggle to make 1% on total sales every year. The real studs with the best franchises might make 2%. Ripoff my ass.

We buy an Apple Powerbook and Apple makes 50% and that's fine. We buy a candy bar and the store makes 125% and that's fine. We buy a new house and the builder makes 20% and that's fine. We go out to dinner and our favorite restaurant makes 80% and we leave a 20% tip and that's fine. BUT THEN.....we buy a new car burning several hours of dealership personnel time and the dealer makes 6% and that dealer is a f**king ripoff who doesn't give a damn about his customers and the whole car business is filled with a**holes!!!

The reason that people are fine paying 50 to 200% markups on many purchases but are pissed off about a 6% markup on a car is because car dealers must negotiate and dealers of most other products have fixed prices. Negotiating on cars is necessary because trade ins and financing are often involved. Most people think cars are marked up 20 to 40%, the actual markup at list is about 5% on small cars and 10% on big cars. A lot of people are afraid they will pay more than the next guy so they make offers that are 10 or 20% below the dealers cost and when the deal does not get approved and management makes a counter offer, he's a greedy rip off artist.

Let me give you a little insight into how difficult it is to sell cars. Only 1/3 of customers today have good credit and a reasonable down payment. 2/3rds of the public require "special financing" for bandits who don't pay their bills regularly and/or have little or no money to put down. 50% of car deals never get delivered because financing can't be found. Customers pass bad checks, lie about mileage on their trades, lie about clear titles, some just want to joyride in a new car, and whole families come in every weekend just to feed on the free hot dogs and soda. Everybody comes in with a chip on their shoulder and a bad attitude expecting "the big ripoff".

My biggest frustration as a dealer who really tried to make it a good experience was getting beat in total sales by very high pressure dealers. Customers would come in and tell me all the time what a lousy experience they had buying a new car at my competitor's dealership BUT THAT'S WHERE THEY BOUGHT. They would tell me that we were much nicer at Beck Pontiac-GMC, but they responded to the high pressure at Showcase Pontiac-GMC and bought there.

So most customers reward dealers who they feel treated them poorly by buying a car from them and then they bitch about the experience. Ah...OK.

So here's my summary. If you know what you want and will sell your own trade, call the fleet manager and get a price. Don't waste his time. If you require a lot of time, assistance, and hand holding (which most average customers do today), you'll need a sales person and you'll have to pay for it just as you need to pay for a waiter or a real estate agent. But no matter how you buy a new car, even if you pay full list price, it will be the lowest percentage markup on just about anything you buy all year. Compared to the absurdly low markup on a new car, everything else you buy is a "big ripoff" and that car is the best deal you have made in a long time.

Chip Beck

Former Auto Dealer (who got tired of the carping about 6% car markups and now enjoys selling you sodas and car washes at a 300% markup at my Chevron and you are happy to pay it!! Cheers.)

I'm so glad Chip doesn't mind writing posts the length of "War and Peace" so I don't have to. I sold cars for about 4 years and I can confirm he is 100% spot on.

 

[07XL0027]

Coincidentally, I bought a 2018 F-150 Platinum Edition this week. I walked the lot by myself and picked out a truck and took a picture of the stock number. I went inside to the sales office and asked the salesman, who has become a close friend of mine, to print out the invoice on the truck. He showed me the invoice price and deducted all applicable rebates. Then he showed me the dealer "hold back" and offered to split that with me. The negotiation part of the sale took 10 minutes maybe. The ease at which this dealership makes the sales process is what has led me to buy multiple Ford trucks and cars over the years . That and I just plain love Ford products.


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[2112]

^^^ That dealer understands you can shear sheep over and over, but you can cut them only once.

 

[DakotaGT]

^^^ That dealer understands you can shear sheep over and over, but you can cut them only once.

"Skin" them only once. :wink

 

[2112]

"Skin" them only once. :wink

Touche'

And more accurate to boot. :cheers

 

[07XL0027]

Foot note to my purchase this week. After I made the deal on my 2018 F-150 I told my salesman that I didn't want to take the time to write up an appraisal form on my trade in, so I said I'll go straight to your used car department and get a quick offer. I know the used car manager/appraiser too, again because of my many purchases from the dealership. The manager walked around my truck and wrote down my VIN and went inside and typed it into his computer. He asked me what I wanted for it. I said somewhere in the 18-20k range. He could have easily offered me 18k and I would have accepted his offer but instead he gave me 21k for a 6 year old truck with 120k miles. They literally couldn't make it any easier to buy a vehicle.


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[rsstopper]

Dealers are business men (women) and like all businesses are entitled to make a profit. Without it, they will be gone.

Supply and demand control the price, not the dealer. The consumer is the ultimate arbiter. When people won't pay, the price drops.

Clearly, the R deserves a premium as demand exceeds supply. With restricted production this will probably continue.


