why did the set price car dealerships

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Originally Posted by Cujet
Our local "no negotiation" car dealership is consistently more expensive than the others. Yes, it's nice to see that boldly painted price on the windshield that is less than the sticker price. However, a quick look on Autotrader shows the exact same Mustang, in the same color, with the same options being advertised for thousands less than the "pay one price" place.

I looked into purchasing a Ford Raptor, and the "pay one price" place offered a nice $8000 premium added to the sticker price.

A quick look on Autotrader shows the exact same truck for $2000 under sticker price.

I noticed the same thing with Carmax. I can buy an equivalent vehicle at a "regular" dealer and pay their asking price with no negotiation, and it would STILL be about $3k less than Carmax.
 
Originally Posted by AZjeff
Originally Posted by Reddy45
Carmax is still around and thriving though.

Never been to one. Do they steal your trade-in worse than regular dealers?

Yes.

And their vehicles are generally priced higher and in worse condition than those at franchise dealers.

I have not once been impressed by CarMax.
 
the no haggle dealer model failed because consumers would get their 'best price' and then go shop it. Any dealer around would usually be able to beat the price by a hundred or hundreds of dollars. Car buyers are conditioned to always want a better deal than they are first offered.
 
Originally Posted by blupupher
Originally Posted by Leo99


You know, like Saturn.


And Scion...
Yep-my ‘05 xB was $13,680+tax & title OTD, take it or leave it, in 2005. Only thing extra I could have gotten by dealer shopping was free car washes!
 
What about " hold back " ?




Originally Posted by Danno
On everyday cars, dealers make surprisingly little on the price. Its the back end stuff where they make the money

Financing
Extended warranty
Gap insurance
Key fob insurance
Critical health insurance
Job loss insurance
Wheel and tire insurance
Rust insurance
...
...
...
 
A couple of years ago , I was shopping for a used Volt , at a Honda dealer . ( Did not end up buying one . )

Was negotiating on the price . Was told by " the sales manager " that they had x dollars in it . I told him he gave too much trade in for it . Some where in the conversation , I was told his New Hondas were one price only .

Did not much for me to figure out , if his new cars were locked in on price , the only place he can compete with the other brands / dealers is by offering higher trade in . Did not tell him that , was not interested in arguing with him .

I had already figured out , the Volt did not have as much interior room as I was wanting .
 
Originally Posted by WhyMe
not succeed. one of the aspect of car buying i dislike is the negotation part. i would have no issue paying msrp if i knew everyone else was. no need to negotiate. i know its been tried in the past, but none have succeeded .

Why?


State franchise laws.
 
Originally Posted by WyrTwister
What about " hold back " ?




Originally Posted by Danno
On everyday cars, dealers make surprisingly little on the price. Its the back end stuff where they make the money

Financing
Extended warranty
Gap insurance
Key fob insurance
Critical health insurance
Job loss insurance
Wheel and tire insurance
Rust insurance
...
...
...



Hold back is like a few hundred bucks on a common model? Not much once it goes towards paying commissions and overhead.
 
Originally Posted by Reddy45
Originally Posted by WyrTwister
What about " hold back " ?




Originally Posted by Danno
On everyday cars, dealers make surprisingly little on the price. Its the back end stuff where they make the money

Financing
Extended warranty
Gap insurance
Key fob insurance
Critical health insurance
Job loss insurance
Wheel and tire insurance
Rust insurance
...
...
...



Hold back is like a few hundred bucks on a common model? Not much once it goes towards paying commissions and overhead.

Hold back can vary depending on the manufacturer's programs. From what I understand, the manufacturer's internal rebates are pretty tight right now.
 
Originally Posted by iahawk
the no haggle dealer model failed because consumers would get their 'best price' and then go shop it. Any dealer around would usually be able to beat the price by a hundred or hundreds of dollars. Car buyers are conditioned to always want a better deal than they are first offered.
Agreed.
Although, you could create a dealership with "set" prices and then have sales events on certain models that don't sell well. Vehicles that do sell well don't need discounts or specials, and they would almost always stay at the higher price of course.
------ Look at Kohl's clothing stores. They have many sales, and it clears out even the slightest hint of over-stock for them, bringing in customers on their frequent sales/discounts all the friggin' time. With increased customer traffic, sometimes customers buy attractive stuff NOT on sale. Get eyes on your inventory up close and get customers to buy the expensive stuff (i.e, they come in for a Focus on sale, & actually leave with a more attractive Fusion not on sale).

As others have said above, CarVana, TrueCar, & other internet pricing sources can at least arm the buyer with info on what actual prices out there typically are.
Last time I got a new car, I cross-shopped 3 dealerships and one dealer seemed to have more inventory they needed to get rid of, so their price was best. Armed with TrueCar's valuation estimates gave me a good idea of what average prices were.
 
I was pretty pleased with the approach I used when I bought my Tacoma. I found the exact model I wanted for sale, and then confirmed all the option pricing with Edmunds. (base model price + add ons). This gives you Invoice, which is what the dealer should have also paid. There were no factory incentives on Tacomas at the time.

Then you take a rough guess at holdback and offer Invoice minus holdback (or a little more if you can manage it).

When I compared what I paid versus what everyone else paid on TacomaWorld, I was near the "lowest paid" for my exact package, only being beat by people who had managed to squeeze out another few hundred in savings at the cost of extra time. This was also in 2015 when Toyota was not budging much on sales of Tacomas due to their reputation.

It helped that the dealership added ZERO of their own options and that Toyota is transparent with their invoice prices. I tried the same approach on a Honda a year later and couldn't use the same method.
 
