What does dealerships lose on GMS pricing?

[RPO_Z28]

Originally Posted by qdz21

So the dealer gets absolutely nothing back? I've heard there is around a 1600 profit on these cars if sold at MSRP so if a dealership honors the Credit Union Discount and it saves me $1100 the dealership make $500 on the vehicle and get nothing from the Credit Union or GM?

Sorry for the redundant questions, I just want to make sure I understand this completely.

Again, all of these GSU type deals bring the price to dealer as if he sold it for about invoice after all credits back from GM.

So, if the dealer were to sell at invoice (or GSU), he would lose the profit between that and MSRP.

[Bell040]

Use #'s please ... I am having a hard time following... and I am an engineer...

so if...

MSRP = $35,000
GSU = -$1,000
Customer Price = $34,000

Invoice = $33,000 (just a guess)

$33,000 < $34000 .... therefore, dealer doesn't get any rebate?

[CamaroFan1]

This is how I understand it from talking to a friend that works at a dealership:

The dealer makes money on the following scale. The farther the discount from the top of the scale, the less profit they make. They have overhead costs, and for cars that sit on the lot, they also have interest expenses.


<---Above MSRP---->

<---Dealer Installed Options--->

<---Finance Incentives to Dealers/Extended Warranties/Undercoating/Etc--->

<---MSRP--->

<---GSU (Supplier), Military, Col, other Discounts--->

<---Invoice--->

<---GMS (Employee) (small rebate given back to dealer)--->

<---Dealer Holdback--->

<---Dealer volume discounts/rebates/special dealer incentives--->

<--Actual Cost--->


So, if a dealer sells at GMS or Invoice, they still make money on the individual car, just not as much. Depending on their overhead, and interest costs, lower volume dealers may loose money farther down the scale. Higher volume dealers generally have less overhead per car, because they are moving more units, and they may get additional incentives. That is why large dealerships may accept invoice or GMS pricing, while small dealers may not.

[RPO_Z28]

GSU is not a specific rebate. It is a price on the invoice.

So, let's say MSRP is $35000.

Let's assume GSU is 33700.

Dealer loses $1300 by not selling it at MSRP. Simple.

[teamlynn1]

Originally Posted by RPO_Z28

GSU is not a specific rebate. It is a price on the invoice.

So, let's say MSRP is $35000.

Let's assume GSU is 33700.

Dealer loses $1300 by not selling it at MSRP. Simple.

[SS Man]

Originally Posted by RPO_Z28

GSU is not a specific rebate. It is a price on the invoice.

So, let's say MSRP is $35000.

Let's assume GSU is 33700.

Dealer loses $1300 by not selling it at MSRP. Simple.

So if I understand correctly, the dealer eats all the cost of any of the discount plans issued by GM??? Why would a dealer ever accept one of these discounts? Are they just a ploy to make the buyer think they are getting a discount? If so, I should be able to negotiate the same deal with a dealer with or without a plan. I'm just confused, it doesn't make sense to me.

[qdz21]

Originally Posted by SS Man

So if I understand correctly, the dealer eats all the cost of any of the discount plans issued by GM??? Why would a dealer ever accept one of these discounts? Are they just a ploy to make the buyer think they are getting a discount? If so, I should be able to negotiate the same deal with a dealer with or without a plan. I'm just confused, it doesn't make sense to me.

x1

[RPO_Z28]

Originally Posted by SS Man

So if I understand correctly, the dealer eats all the cost of any of the discount plans issued by GM??? Why would a dealer ever accept one of these discounts? Are they just a ploy to make the buyer think they are getting a discount? If so, I should be able to negotiate the same deal with a dealer with or without a plan. I'm just confused, it doesn't make sense to me.

That's why it's the dealer's choice to accept it or not. If you have a car you can sell that's in high demand, it's like throwing money away if you can sell them all for MSRP.

[CamaroFan1]

Originally Posted by RPO_Z28

That's why it's the dealer's choice to accept it or not. If you have a car you can sell that's in high demand, it's like throwing money away if you can sell them all for MSRP.

You are right, except some dealers have committed to Supplier or Employee pricing back in October. They should honor the commitments they made.

-----------------------
Unfortunately, some dealers have gone even further. Why sell them at MSRP, when you can charge over MSRP?

[JDBeck23]

Yes, some dealers will agree to GMS pricing and employee pricing im sure in hopes to secure your business for years to come. Just like OTHER dealers will gouge your eyes for a 10k over MSRP price tag on a pre order. Both ends of the spectrum, go figure!

[KJS]

Originally Posted by RPO_Z28

That's why it's the dealer's choice to accept it or not. If you have a car you can sell that's in high demand, it's like throwing money away if you can sell them all for MSRP.

Got it, thx.

[Jim Thompson]

Originally Posted by CamaroFan1

You are right, except some dealers have committed to Supplier or Employee pricing back in October. They should honor the commitments they made.

yep

[Bell040]

Originally Posted by RPO_Z28

Again, all of these GSU type deals bring the price to dealer as if he sold it for about invoice after all credits back from GM.

So, if the dealer were to sell at invoice (or GSU), he would lose the profit between that and MSRP.

then what are these credits for???

still doesn't add up.

[SS Man]

Originally Posted by RPO_Z28

That's why it's the dealer's choice to accept it or not. If you have a car you can sell that's in high demand, it's like throwing money away if you can sell them all for MSRP.

Thanks, that is good to know. I had always assumed that the manufacturer had ate the cost for those "discounts".