New Car Buying Hasn't Changed

[Mr._Graybeard]

We had a local Ford dealer that had been around for years just change ownership. It's now a proper name like PETER GIBBONS FORD (not the actual name). Much of their advertising has been along the lines of "PETER WILL GET YOU THE BEST DEAL EVER!" I was curious as to who this character is and for the life of me, I couldn't make a definite determination that it's even an actual person. They also have one of the worst logos I have ever seen...the stickers they put on the back of the car are VERY LARGE and just the initials PGF...probably a good 10"x8".

Hey, Pete's website says they're pet friendly. Next time you want to buy a car, bring your rottweiler along.

 

[ExFlyBoy5]

Hey, Pete's website says they're pet friendly. Next time you want to buy a car, bring your rottweiler along.

 

[JoeWras]

They also have one of the worst logos I have ever seen...the stickers they put on the back of the car are VERY LARGE and just the initials PGF...probably a good 10"x8".

As part of the deal, have it in writing that the dealer won't install any stickers or advertising. If it is already on, they can take it off.

There's no law that says you need to carry that crap around for them.

 

[ExFlyBoy5]

As part of the deal, have it in writing that the dealer won't install any stickers or advertising. If it is already on, they can take it off.

There's no law that says you need to carry that crap around for them.

I have never had a decal on a car. Either I made sure it was of the vinyl type that is very easy to remove or it's in the purchase contract to have it removed and any damage fixed.

 

[MichealKnight]

I love other retail. I walk into a bid-box. I get helped by someone who is either competent, or part of the Making Pot Smoking Great Again talent agency. I pay full sticker. They don't take my trade in. They tell me a 4 hour window of delivery,, I don't tell them. they make me pay upfront for everything. Full sticker price and little service.

Eliminate the whole 'get the best deal'. Full Price, Full Sticker, every time. That's what I want. Hey, I got money to burn....

 

[MichealKnight]

One bit of positive news on this....

Slowly those individual dealers .....are selling out to the Big Dealer Chains. (I know intimately about this....I've contributed to it). So now, slowly - in metro markets, the same family or entity will control almost all, or ALL of the retail activity for a given car brand. So then there's no more "I'm going to the other guy to get a better deal" - because they other guy is the dealer's brother, or himself. The Big Chains? They earn more profit per car than the invidudual rooftop dealer. Look at Lithia, AutoNation - their profits per car - way more.
This allows the big guys to add higher fees, increase labor rates. (Of course, their margins won't be close to the local jewelry store....or many other retailers)

But still, there will be less people controlling bigger chunks of the retail chain. This semiconductor shortage has given them a nice taste of monopoly pricing. Net Profits at dealerships are a record high. In a decade it'll be even higher - the only thing that'll be reduced is the jobs that pay $40k-$75K plus benefits.

So eventually, the whole model will be like Tesla..... Full Price, is a Fair Price. So be patient, soon it'll be like that.

 

[Out of Steam]

A lot of businesses have learned that keeping supply below demand is extremely profitable.

I believe it will be a permanent part of retailing for many types of things.

 

[RobbieB]

Yeah baby! Capitalism at the finest.

Supply chains, covid closures, ships anchored out at sea. Poor poor pitiful me.

That's why King Crab and Lobster are high and gas is $5/gal.

Oh yeah, prices are going up!

 

[GTFan]

So eventually, the whole model will be like Tesla..... Full Price, is a Fair Price. So be patient, soon it'll be like that.

I don't believe this at all, but it would be way better to not have to put up with all the BS people do today, which is why Carmax, Carvana etc. are so popular.

 

[brett]

One of our dealerships claims that 40 percent of their new car retail business is internet based.

 

[Mr._Graybeard]

I don't believe this at all, but it would be way better to not have to put up with all the BS people do today, which is why Carmax, Carvana etc. are so popular.

Again, I was very happy with the local small-town, family-owned dealership I bought from. The little fish are still around if you can live with a "legacy" domestic brand. The stores have always had to rely on repeat customers to stay afloat, and the Internet is forcing them to be more competitive in price.

Slightly OT, the first 5K miles in my 2021 Ford Ranger SuperCab have been outstanding. The little 2.3L Ecoboost four is putting out 310 pound-feet of torque into a 10-speed trans, making throttle response very quick. It's rated to tow 7500 lbs, which is way more capacity than I need. I'm getting about 22 mpg average, although that's dropped a bit recently with the arrival of winter. A big thumbs-up for this model.

