Dealer Markups

[EAGLE5]

You only live once. What are you saving the money for anyway?

Porsches are significantly superior to the similar VWs. I don't own any of either.

This economy could rise for a while. It could fall. We can't predict.

[AnalogMan]

FWIW, on one hand, I'm hoping that Subaru's apparent corporate 'guidance' on ethical sales practices might put at least a bit of a tamper on dealer greed. Between myself, family, and friends, we've bought 5 Subaru's in the past 2 years from 4 different dealers. Each of those transactions couldn't have been more forthright and straightforward, with no games whatsoever.

In my own personal experiences, I've found that Subaru dealers seem to be a little more ethical (I can't believe I'm using that term associated with a car dealer) in their selling practices. In my communications with someone in Subaru customer service, they told me they 'encourage' their dealers to follow some sense of integrity in their dealings with customers.

But all of those deals were for readily available cars, and there's no controlling the most powerful, primal human instinct of all: greed. Even the dealer from whom we bought two cars in painless, easy, fair deals slapped a $10,000 ADM on the only 2021 WRX STi S209 they had.

As others have said, it will depend solely on supply and demand. Dealers won't turn away the chance to make money. Despite talking the talk about wanting to 'build relationships' and being in it for 'the long term', few actually walk the walk (see: S209 prices).

Things aren't looking great right now on either the supply or demand sides. On the supply side, there are multiple disruptions in various components used to manufacture cars, such as ECM chips and seat foam. Since Subaru and Toyota are gearing up right now to produce the cars, I imagine that's constraining supply and likely will for some time.

On the demand side, there's the unholy combination of a soaring stock market making a lot of people feel 'rich', and revenge buying with money burning holes in people's pockets and wanting to 'reward themselves' for their perceived deprivations during the pandemic. Limited supply + strong demand usually = high prices.

A wild card in this is the Nissan Z, the timing of it's launch vs. the BRZ, and what consumer demand will be for that car. Given my own past experiences with Nissan dealers, I'm sure all of them will continue to be as sleazy as ever and will squeeze and squeeze and squeeze every last nickel they can get out of every deal with ADMs and especially Nissan's rapacious new financing plans (8 year loans!). Some people might forgo the BRZ in favor of the Z, or they might leave Nissan dealers in disgust and head over to the Subaru and Toyota dealers, or the noise around the Z might increase the demand for sports cars in general.

Overall, I don't think there will be any bargains to be had with the new BRZ/86 for a while, at least into the second model year. After that, the crystal ball gets cloudy. Hopefully it will get no worse than dealers demanding MSRP. No matter how much I might want a car, I just would feel like too much of a sucker paying any ADM.

YMMV.

[TheDonEffect]

Can't complain about ADMs if you celebrate haggling a lower price. Frankly I wish we just sent to a fixed price system.

[Tcoat]

Originally Posted by TheDonEffect

Can't complain about ADMs if you celebrate haggling a lower price. Frankly I wish we just sent to a fixed price system.

Scion tried that. Where are they now?

[Dadhawk]

Originally Posted by Tcoat

Scion tried that. Where are they now?

So did Saturn.

[Tcoat]

Originally Posted by Dadhawk

So did Saturn.

And they are now with Scion.

[AnalogMan]

I don't know if the cause(s) of Scion's and Saturn's failures were their fixed-price no-haggle selling approaches. I seem to recall that Saturn's actually sold pretty well initially (my late mother-in-law bought one and absolutely loved both the car, and the hassle-free buying process).

I thought Saturn's demise was more due to the lack of product development. GM started something new, but then penny-pinched and starved it to death. What were innovative products in 1990 became mediocre by 2005. GM seems to have a habit of screwing up and killing off good ideas (Corvair, Fiero).

https://www.forbes.com/2010/03/08/sa...h=379237066ee3

It might have also been one of the problems with Scion as well. It usually comes down to the product -

https://www.thecarconnection.com/new...did-scion-fail

I personally would much prefer a fixed-price approach to buying a car. A car is one of the only major items we buy where we have to 'haggle'. We don't 'negotiate' the price of a television, or a gallon of milk, or clothing. Yet cars are stuck in the horse-trading thinking of the 19th century wild west. Obviously, dealers have a strong vested interest in keeping the negotiating system going, since they profit from it. Life is too short to waste hours and hours stuck with a sleazy car salesperson, playing all the old games, "let me check with my manager", "how do I get you into this car today", etc. etc. etc. (and no, I won't just 'pay what they ask' because I know most people pay less, it can be bought for less, and I don't like feeling like a sucker and being ripped off).

While some people might get a thrill out of 'negotiating' with a car salesperson, for me it's just an annoying waste of time that usually doesn't go anywhere. Maybe I'm just too old, have too little remaining time and value it too much, or have bought too many cars in my life. But I think a combination of a desirable product line plus a fixed-price selling approach could be appealing to many people. Too bad it probably won't happen.

[Tcoat]

Originally Posted by AnalogMan

I don't know if the cause(s) of Scion's and Saturn's failures were their fixed-price no-haggle selling approaches. I seem to recall that Saturn's actually sold pretty well initially (my late mother-in-law bought one and absolutely loved both the car, and the hassle-free buying process).