2005 FGT #30
2017 NFGT #H043
2017 GT350R #H249
2017 Focus RS #H756

 

[Kingman]

I just re-read this thread and don’t quite understand the ‘put upon’ mentality of the car dealers, while ignoring the matter of fact statement from ‘david b’ – “Car dealers have earned their reputations over the years. The public didn’t wake up one day and say, hey we are going to hate car dealers.”

My take on the “high-pressure dealership outsold the nice-guy dealership”…………….(because we were nice?????????????), is probably better explained by looking at the quality for the sales training. The high-pressure guys most likely ‘followed up’ until they got the deal. It’s ‘Sales 101’. It’s how ‘sales’ works.

I ‘assume’ the ~6pt margin alluded to covers the cars that are simply ‘commodities’. I am not going to go into detail about the time I purchased my GT (not a commodity, but a called a ‘HALO CAR’ for a reason), but suffice to say, the dealership where I first had a ‘deposit’ of $10K over list deal, tried to jack up the price another $15K a month before scheduled delivery (allowing me the ‘pure enjoyment’ of walking away from the deal we had because they ‘unilaterally’ changed the deal…….in writing). I then spoke with several dealerships that tacked on an additional $70K+ to the list price before finding mine at list.

The exorbitant ‘Dealer Consideration’ practice engaged in whenever a ‘popular’ vehicle comes out (Chevy SSR, Thunderbird, Shelby, Focus RS, etc….) frankly leads to the lousy perception, as well as potentially ‘killing’ the product because people are so disgusted with the practice they simply stay/walk away.

Let’s look at ‘FOLLOW UP’ a little more. While my Cadillac was under warranty, the memory seat module failed. When I brought it in for service, the Service Manager had the chutzpah to tell me that the part will no longer be provided by any auto manufacturer going forward, and they will not be able to replace mine. Let me simply state that that conversation became colorful and eventually I elevated the issue to the GM Area Manager (I believe that was the title) who then tried to tell me that I must have been mistaken about the original conversation. This issue was extremely educational about how ‘distant’ the relationship is between dealership and manufacturer.

Net Net - My singular experiences were quite the contrary with regards to the various customer’s trying to rip-off the dealer conjectures, and I doubt I’m the only one.

Take away: Do your homework first online before going to the 'Fleet Manager'...........and the dealerships will go the way of Macy's, Toys 'R' Us, etc...????

Gosh....I hope I'm not being provocative by recognizing the obvious.

 

[Empty Pockets]

^^^ That dealer understands you can shear sheep over and over, but you can cut them only once.

'Reminds me of the equally accurate old adages, "There's a clear difference between profit and plunder"...and, "There's a difference between scratching one's butt and clawing it to pieces."

Let’s look at ‘FOLLOW UP’ a little more. While my Cadillac was under warranty, the memory seat module failed. When I brought it in for service, the Service Manager had the chutzpah to tell me that the part will no longer be provided by any auto manufacturer going forward, and they will not be able to replace mine....

'Battery failed in wifey's new BMW 'Turbo Terrific' about 18 months after purchase...'car had about 3,800(?) miles on it...'was told BMW wouldn't replace the battery because we'd "abused" it. How? Wifey hadn't been driving the car "the necessary FIFTY MILES A DAY " required to keep the battery charged! ('Gospel truth!) I pointed out to the 'service consultant' (or whatever his title was) that was a little factoid neither our salesman nor the service manager had bothered to mention when we bought the car and I asked him to show me where in the owners' manual that little tidbit of info could be found. He couldn't. BMW paid for the replacement battery. (The alternator on that car must have been the size of a golf ball...)

Compare that to FORD making it a point to 'clue in' FGT owners on the whole 'trickle-charge-the-battery-when-car-sits-for-any-length-of-time' thing from the get-go...

 

[Beach-GT]

I look forward to going to a car dealer like having a knife fight in a ditch. Thus I try to drive everything until it is smoke and flames. I usually get 12 - 16 years out of a car and maintain it myself. I could write a book on the poor dealings I have had with car dealers but wouldn't want to re-live the memories. I did buy one Ford from a fleet manager and it was not a bad experience so maybe that is good guidance. I always know the car I want to buy inside and out and the price I am willing to pay. The old show me the invoice is not a real determination of value because dealers get rebates based on volume. They can sell below invoice and make a profit if they want to. Sounds silly but they have made their own bed. Quality service after the sale is another whole discussion. I will need another car in the next two years if my present one only makes 18 years so I'm sharpening my knife now. Interesting thread!

 

[nautoncall]

What bothers me the most is if they have a modified car, supercharged or turbocharged, they upcharge the wazoo out of you and push all the cost of the mods. If you tried to trade that same car to the same dealer, they tell you how the mods make the car less desirable. Would someone please explain that to me? Just go look at dealers with modified cars? Bet if any of you went to trade your Whippled or TT FGT, you would hear how it’s not worth a stock one.


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