Dealer Mark-Up Gone Wild

[90503]

....Sure, there are others to be had without a mark-up at other dealers in other regions. But it's not like you can just go across the street and save the 50K...And the car is not a "necessity". But still, it is somewhat "rare" and a huge mark-up seems like it is taking an unfair advantage of the situation...If it were any other type of business doing this, it would be a scandal, but a car dealership seems to get a free-pass, as terrible sales practices are somewhat expected...lol...

A fine line perhaps on whether or not it's gouging....still, if others are not adding a mark-up, the ones that do are making themselves look bad....If every dealer did it with every Z/28, then we'd have gouging (and a conspiracy!!!...lol)

I still think they know that mark-up will make the car sit on the showroom unsold....And that is what they want for now....

[McRat]

Sadly, selling a 2014 model year in June is a toughy to start with.
In a month or two, 2015's will be on the lot.

Unless they truly believe a 2014 will have a higher resale than a 2015 (har-d-har), they should have moved them already if they can get MSRP. Few 2014's are selling right now without heavy dealer price cuts.

The 2014 GT-R Track Edition is going for $10k under MSRP right now. That's huge.

[PQ]

Originally Posted by Norm Peterson

Gouging doesn't exist for those 80% or for the 2% or so for whom either $75k or $125k isn't a barrier.

For those somewhere in the middle where $75k is a stretch but still do-able, $50k absolutely is a gouge. Greedy b*****ds are totally unwilling to sell it for what Chevy has established is a reasonably fair price.


Norm

That's a fair point but there are many things that become out of reach.

I'll be offering my car up for sale. And I will charge more than blue book and probably more than it's market worth. (new engine forged cammed etc......) My reasoning is that the car is worth more to me than someone else and if I have to I'll lower the price but I do not HAVE to sell it. So my price will be set to help make my decision to sell it easier and by default NOT sell it. I may not get the extra money but I am not gouging the people who could otherwise afford a bluebook market price.

And if I am then I have no problem with price gouging a luxury item.

[brt3]

Originally Posted by Iron Lung Jimmy

If you put your house up for sale at a price 65% higher than market value, are you "gouging"?

If Best Buy tries to sell a TV for 65% more than the same TV can be purchased at Sears, are they "gouging"?

If a plumber tries to charge 65% more than his competition, is he "gouging"?

If Whole Foods tries to sell meat for 65% more than you can buy it at Wal Mart are they "gouging"? Oh, wait a minute, that already happens... never mind.

Anyway... apparently, as documented in this forum, if a person wants a Z/28 at MSRP they can find one. So this dealer is just hoping that person for whom $125K is pocket change happens to walk in and likes the car.

You are right on all counts. However, dealers are protected by antiquated laws around franchising and vehicle sales. The same dealers that add dealer markup for rarer cars complain about services -- like TrueCar -- that aimed to expose the pricing games played by US dealers.

In the case of TrueCar, the FTC investigated car dealers for collusion in trying to undermine their business. Basically, TrueCar was forced to modify their business model because dealers tried to force them out of business. For the whole story you can READ MORE HERE.

Similarly, Tesla has tried to get states to change antiquated laws that protect an antiquated system that benefits dealers but hurts consumers. Dealers reacted by spending millions on lobbyists to fight Tesla tooth and nail.

These very same dealers -- who bemoan me searching out the best price, even if it's out-of-state [buy locally, they shout] -- are aghast at the idea of open and fair competition.

Why? Because they realize that only a handful of dealers understand how to provide superior sales and service, which cultivates customer loyalty. Only this handful of superior dealers would survive if the protective buffer these laws provide were changed.

The reason this sort of thing enrages me has nothing to do with logic, but everything to do with morals. I've worked for two different dealerships; one was an Olds dealer and paid for my undergrad tuition; the second was with a BMW store and paid for my grad school. One store treated people right; the other was run by a crook.

IMHO, most dealerships deserve the term "stealership". They have no clue about how to treat people in a way that fosters long-term relationships, and they have an incredibly short-sighted way of doing business. When I see this sort of ADM, it really pisses me off. We are all free to vote with our wallets, and in my case once I've seen this sort of practice at a dealership I'll never walk through their doors again.

EOR [end of rant]

[Doubleblank]

Originally Posted by McRat

Sadly, selling a 2014 model year in June is a toughy to start with.
In a month or two, 2015's will be on the lot.

Unless they truly believe a 2014 will have a higher resale than a 2015 (har-d-har), they should have moved them already if they can get MSRP. Few 2014's are selling right now without heavy dealer price cuts.

The 2014 GT-R Track Edition is going for $10k under MSRP right now. That's huge.

My dealer received 3 allocations for 2014 and 4 for 2015. They ordered the first one for me, ordered a Z28 for their floor (with only one "interested" customer) and traded the other 2014 allocation for another 2015. They sell a ton of hipo Camaros and Corvettes (they have 40 deposits for the 2015 Z06). They clearly don't see any premium being gotten for a 2014 Z28 or would have ordered one for their floor.

[Iron Lung Jimmy]

Originally Posted by brt3

You are right on all counts. However, dealers are protected by antiquated laws around franchising and vehicle sales. The same dealers that add dealer markup for rarer cars complain about services -- like TrueCar -- that aimed to expose the pricing games played by US dealers.

In the case of TrueCar, the FTC investigated car dealers for collusion in trying to undermine their business. Basically, TrueCar was forced to modify their business model because dealers tried to force them out of business. For the whole story you can READ MORE HERE.