I thought Saturn's demise was more due to the lack of product development. GM started something new, but then penny-pinched and starved it to death. What were innovative products in 1990 became mediocre by 2005. GM seems to have a habit of screwing up and killing off good ideas (Corvair, Fiero).

https://www.forbes.com/2010/03/08/sa...h=379237066ee3

It might have also been one of the problems with Scion as well. It usually comes down to the product -

https://www.thecarconnection.com/new...did-scion-fail

I personally would much prefer a fixed-price approach to buying a car. A car is one of the only major items we buy where we have to 'haggle'. We don't 'negotiate' the price of a television, or a gallon of milk, or clothing. Yet cars are stuck in the horse-trading thinking of the 19th century wild west. Obviously, dealers have a strong vested interest in keeping the negotiating system going, since they profit from it. Life is too short to waste hours and hours stuck with a sleazy car salesperson, playing all the old games, "let me check with my manager", "how do I get you into this car today", etc. etc. etc. (and no, I won't just 'pay what they ask' because I know most people pay less, it can be bought for less, and I don't like feeling like a sucker and being ripped off).

While some people might get a thrill out of 'negotiating' with a car salesperson, for me it's just an annoying waste of time that usually doesn't go anywhere. Maybe I'm just too old, have too little remaining time and value it too much, or have bought too many cars in my life. But I think a combination of a desirable product line plus a fixed-price selling approach could be appealing to many people. Too bad it probably won't happen.

They weren't killed by fixed price. At least not fully. They both did very well at the start but sort of faded for many reason.
I also am not a guy to haggle prices but always go in for the extras to make me feel like I did something. Usually do really well at that actually.
Unfortunately many people love to feel that they somehow pulled one over on the dealership and they are the first person ever to negotiate a deal. If people really think they are somehow fooling the sales team with all the negotiating tactics then they are sadly mistaken. The sales folks see these things many times every single day and you are not fooling them with your great bargaining skills in any way. In the end they have always got exactly what they wanted since that is how they earn a living and they are not giving a single cent up that they didn't plan on. As long as people THINK they are getting special deals through their negotiating ten fixed reasonable pricing will never happen.

[Sasquachulator]

Saturn got stale and it was too late when their new product came and eventually it just ended up being yet another GM rebadge brand.

Scion had fuel efficient quirky JDM cars that no one had, but the second generations turned them into redundant bland Corolla variants.
Toyota tried to revive the brand with their overseas product but they could have just been branded Toyotas anyways....it was just pointless to keep Scion by this point.

[Dadhawk]

Originally Posted by Sasquachulator

Saturn got stale and it was too late when their new product came and eventually it just ended up being yet another GM rebadge brand..

Exactly, I owned a first gen SC and loved it. The next car they had I would have purchased wasn't until the end (the Sky Redline) which I was close to buying rather than the 86 but I needed the extra space the 2+2 gave me.

[Ernest72]

Originally Posted by TheDonEffect

Can't complain about ADMs if you celebrate haggling a lower price. Frankly I wish we just sent to a fixed price system.

Would not work. Because let’s say it’s a good deal and everyone wants one. Well demand would outstrip supply quick leaving none available to buy. If the price goes up with demand it should keep decrease demand. But people who have one will flip it for more money anyway. Econ 101. People want things and many are willing to overpay. Just look at the C8 market. Years from now you will get a C8 like you can get a C4. It’s life and unfortunately we have become an instant gratification society. What’s more important to you saving money or instant gratification.

[Sport-Tech]

The last car I bought was a dealer to dealer transfer, and when I got it home I found that my dealer had forgotten to take the originating dealer's invoice for the transfer out of the glove compartment, so I could see to the dollar how much my dealer made on the car - about a grand.

[TheDonEffect]

Originally Posted by Tcoat

Scion tried that. Where are they now?

So does Tesla.

Bottom line, if you're not going to adjust your marketing and product lineup, doesn't matter how you price it.

I remember back in 2005 when a buddy went to buy a TC, a hot commodity at the time, I was astonished how easy and straightforward it was.

[TheDonEffect]

Originally Posted by Ernest72

Would not work. Because let’s say it’s a good deal and everyone wants one. Well demand would outstrip supply quick leaving none available to buy. If the price goes up with demand it should keep decrease demand. But people who have one will flip it for more money anyway. Econ 101. People want things and many are willing to overpay. Just look at the C8 market. Years from now you will get a C8 like you can get a C4. It’s life and unfortunately we have become an instant gratification society. What’s more important to you saving money or instant gratification.

Well we would have to fundamentally change the way we sell and shop cars, and quite frankly the dealer unions won't have it. Tesla had the hardest time opening up in certain states because of the dealers. People once thought that people wouldn't buy things online, and now Besos is the richest man in the world.

For instant gratification, what would be easier than getting online, finding/locating the car you want, finish the entire buying process online, and then go and pick up the car? One of the biggest reasons companies like Carmax, Shift, Carvana, etc put traditional used car lots out of business was because they can more easily sell cars online (among a lot of other reasons too). No haggling, you like the car, buy it for the price, can be done all virtually, and they'll deliver the car to you oftentimes in under 48hrs, or you can pick it up almost immediately. If the same was applied to new car lots, no one would go back. What does everyone hate the most about dealing with dealerships? Dealing with them.

Don't get me wrong, I'm one of those masochists that actually enjoys the dance, but as I get older and busier, I find that I'm loathing it more and more.