 

[Midpack]

Some aspects have changed (online tools), but some traditions have not (stalling, obfuscation, even lying in some cases). Many customers are pretty naive, or car salespersons would change their tactics - if it ain't broke... If a dealer can tell you're wise to the traditional tactics, they will drop some of them IME.

 

[MichealKnight]

Indeed

I don't believe this at all, but it would be way better to not have to put up with all the BS people do today, which is why Carmax, Carvana etc. are so popular.

Yes, and the gross profit per car at Carmax- is 20%-30% *MORE* than the traditional dealer.

Hence, absolutely - traditional dealerships are consolidating. And once there's less of them, AND that final quantity of dealerships is controlled by the same entities...they'll be just like CarMax: No BS! Just pay what we tell you to pay. You're happy, and we laugh all the way to the bank.

Everybody....'wins'.

 

[MichealKnight]

I don't believe this at all, but it would be way better to not have to put up with all the BS people do today, which is why Carmax, Carvana etc. are so popular.

Mind you, just walk in and tel them:

"I want to pay what's on the sticker"

I doubt they'd argue. "BS" eliminated....

After all, that's why Carmax is popular.....

But either way, full sticker price will eventually be the industry norm. Not tomorrow, but one by one, the local monopolies are flexing muscles. (I've helped them do it in 2 metro markets...and they are loving life right now. )

 

[CatinKS]

My company provides me with a vehicle. The company buys at a discount since they negotiate a package deal for a group of vehicles. I have compared the actual dollars paid to the sticker price. Granted this doesn't apply to today's market, but have determine that my company has been paying between 82% - 84% of the sticker price depending on if it was a pickup or SUV. I start my negotiations at 80% and have ended up paying near my company's discount. Maybe this isn't' a great idea, depends on how well the company is negotiating. It does give me a range I feel like I'm not getting totally gouged. My last purchase in 2018 took the dealership a week to come back to my price. It is best, not to feel like you must buy within hours of first talking to the dealer. Again, today this probably not happening as inventory is so low.

 

[foxfirev5]

My neighbor just went through the process. Of course they normally buy/lease every couple of years. A miserable experience for them. I told them I do everything I can to avoid the process. That's why I have an 18 year old Lexus and a new Toyota RAV4 (frugal retirement). My goal is reduce the number of transactions. Whether it be homes, cars or investments, every time you buy or sell something it has a cost. Overall my transaction costs are nil.

 

[GTFan]

Mind you, just walk in and tel them:

"I want to pay what's on the sticker"

I doubt they'd argue. "BS" eliminated....

After all, that's why Carmax is popular.....

But either way, full sticker price will eventually be the industry norm. Not tomorrow, but one by one, the local monopolies are flexing muscles. (I've helped them do it in 2 metro markets...and they are loving life right now. )

And then each dealer group in a market gets sued for antitrust or class action price fixing, because there's no price competition in a normal supply-and-demand market (i.e. not the market we have now, the pre-Covid market). Assuming they all insist on full sticker, that is.

Tesla gets away with this because there's no dealers. I don't think a bunch of dealers in one town do if they all agree to charge full price.

 

[FLJim]

I have never had a decal on a car. Either I made sure it was of the vinyl type that is very easy to remove or it's in the purchase contract to have it removed and any damage fixed.

On all my contracts: "Should dealer desire to apply advertising to my vehicle, he agrees to pay $300 base charge and $49.95 per month thereafter as long as advertising remains on my vehicle." Has worked so far - no stickers on my last 4 new cars. MANY years ago dealers had chromed dealership logos DRILLED in truck lids and affixed permanently. apparently customers liked chrome!

 

[MichealKnight]

Correct - in a perfect world

And then each dealer group in a market gets sued for antitrust or class action price fixing, because there's no price competition in a normal supply-and-demand market (i.e. not the market we have now, the pre-Covid market). Assuming they all insist on full sticker, that is.

Tesla gets away with this because there's no dealers. I don't think a bunch of dealers in one town do if they all agree to charge full price.

True, a bunch together - it gets messy.

But instead of "8" people - owning "8" different dealerships in Metro-Town, USA... ..let's say there's now 2. Or even 3. They now control Google search - for that market. They control recalls and warranty - for that market. Do they sign a contract to fix prices? Nope....do they go golfing and chat? NO COMMENT....and then....they will end up doing it the sacred Tesla, CarMax way: Full Price, pay full sticker, and you can say there was no BS. Hey, it's only money Jonesy.

