Ford and GM not happy with their dealers

[RetiredAndLovingIt]

It was reported on my local news this morning that both Ford and GM are letting their dealers know that overcharging for their vehicles is not okay.

https://ktla.com/news/money-smart/ford-gm-tell-their-dealers-to-stop-ripping-off-car-buyers-or-else/

 

[Sunset]

I think the manufacturers don't want to be blamed for the price gouging and want to look like the good guy.
Otherwise some customers might actually switch brands

 

[Bamaman]

I worked for one of the auto manufacturers for 24 years, and I can promise you that the dealers are not at all happy with the availability of new autos and trucks.

The auto manufacturers of the world should have never put all their eggs in one basket--with electronic component suppliers. They should have spread their business around and had suppliers where they build vehicles.

Auto dealers have incredible fixed expenses with buildings, taxes and utilities to pay for. And they have employees salaries and fringe benefits to pay monthly. When there is nothing to sell, they've got to make changes somewhere to pay the fixed expenses. And unfortunately most cannot do much other than to layoff employees.

I worked throughout the Jimmy Carter Voo-Doo economics days of 1980. And I was personally closing down new car dealerships one by one when they couldn't make ends meet with 20% floorplan charges. It was demanding times.

So unhappiness goes in both directions.

 

[brett]

I believe it will lead an even higher percentage of internet sales.

We were considering an upgrade. Will not bother now for at least another year, perhaps two.

 

[street]

Interesting!!
I mentioned in another thread about not all dealers are price gouging any way not around here.
I still believe if a dealer is asking over MSRP I would be looking for a new place to buy an outfit.
I think it is just a bad deal when companies take advantage of consumers. It is also our job to do our homework as well to avoid these companies.

 

[street]

I worked for one of the auto manufacturers for 24 years, and I can promise you that the dealers are not at all happy with the availability of new autos and trucks.

The auto manufacturers of the world should have never put all their eggs in one basket--with electronic component suppliers. They should have spread their business around and had suppliers where they build vehicles.

Auto dealers have incredible fixed expenses with buildings, taxes and utilities to pay for. And they have employees salaries and fringe benefits to pay monthly. When there is nothing to sell, they've got to make changes somewhere to pay the fixed expenses. And unfortunately most cannot do much other than to layoff employees.

I worked throughout the Jimmy Carter Voo-Doo economics days of 1980. And I was personally closing down new car dealerships one by one when they couldn't make ends meet with 20% floorplan charges. It was demanding times.

So unhappiness goes in both directions.

I know that statement is true for all businesses just not an auto industry.

 

[PaunchyPirate]

They need to dismantle the virtual monopoly that the car dealership concept has on auto sales. Enable fully independent internet sales directly from the manufacturer.

 

[VanWinkle]

They need to dismantle the virtual monopoly that the car dealership concept has on auto sales. Enable fully independent internet sales directly from the manufacturer.

Service dept concept may go away completely though. Independent mechanics could take up some of the slack, but training would be a must for quality repairs.

 

[Mr. Tightwad]

Bought my new car on the internet 4 days ago.

 

[ExFlyBoy5]

Service dept concept may go away completely though. Independent mechanics could take up some of the slack, but training would be a must for quality repairs.

And very, VERY expensive proprietary software that many independent shops have to pay for but must have for late model cars.

 

[Car-Guy]

Service dept concept may go away completely though. Independent mechanics could take up some of the slack, but training would be a must for quality repairs.

I aviod dealership service departments like the plague. In my experaince they break (mess up) two things for every one thing they fix. I will take mine in for warranty work if it's an expensive item, otherwise I prefer to just fix it myself. YMMV

 

[RetiredAndLovingIt]

I worked for one of the auto manufacturers for 24 years, and I can promise you that the dealers are not at all happy with the availability of new autos and trucks.

The auto manufacturers of the world should have never put all their eggs in one basket--with electronic component suppliers. They should have spread their business around and had suppliers where they build vehicles.

Auto dealers have incredible fixed expenses with buildings, taxes and utilities to pay for. And they have employees salaries and fringe benefits to pay monthly. When there is nothing to sell, they've got to make changes somewhere to pay the fixed expenses. And unfortunately most cannot do much other than to layoff employees.

I worked throughout the Jimmy Carter Voo-Doo economics days of 1980. And I was personally closing down new car dealerships one by one when they couldn't make ends meet with 20% floorplan charges. It was demanding times.

So unhappiness goes in both directions.

I agree with what you say but isn't there a very nice profit built into MSRP plus extra advertising allowances and rebates back to dealers?
I think there is a lot of smoke and mirror games that are played in the car business. I remember for a while dealers were advertising pay $100 over actual dealer invoice, they would be out of business in no time if that was really true. Are dealers lost leaders truly lost leaders, I don't think so.
I have no knowledge of it but I would hazard a guess that there is a minimum of at least 10K profit if the vehicle is sold at MSRP after all the rebates, allowances, credits etc have been refunded to the dealer and that's on a standard low end car.
I always have bought the advertised special or took the ad to another dealer and asked them to match it.
My last 3 vehicles,
Mitsubishi MSRP $27K, I paid $21K
Hyundai MSRP $24K, I paid $19K
Chrysler MSRP $17K, I paid $8888 My best deal ever. Took a lot of work and a complaint
to the DMV on this one to make dealer honor his ad.



