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Originally Posted by live2well
I truly understand your view and no disrespect intended but your best friend's overhead is too high if he cant absorb a the employee discount or supplier discount (btw which is part of an employees compensation package "pay"). I only say that because most of his car sales would NOT fall into the employee or suppliers discount catagory.
Example being that if his yearly allotment was 20 cars and he sold 15 of them at MSRP and 5 were sold with GMS discount, then he is doing something wrong if this hurts his bottom line significantly. If 25% of his sales get the GMS discount and this takes food off his table then he is running his business the wrong way.
I hope I havent offend you. I am not trying to offend any one but if we keep running our businesses the same way we have for the last few year we are dooming our businesses. We need to start thinking long term not short term. Decades not just one or two years down the road.  |
Hi Brian,
No you haven't offended me in anyway. Discussion is good in my world, even if it is regarding polar opposite opinions about something. I agree with you that a dealer should grant employee discounts on a vehicle. Yes that would be part of a compensation package and would most likely be clearly identified in the employment contract/benefit plan.
To your second point about selling 15 out of a 20 allotment at MSRP and then having 5 to sell at discount, he would still make money as a whole but the dealer world is not that simple. Looking at Camaros alone, you are assuming that this would be the case every year. In reality, it would only be the case for the first year.
Once Oshawa gets fully ramped up, supply will be greater than demand and dealers will at last be able to hold inventory of the Camaro (lot cars). At that time, there is more incentive for a dealer to move a car because now, he has to worry about carrying costs. 10 Camaros sitting on a lot is $300,000 (roughly) to the dealer. GM gets paid even before some lot cars get sold. So what do you think the monthly interest is on $300K? That money must come from the dealers profit from the car.
There is another issue that has not been discussed here which complicates things even further. GM tries to get dealers to take slow moving or no moving cars which the dealer will lose money on every sale. Here's the scenario -
A few years back, GM could not build enough Hummers and they were flying out the door at MSRP. My dealer friend was selling them as soon as he got them. He ordered as many as he could get. The catch? He had to buy 3 Pontiac Aztecs for every Hummer he got. What's the big deal about that? The problem is he couldn't sell them and lost a minimum of $1,000 on every one. GM didn't lose a dime because they still got their money. So where does the Aztec sales loss come from? The Hummer sales.
The same thing will happen here. GM will pressure Chevrolet dealers to buy a dud if they want a Camaro. The profit from the Camaro sales will offset the loss from other cars. You would figure that GM would just build whatever is in demand and stop building what isn't. It's one more area that needs to be addressed in the new GM. Give dealers the cars they are asking for and stop giving them the cars that don't sell.