Why does anyone outside of Ford need to know Ford's profit margin on an individual vehicle sale?
Ford is going to a 100% fixed price online sales model for EV's
- Thread starter skyactiv
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Why does anyone outside of Ford need to know Ford's profit margin on an individual vehicle sale?
So you’re ok with lowering the price in a buyer’s market but not raising the price in a seller’s market?
JHZR2
Staff member
Yes. This is the fundamental function of an MSRP. To stabilize prices via an expected value/price for the item.
Vendors can offer sales, or provide a specific negotiated adjustment if they desire to make a sale. Thus the spread between invoice and MSRP, plus the bit of holdback that some brands maintain. That is their negotiation space,
Trying to claim that they sell at MSRP and a fixed price is favorable to the dealer, not the consumer. Since I’m not a dealer, but I am a consumer, I want the best deal. These “no negotiate” sales tactics are appealing to folks who don’t have the skills, inclination, or willingness to negotiate (or walk), and will pay a premium to believe they’re getting a good deal.
When the potato chip manufacturer prints a price on the bag of chips, do you just take it at face value, or try to get the ones that are on sale? Is it wrong that vendors offer sales on potato chips? Shoukd one go and scope out the bag selling for retail price?
JHZR2
Staff member
No, we just have better things to do than waste our time with the infuriating process of negotiating. Oh the car costs 2-3,000 more but I’ll be done in 30 minutes vs 2 hours+? Say no more!
Even when I did all the negotiating via email I was incredibly annoyed with the process, AND STILL SPENT 3 HOURS!!!!! at the friggin dealership. “Do you want the interior protection package?” “No, I already told you this….” “Alright, let me go tell the manager…”
Hey if you make so much money that 1.5 hours isnt worth $2-3000, good for you. I know I don’t make that much money per hour, so I’ll spend the time to get the deal.
I agree. The “spread” is negotiable, nothing wrong with that.
MSRP is a suggestion. The market sets the price.
Every dealer in the world wants you to think you are getting a great price. If you think you did well you will tell 10 of your friends. If you feel you got taken, you will tell the world. Dealers are not in the business of giving good deals, they are in the business of making money. They will not give you or me a killer deal if there are 10 people behind us waving cash at them.
I agree in general selling at MSRP is favorable to the dealer, but right now it is favorable to the customer. That's the market.
The market will set the price for Ford's EVs as well. Brands will compete for customers just like they do now. Losers will have the option to lower MSRP (or whatever they are calling it) and winners will raise prices.
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As an investor, I like to understand how well a company is doing. For example, it is thought that GM loses $9K on every Bolt they sell. If EVs become more of the market, GM just might be in trouble.
Would you want to buy a car from a company that is in trouble?
Do you think message boards are a good use of time, or a bad addiction that wastes enormous amounts of the publics time? I vote for the last one. Of course if you want to know how to remove the gizmo valve on a Tesla, then find out, that’s not a waste of time. But then it’s done.No, we just have better things to do than waste our time with the infuriating process of negotiating. Oh the car costs 2-3,000 more but I’ll be done in 30 minutes vs 2 hours+? Say no more!
Even when I did all the negotiating via email I was incredibly annoyed with the process, AND STILL SPENT 3 HOURS!!!!! at the friggin dealership. “Do you want the interior protection package?” “No, I already told you this….” “Alright, let me go tell the manager…”
Public discourse isn’t a bad thing. But I’d rather spend my time doing things I want to do (like post on BITOG) rather than the back and forth game of a dealership.
I don’t either, but in that moment my time and anxiety level is worth that much if not more. I’m not saying “Direct sales only! Down with the dealerships!” I simply want the option.
No, the Ford stealer is going to tear up your vehicle, make you wait for hours & hours or get a rental, and refuse to fix obvious issues under warranty... Until it's out of warranty, then they'll charge you a small fortune and then may or may not fix it. Clowns can't even fix their ICE vehicles, they've done NOTHING that convinces me they can handle anything else.Is Ford gonna give me free coffee, free snacks, sponsor my kids toss ball team, give me a loaner car and kiss my ass every time I complain? If not I’m leaving them a bad a survey
Then they can have all the benefits of the dealership life!
There are plenty of ways, to include public disclosure of all sorts of other information aside from the profit margin on one specific model, to determine how well a car company is doing.
I know that people say things like you have said but the actual reality is that people get notions inside their head about buying a product and like to think in terms of "getting ripped off" when we speak of how much a business might profit from selling something. Anyone can find all sorts of discussion about this on BITOG or the internet at large.
Let's not feign ignorance, most people who think in terms of how much profit a vehicle sale will generate are thinking in terms of the notion that they are "getting ripped off." I can post several links to recent discussions on BITOG alone to support what I am saying.