I think we're going to see lots of changes to the car purchasing experience in the near future.

 

[travelover]

I think the manufacturers don't want to be blamed for the price gouging and want to look like the good guy.
Otherwise some customers might actually switch brands

Car dealers have very strong protections from their own state governments and they are independent businesses. When I worked for MegaMotors, I was amazed at the crap the dealers could get away with due to state laws.

 

[RetiredAndLovingIt]

Car dealers have very strong protections from their own state governments and they are independent businesses. When I worked for MegaMotors, I was amazed at the crap the dealers could get away with due to state laws.

And a lot of donations to their local congressman and lunches with the mayor and other leaders.

 

[aja8888]

The real money in dealerships is made in the service department and arranging financing.

 

[travelover]

The real money in dealerships is made in the service department and arranging financing.

And re-selling used cars.

 

[JoeWras]

And a lot of donations to their local congressman and lunches with the mayor and other leaders.

For some reason, my eye twitched and I read it as "donations to their local cousin and..."

Might as well be. In my state, too, the relationship between dealers organizations and politicians is nearly incestuous.

 

[Buckeye]

And enough with the gaslighting about inflation. Dealers have the upper hand right now and they are making buyers pay.

 

[CoolRich59]

To quote Claude Raines, Ford and GM must be shocked, shocked to discover their dealers have been using the inventory shortage as a pretext to gouge prospective buyers.

Last Fall, I totaled the DW’s SUV and had to go looking for a replacement vehicle. So, I got to experience a little of this treatment. My “favorite” was the local Kia dealer where I was quoted a “dealer adjustment” of $8,500 over MSRP.

 

[youbet]

Sounds like supply/demand theory might be true!

 

[USGrant1962]

Sounds like supply/demand theory might be true!

+1

 

[ERD50]

Interesting!!
I mentioned in another thread about not all dealers are price gouging any way not around here.
I still believe if a dealer is asking over MSRP I would be looking for a new place to buy an outfit.
I think it is just a bad deal when companies take advantage of consumers. It is also our job to do our homework as well to avoid these companies.

Your call, but I've never understood this fascination with MSRP. It's just a number. What's important to me is my out-the-door cost, and did I get good value for my $'s.

So what if MSRP for Car A is $30,000 and Car B is $33,000? What if the general public sees Car A as a better car overall? Then it is perfectible reasonable to pay over MSRP for Car A, or under MSRP for Car B.

Sounds like supply/demand theory might be true!

Agreed. The term "gouging" should not be used for normal supply-demand action. It's not like the car dealers can force you to buy their product. There's only one entity I know of that can force you to pay for something you may not want, or at least not at that price - maybe the "gouging" term should be applied to them when it fits?

-ERD50

 

[street]

Price gouging occurs when a seller increases the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair. Usually, this event occurs after a demand or supply shock. ... Price gouging may be considered exploitative and unethical.

It all comes down to buyers choice and MSRP it is the only number to work from and go forward to a purchase. Is MSRP accurate I have no idea, but I would hope the auto companies are creditable that those numbers are true legal numbers for cost of the outfit and being truthful.
I personally use that MSRP as a point to start negotiating a lower price or if it doesn't happen, I move on to another. It is the only number I can go from because that is a number, they give me. I have bought outfits where one doesn't move and one down the street on same vehicle (apple to apples) I have got 5K lower in price.

 

[ERD50]

Price gouging occurs when a seller increases the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair. Usually, this event occurs after a demand or supply shock. ... Price gouging may be considered exploitative and unethical.

It all comes down to buyers choice and MSRP it is the only number to work from and go forward to a purchase. Is MSRP accurate I have no idea, but I would hope the auto companies are creditable that those numbers are true legal numbers for cost of the outfit and being truthful.
I personally use that MSRP as a point to start negotiating a lower price or if it doesn't happen, I move on to another. It is the only number I can go from because that is a number, they give me. I have bought outfits where one doesn't move and one down the street on same vehicle (apple to apples) I have got 5K lower in price.

"reasonable or fair" is in the eye of the beholder. And if you don't think it is "reasonable or fair.", then don't engage in the transaction. As I said, no one can force you.

"Price gouging may be considered exploitative and unethical." - or factually, it is simply a response to supply/demand. Interfering with supply/demand may be considered exploitative and unethical.

-ERD50

 

[aja8888]

"reasonable or fair" is in the eye of the beholder. And if you don't think it is "reasonable or fair.", then don't engage in the transaction. As I said, no one can force you.

"Price gouging may be considered exploitative and unethical." - or factually, it is simply a response to supply/demand. Interfering with supply/demand may be considered exploitative and unethical.

-ERD50

Historically, it's a known fact that for decades, dealers have sold cars and trucks at a discount to the MSRP price (Moroney sticker - suggested retail pricing). This has been "business as usual" and nothing except this shortage has changed that. I would expect that once the supply issues are normalized, vehicle sales will go back to "business as usual".