Similarly, Tesla has tried to get states to change antiquated laws that protect an antiquated system that benefits dealers but hurts consumers. Dealers reacted by spending millions on lobbyists to fight Tesla tooth and nail.

These very same dealers -- who bemoan me searching out the best price, even if it's out-of-state [buy locally, they shout] -- are aghast at the idea of open and fair competition.

Why? Because they realize that only a handful of dealers understand how to provide superior sales and service, which cultivates customer loyalty. Only this handful of superior dealers would survive if the protective buffer these laws provide were changed.

The reason this sort of thing enrages me has nothing to do with logic, but everything to do with morals. I've worked for two different dealerships; one was an Olds dealer and paid for my undergrad tuition; the second was with a BMW store and paid for my grad school. One store treated people right; the other was run by a crook.

IMHO, most dealerships deserve the term "stealership". They have no clue about how to treat people in a way that fosters long-term relationships, and they have an incredibly short-sighted way of doing business. When I see this sort of ADM, it really pisses me off. We are all free to vote with our wallets, and in my case once I've seen this sort of practice at a dealership I'll never walk through their doors again.

EOR [end of rant]

I agree 100%. I mean, after a house, a car is the biggest purchase most people will make... and the system is rigged solidly against you. Totally unfair.

But my fidelity to the principles of free market capitalism trump my loathing of the automotive dealership system so if this guy wants to try to get $125K for a Z/28 I am fine with it.

How scummy are dealers? The last time I went shopping, the salesman put the dealer holdback on the invoice... as a cost to me! (Yes, you read that correctly.) Then he was going to let me negotiate it off.

Needless to say I called him on it. But, the more it became obvious he was caught in a lie the more the idiot salesman tried to stick to his guns... until I finally went ballistic and caused a minor scene.

Sadly, the vast majority of people would have no idea what the guy was trying to pull.

[strych9]

It's only gouging if somebody buys it. And even then, it really isn't. It's free enterprise.

It's funny to see people get bent out of shape because they feel entitled to be able to buy a vehicle at a certain price that "they" feel is reasonable.

Price too high? Don't buy it. Problem solved.

[No Excuses]

Is it a good marketing tactic to get customers in the door? Sure. I see what their doing with the price. Now just begs to question what else they have up their sleeve when it comes to other things at their dealership. I'm sure it wont sell for a 50k markup. No doubt, but then again their is a sucker born every minute.

[Ragnar]

Do banks finance markup or is it based on the value of the car? I would guess that you would have to put down some extra down payment. That is crazy, but someone may have more dollars than sense....

[swaugie]

Originally Posted by Iron Lung Jimmy

I agree 100%. I mean, after a house, a car is the biggest purchase most people will make... and the system is rigged solidly against you. Totally unfair.

But my fidelity to the principles of free market capitalism trump my loathing of the automotive dealership system so if this guy wants to try to get $125K for a Z/28 I am fine with it.

How scummy are dealers? The last time I went shopping, the salesman put the dealer holdback on the invoice... as a cost to me! (Yes, you read that correctly.) Then he was going to let me negotiate it off.

Needless to say I called him on it. But, the more it became obvious he was caught in a lie the more the idiot salesman tried to stick to his guns... until I finally went ballistic and caused a minor scene.

Sadly, the vast majority of people would have no idea what the guy was trying to pull.

Sadly, you don't understand how a new car franchise runs. The dealer pays the manufacturer invoice which includes the net cost of the car, local and national advertising, and holdback. The dealer gets paid the holdback quarterly after selling the car. If and when the dealer sells you a car under invoice, they essentially provide you a no interest loan for up to 90 days. All for the enjoyment of having you make a minor scene in their showroom. Lucky them!

[Indydriver]

I saw the dealer's tally sheet on my new car transaction. They made $900 profit selling a car that listed for $47,750. That's 1.9%. I'm good with that. After all, they aren't running a charity. Where they really profit is on your trade-assuming it is attractive. The gave me $14,165 for my 6 yo car that was $25K new and resold it for a $3,000 profit. Again, I'm fine with that. They got me to the middle of the KBB trade range, I saved $1000 in sales tax on the new car transaction and I didn't have to deal with the public to get my money out of the trade.

[SamHouseIII]

Originally Posted by Ragnar

Do banks finance markup or is it based on the value of the car? I would guess that you would have to put down some extra down payment. That is crazy, but someone may have more dollars than sense....

I believe they do up to a certain percentage of the MSRP...

[jcamaro37f]

It's currently listed as 56,440 on the website.


Sent from my iPhone using Tapatalk

[Iron Lung Jimmy]

Originally Posted by swaugie

Sadly, you don't understand how a new car franchise runs. The dealer pays the manufacturer invoice which includes the net cost of the car, local and national advertising, and holdback. The dealer gets paid the holdback quarterly after selling the car. If and when the dealer sells you a car under invoice, they essentially provide you a no interest loan for up to 90 days. All for the enjoyment of having you make a minor scene in their showroom. Lucky them!

You must work at a dealership

OK, so how does some accounting gymnastics designed to benefit the dealer become a cost to the customer? The holdback is only there so the dealer can borrow more money against the car. Oh and to screw the salesman as well... but that's not my problem. It is not a true cost.

And as far as making a scene, it works both ways. If the customer specifically tries to negotiate into the holdback the salesman will throw a fit... so you leave it alone. I expect the same courtesy. For the salesman to put it on the table was just stupid.

Edit: Oh, and to be clear... this wasn't a below invoice deal. He had the supposed invoice price listed, then some various add-ons, one of which was the holdback. So the holdback was already in the invoice and now he's adding it on again.

Smooth...