Also, the big groups - the chains - they keep getting bigger. Again, evil single rooftop dealers- sell out for big money to them. And this isn't just one town....it becomes regional, even national as Time goes on so is that a monopoly? Nope....it just means that they have higher gross profit standards per sale - because they have shareholders to answer to. So guess what surrounding dealers do?? They also enjoy the higher margins. These BigGroups - are very talented and sophisticated. Their profits per car are....well....you don't believe them till you audit for yourself.

In the end, it'll be higher profits, for less entities. The entities left over have it maid - higher labor rates, and no "gimme your best deal...." - because sticker is the best deal. Right now, during shortages - over sticker is a deal. They are getting a taste of it, and they know eventually competition comes back when supplies normalize it - - but big dealer grouse and manufacturers are now having dialogue on how to have less competition - and forever higher gross profits. And hey, the customer can have the Tesla Carmax experience "I paid what they told me to pay, woo-hoo".... which is great. Everyone....wins, I guess.

Also, the good part will be more manufacturer controlled service departments. Dealers will share them....but they won't be directly responsible for levels of service but this is perhaps 2030-2034 because of real estate ,etc.

Writing is on the wall.

None of the above is opinion: I've intimately, personally seen it all my life.....and I've contributed to it and benefitted from it.

 

[MichealKnight]

On all my contracts: "Should dealer desire to apply advertising to my vehicle, he agrees to pay $300 base charge and $49.95 per month thereafter as long as advertising remains on my vehicle." Has worked so far - no stickers on my last 4 new cars. MANY years ago dealers had chromed dealership logos DRILLED in truck lids and affixed permanently. apparently customers liked chrome!

I wonder if I can tell the Apple Store that. I got that darn Apple thing on my computer, everyone sees it when I'm out and about using it. Also those pesky "This house is protected by ADT" lol

 

[MichealKnight]

One more thing I forgot, re monopoly.

If the manufacturer - be it Toyota, Lexus, Ford...etc sets a "Minimum Retail Price" - the dealers 100% are in compliance to follow it. And guess who sits on Dealer Boards that represent dealers to the OEM? Yep, dealers do.

Problem is there's too many darn evil dealers out there -- and when a OEM tries this.....many dealers want to.....but there's that one guy in town "I wanna outsell all of you!!!" and he discounts heavy - and then others have to follow suit.

But slightly - it's starting. For instance that Hummer that's an "ev!" you know, "EV" the neatest thing since Micheal Jackson did the moonwalk....... they've told dealers what the fixed margin is - comply or else. No discounts, nothing.

As the dealer ranks get trimmed...... there's 20 ways to say "no more discounts".....it's just time and attrition now.

There's other stuff associated with this......but I find that rank and file online feel their Google search trumps it so I won't bring it up. All I know - there's a reason why big public corporations....are overpaying for dealerships ..... they know they gonna have fun as this gets "more consumer friendly, without BS"

 

[Out of Steam]

My neighbor just went through the process. Of course they normally buy/lease every couple of years. A miserable experience for them. I told them I do everything I can to avoid the process. That's why I have an 18 year old Lexus and a new Toyota RAV4 (frugal retirement). My goal is reduce the number of transactions. Whether it be homes, cars or investments, every time you buy or sell something it has a cost. Overall my transaction costs are nil.

I drive a lot of miles, and would prefer to keep my cars only 5-6 years. Going through the buying process is daunting enough that I drive them years longer than I really want to.

I got caught by the car shortage with a car at the top of that age range. Not happy about the prospect of paying over list price for a replacement.

 

[FLJim]

Capitalism and with it, supply and demand. For years MSRP was the starting point for the discounts we all wanted. Today it is the starting point for the added profit the dealer wants. The pendulum will likely swing back eventually, sooner or later. When it does, then time to buy. Or buy now and pay what the market demands. Simple.

 

[teetee]

With the pandemic and chips shortage, the timing of buying a car in 2021 is just awful. It always reminds me driving is a privilege.

Consumers and car shoppers can compete with dealership because dealerships are working together.

Sent from my Moto G (5) Plus using Early Retirement Forum mobile app

 

[ArmchairMillionaire23]

Again, today this probably not happening as inventory is so low.

I drive by a Toyota and a GM dealership everyday on my way to w*rk. The Toyota dealership has an expansive empty lot in front of the showroom. The only vehicles they have on the lot are trade-ins. There might be one or two new ones inside but out in front of the building there are only used vehicles for sale.
The GM dealership might have 2 or 3 trucks at most on their lot, with 10 or 12 used (trade-in - non GM) vehicles out by the road to make it look like they have stuff for sale.
It looks like the days of test driving the vehicle you want are gone for now.