Over inflated pricing is detrimental to the brand as are rebates utilized to bring cost closer to transaction level. However, my experience is that buyers enivetably want to "deal" to some degree. Therefore, it is my opinion dealers need some flexibility in order to accomodate the desire of customers. It also allows for swings in market conditions and gives the seller some room either way depending on the current state of the market.

 

In my industry, rebates are non-existant. GM can demand certain cost reductions, but those all end up baked into the cost at the beginning of the program, so it's really just a shell game of their own creation.

"Here's the price if you want to pay what the actual price is, here's the price with 3% given back every year after the first for 3 years... notice that the second one is 10% higher than the first."

That part of the business is nothing short of stupid. All it does is needlessly complicate the situation. In the end, either I make a reasonable profit or I don't want the business. My shareholders define "reasonable", not my customer.

My buyers do not want to haggle. It's counter-productive for both of us. They prefer to deal with a salesman they can trust, and I prefer to not have confrontations with them unless it's absolutely necessary. It's helps my credibility, and helps them too. I'll tell them to go pound sand from time to time, but if I do so, they know I have a damned good reason for it.

I have to question the idea that the buyers want to "deal". I think they've been forced into that position by bad sales practices, and would much rather have a fixed price. Furthermore, I highly doubt that it is somehow to their advantage to "deal" like that. My guess is that the car salesmen end up on top of that exchange far more often than the customers do.

 

OK BM...what is the percentage of cars your dealership sells at MSRP?

 

Here is an article in today's Phila. Inquirer regarding the current GM incentive program:

Posted on Tue, Jun. 28, 2005





GM's making hay now, but later it could pay

A promotion that has lifted the automaker's sales could wind up backfiring.

By Dee-Ann Durbin


ASSOCIATED PRESS

DETROIT - General Motors Corp.'s monthly U.S. sales could reach a four-year high this month thanks to a heavily promoted discount, but the campaign could hurt future sales, analysts said yesterday.

Automakers will report June sales on Friday.

In a note to investors, John Casesa, an analyst for Merrill Lynch & Co. Inc., predicted that this would be GM's best month since the post-Sept. 11 incentive blitz in October 2001.

He said GM could grab as much as 30 percent of the market, up from its 25.4 percent share in the first five months of the year.

"After five terrible months of market share, this is relatively good news for GM," Casesa said.

Between June 1 and July 5, GM is offering its employee discount to anyone who buys a new car or truck.

Dealers like Kim Bushy, who manages Suburban Buick Co. in Wheaton, Ill., say they are urging the automaker to continue the discount because it has led to a huge boost in sales.

"This is just very straightforward," Bushy said. "It's easy to understand, and it doesn't confuse the customer."

Mark LaNeve, GM's North America sales and marketing chief, said the company was considering extending the promotion.

Customers can save up to $8,000 under the program in some cases, but analysts warn that GM could wind up paying for the promotion for months to come.

Chris Ceraso, an analyst for Credit Suisse First Boston, said that even if the promotion continued, GM would lose market-share gains as the buzz subsided.

Since 2001, for every month that GM's share has surpassed 30 percent, the automaker's sales dropped by an average of 4.2 percentage points the next month, Ceraso said in a research note.

The program also will cut into the automaker's profits and will lower resale values later, Casesa said.

"The bad news, of course, is that this market share wasn't captured with hot new product but with hard-earned cash, something GM should be hoarding, not dishing out," Casesa said.

Other automakers also are expected to report strong sales in June, thanks to good weather, increased interest because of GM's promotion, and - in the case of Ford Motor Co. - a boost in incentive spending to match GM.

Analysts predicted that the seasonally adjusted sales rate for the month will be between 17.2 million and 18 million.

The rate indicated what sales would be for the full year if they remained at the same pace for all 12 months. Full-year sales for 2004 were 17 million.

Ceraso said GM's sales would rise around 30 percent, while Ford's sales should be up around 2 percent.

DaimlerChrysler AG's Chrysler Group should see sales increase from 3 percent to 5 percent. Nissan Motor Co., Toyota Motor Corp., and Honda Motor Co. could see sales increase from 8 percent to 12 percent.

David Healy, an analyst with Burnham Securities, said in a research note that June sales figures would be distorted by GM's promotion and would not be a good indicator of market trends, including the effect of high gas prices on vehicle sales.