I tried to buy a Saturn for my wife (then fiancée), Angi, using the GM employee plan. Ordered it with everything I wanted, price was set by the factory. Got the final price sheet.

Me: This Doc fee isn't allowed under the GM employee plan [in 1998, it wasn't permitted].
Them: You have to pay it if you buy it here. Everybody pays it, even the manager if he buys a car here.
[after consultation with soon to be wife]
Me: It goes against my grain, but OK (figured I'd take it up with GM later)
Me: This sales tax looks high. Is it based upon the list price of the car, or my actual purchase price?
Them: The actual purchase price.
Me: Give me a calculator.
Me: This sales tax is based upon the list price. Recalculate it correctly, based upon the actual sales price.
Them: [after speaking to the manager] This is the way we do it, and is correct. Our accountant says we have to do it this way.
Me: Angi here is an accountant, and was a tax compliance officer for Times Mirror. She and common sense says you are doing it wrong. If your accountant says to do it this way, he or she is incompetent. Either do it right or lose the sale.
[for the record I was still steamed about them trying the Doc fee scam]
Them: We aren't changing it.
Me: Return my deposit. Goodbye.
Ended up buying a basic Camaro for about $2k less than the base Saturn. Twice the car, same gas mileage, less money after employee discount, rebates, and no bogus add-ons.

Saturn was a great business model for them. I viewed it as a mediocre car, at best, for which most people had to pay full price.
 
Originally Posted by Reddy45
I was pretty pleased with the approach I used when I bought my Tacoma. I found the exact model I wanted for sale, and then confirmed all the option pricing with Edmunds. (base model price + add ons). This gives you Invoice, which is what the dealer should have also paid. There were no factory incentives on Tacomas at the time.

Then you take a rough guess at holdback and offer Invoice minus holdback (or a little more if you can manage it).

When I compared what I paid versus what everyone else paid on TacomaWorld, I was near the "lowest paid" for my exact package, only being beat by people who had managed to squeeze out another few hundred in savings at the cost of extra time. This was also in 2015 when Toyota was not budging much on sales of Tacomas due to their reputation.

It helped that the dealership added ZERO of their own options and that Toyota is transparent with their invoice prices.


I can't understand how people think a car dealer should make little or no money selling a $30K (or whatever) vehicle. It makes no sense, there has to be profit in the sale somewhere. Are people who take their cars into a dealer for service supporting the entire business? Many new cars never go back for anything.
 
No manufacturer is 100% transparent with their pricing when it comes to final customers. Some may do a bterr job at convincing their customer base than others, but the whole business model revolves around keeping the customer in the dark as much as possible. A lot of the "independent" services that claim to provide the invoice pricing are nothing more that sponsored shills.

I mean, do any of you know the cost of goods that Amazon , Walmart, etc pay for? Why would automotive industry be so willing to share their cost information. It's naive to think they would.
 
Originally Posted by KrisZ
No manufacturer is 100% transparent with their pricing when it comes to final customers. Some may do a bterr job at convincing their customer base than others, but the whole business model revolves around keeping the customer in the dark as much as possible. A lot of the "independent" services that claim to provide the invoice pricing are nothing more that sponsored shills.

I mean, do any of you know the cost of goods that Amazon , Walmart, etc pay for? Why would automotive industry be so willing to share their cost information. It's naive to think they would.

It depends on the dealer, and also on the salesperson at that dealership. When we bought our two Toyota cars there couldn't be more of a difference between the four Toyota dealers in the Milwaukee metro area. The one we settled on was very honest and told us down to the dollar what the cost was and how much the salesman himself was making in the deal. They included everything including holdback and any other incentives.
 
Originally Posted by kschachn
Originally Posted by KrisZ
No manufacturer is 100% transparent with their pricing when it comes to final customers. Some may do a bterr job at convincing their customer base than others, but the whole business model revolves around keeping the customer in the dark as much as possible. A lot of the "independent" services that claim to provide the invoice pricing are nothing more that sponsored shills.

I mean, do any of you know the cost of goods that Amazon , Walmart, etc pay for? Why would automotive industry be so willing to share their cost information. It's naive to think they would.

It depends on the dealer, and also on the salesperson at that dealership. When we bought our two Toyota cars there couldn't be more of a difference between the four Toyota dealers in the Milwaukee metro area. The one we settled on was very honest and told us down to the dollar what the cost was and how much the salesman himself was making in the deal. They included everything including holdback and any other incentives.


This was my experience as well.

Yes it's possible that Toyota's public invoice numbers are inflated, but then everyone is going off those numbers anyway, so it's not like some people are getting TRUE invoice values. (if every ruler is wrong, then are the measurements actually "wrong"?)

In my case, I was buying a truck that only had factory options (no regional packages or dealer add ons) so I compared it to the same exact models in other states and the option pricing was identical..


*edit - Despite Toyota publishing their invoice numbers, you have to watch out because their regional distributors (like Gulf States Toyota) will add packages at the port of entry that have a price, but that price can't be verified against Toyota factory pricing so you lose some transparency in that area.
 
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Forget invoice or dealer holdback or any other cost as some are discussing above. Doesn't matter. .. The market doesn't work that way. Supply and demand. Thats why Truecar.com's average actual transaction prices are the best guide to real price. MSRP, also, means absolutely nothing. The market rules.
 
Originally Posted by oil_film_movies
Forget invoice or dealer holdback or any other cost as some are discussing above. Doesn't matter. .. The market doesn't work that way. Supply and demand. Thats why Truecar.com's average actual transaction prices are the best guide to real price. MSRP, also, means absolutely nothing. The market rules.


Edmunds TMV is also handy. It seems they have buried it within their site, though. Every year it gets tougher to find the meaty content on Edmunds.
 
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