Sorry the dealership you go to sucks. They’re not all that way but may be soon if the pay plans don’t change. Good techs and experienced advisors have been exiting the industry in droves the last few years.
To be a great tech a person needs to be an electrician, a welder, computer programmer and a fabricator. The secret is out that you can make more money doing any one of those things alone.
I can assure you that I’ve worked with many great techs over the years and I don’t think you’d call any of them, or myself for that matter even though I’ve been out of that industry a while now, clowns to their faces. Then again this is an automotive forum where I guess you're supposed to stereotype people by their careers and degrade them accordingly behind the safety of your computer screen. This group stays pretty cordial so I sometimes forget that.
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JHZR2
Staff member
Sure, but these are depreciating assets. Fools and their money can be departed if they like.
The reality is that paying over MSRP is a fool’s errand every time. The wacky car market of 2020-22 is not a data point to judge against.
And frankly, we’re talking two different things. Training the population that a vendor’s set pricing is fair and acceptable, and that there’s no need to, nor way to negotiate a better deal is just silly. Training the population that lacks the drive, willingness, mental dexterity, aptitude, etc to not negotiate because it is “hard”, “stressful”, “shady”, or whatever other rationale is just profiting off of laziness and unexceptional behaviors.
That’s different than someone being willing to pay a premium to get a car over MSRP because they need to fulfill whatever sense of need they have to get a car now. I get it there are some niche cars that someone might not even get without paying at MSRP or above, because of true limited supply. But these cars are far from the pedestrian daily drivers that get produced by the hundreds of thousands.
I'm not sure I said any price is "fair". My arguement is MSRP is a suggestion and that the market sets the price.
Today's prices are a reflection of the market, primarily supply versus demand. If you need, or want, a car you gotta pay the price. This is true at all times.
Your last paragraph describes the market perfectly, spanning niche and daily drivers. Porsche and Tesla have incredible margins; VW not so much.
Cars in demand will demand a higher price, and vice versa. If and when the auto business goes to a fixed price, that price will reflect market conditions.
Buying a car requires the seller and buyer to agree on a price. If I as the buyer feels ripped off, I have 1 person to blame.
You ever notice most dealers order just a few configurations? Different colors - so big inventory does not necessarily increase your chances of getting what you want. I’d prefer to be able to order what I want and not have to go through the rigamarole with the dealer - I’d pay more to do a direct transaction with Ford and skip the whole F&I manager racket too. Just take my check and bring my vehicle. Rant on about negotiating all you want but try going into Best Buy and negotiate ing for a drone or a TV - I’m not even sure where the idea that cars should be negotiatable came from. I get houses and used cars because the are variable conditions, but a brand new car or truck there’s no basis for different people paying a different price for exactly the same thing. And I’m perfectly adept at negotiating and buying cars but why? Why do we expect it to be negotiated?
Eaverything is negotiable. Is just depends on who has the power at a point in time.
JHZR2
Staff member
You didnt say what is fair. But what do you think they are trying to do in trying to train the population to accept paying full MSRP for a negotiable asset?
A negotiable depreciating asset at that.
Tesla margins are a proof of the ripoff of the public. They could lower their prices, but instead are claiming insane margins compared to other automakers. I get it that is the market, they CAN do that. But I can also NOT buy one, and wont. Precisely why while I appreciate and like Musk, I wont buy an overpriced Tesla car. When their margins decrease, which implies a better value to me the consumer, Ill consider one. Since there are plenty of options for cars on the market, and I own over ten cars as it is, I have all the options in the world. So as an example since you mentioned them, they have to appeal to me, to provide me perceived value for my money, in order to get me to buy. If they dont, they lose a sale. If theyre smug, theyll fail. If theyre smart, theyll reduce price/margin and provide value.
The auto business fixed price will not be variable, it will be like buying a bag of chips at a convenience store. Do you think the automakers will offer a sale? Or sell less cars because of deteriorating conditions to do anything, including find worthy workers? They already operate on a model of laying off workers, idling the factory at the MY changeover, etc. Theyll just stop producing and furlough the workers to keep production meeting demand.
Im against training people to think that paying MSRP is fair. Everything is negotiable. Being able to walk is a person's greatest strength and asset. They buyer's cash is the valuable thing, not a depreciating car. And even the case of paying a premium.... A tesla isnt a car worth a premium. Its artificially propped up by tax breaks perhaps. 30 years from now a 911 will be a valued item that can operate liek day 1 if maintained. An EV will have battery degradation so bad, that coupled with other typical failed systems that EVERY car has (AC, rubber bushings, interior materials, paint, seals, etc) that it wont be worth the battery replacement. Thats physics, not opinion.
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Deleted member 89374
Automakers who needed massive bailouts little over a decade ago are now suddenly kings of the hill. How did it come to this?