Healy also said that the amount consumers were saving under the GM program had been overstated and that the automaker would spend only about $300 more per vehicle on incentives in June than it spent in May.

He predicted GM's total incentive spending per vehicle in June will be an industry-high $4,300.

"Contrary to the impression created in its advertising, GM's extension of its employee discounts to everyone in June is not the deal of the century," Healy said.

 

We sell very few at full list. Again the sticker means suggested retail. The willingness of the buyer and seller should determine the transaction price, same as with a house. Not many people pay the listed price, but at times, two bidders can push the price over the asking amount. That is the nature of a free economy. This is not to imply that I would ever condone "ripping someone's head off". In fact as a manager, I have sent salesmen back to the customer with a better price than what was offered. A few times, an ad had run on the unit, others I felt the salesman was being too aggressive. The best scenario is FREE and FAIR.

 

So you would say that the majority of car buyers "deal" or "negoiate" on the MSRP?

 

A better question is which would the buyer preffer: To have to "deal or negotiate" the price or just being told straight up what the price is?

Guess what category I fall into.

 

A telling stat on how well the current "haggle" system is viewed... I've seen survey after survey where "Buying a new car" is listed in the top 2-3 things that people most hate having doing in life.

 

My attitude as well. Whether office equipment, computers or cars, I have a relationship with specific vendors built on good service, a fair price for me and a fair return for them. They also know that if they break that trust they lose my business and referrals.

I've often "checked up" on vendors, mostly vehicles, by comparing elsewhere. The deceptions and outright lies some salespeople come up with are unbelieveable. I'm definitely an advocate of sticker prices that are very close to transaction prices ... though not necessarily "fixed" like Saturn.

 

bin - GO

That's what I have been saying all along.

It's also GM's way of walking out of the promotion smelling like a rose. It also can be the end of rebates unles they truly want to get rid of something.

And, it takes the jerky salesperson out of the mix.

How many Americans are going ot be upset that some car salesmen are not making as much as they used to? LOL. Does that question even need to be asked? LOL.

 

I’m glad someone finally said what I’ve been thinking through out this entire thread.

However I wouldent mind test driving something, then coming home and ordering/optioning my car out online and have it delivered for one low price no BS.

 

Sometimes the customer has a price or payment in mind that they offer, which we try to meet. More often, the price is quoted by the store manager based upon supply and age of the unit. The figure given is rarely near MSRP, actually closer to invoice than list. The appraisal is at wholesale cash value. The customer is then free to make an offer and we do our best to put the deal together or if necessary, counter. I'm not one for games, or lots of back and forth, but negotiating is not all bad if done properly and in good faith.

 

Yes it is (negotiating all bad). Give me your best price and i'll take it or leave it.

Thats why i walked out of the dealer 2 minutes from my house and sat in traffic to go to another one after work. I'd been through 2 rounds of your 'negotiating in good faith' including letting them test drive my trade in and they were still more than $1000 off the other guy's buypower.com quote, which coincidentally was in line with what everyone else was paying for 04 GTOs in October 04.

The first guy wanted to play the game, i guess he thought i appreciated wasting my afternoon talking about what kind of payment i wanted. I had my number in mind, and told him outright before the game started what the other guy told me, and he STILL started 3k higher. He dropped his number twice, and was still off, so i walked out. He called and emailed me in the weeks to follow, too bad he'd already lost.

 

Unfortunately you are right, way too many salespeople play the game and it is very distasteful. Deliberately trying to hold up an unsuspecting client is bad for the industry and reputation of both salespeople and dealers. Honest, upfront pricing is the best form of selling. However, a reasonable request by a customer should always be considered in the spirit of earning their business.
How many people pay the asking price for a home? Making an offer on Real Estate is an aniticipated part of the transaction and no one seems to mind. The expectation of the inevitable "offer" is built into the asking price in most cases. The car business should be no different. However, attempts at gouging
are unacceptable.

 

DON'T YOU GET IT?

The public perception is that ALL or a vast majority of car salespersons are there to screw them.

Publicized fixed pricing, get GM out of this current offer looking good. It also removes a lot of the stigma people have for car dealers, that those dealers have done to THEMSELVES.

Car salespeople are as bad as telemarketers to the general public.

So, maybe you are the most honest, decent, caring, will give cars away for free, savior of a car dealer that there is out there. Does even 1% of the nationwide general buying public deal with you? No, they deal with Vinnie the shark who prides himself on screwing every customer he can.