Why are dealers such a rip off


ChipBeck

GT Owner
Staff member
Mark IV Lifetime
Le Mans 2010 Supporter
Feb 13, 2006
5,608
Scottsdale, Arizona
My bad......on purpose.

Wow! I guess my comments about experiencing more "bad" dealerships than "good" in the hunt for an LS were just way too controversial for the delicate eyes of the forum members and got censored! Sorry to be such a maverick with such wild observations.
Kendall,

Your post was fine and so were the other 14 posts I hid from view so I could selfishly push my lengthy blowhard post up onto the first page. :lol It had nothing to do with what anybody said. I have restored your post and will do the same for anybody else that requests it. Normally when I answer an original post with a lengthy response I catch it early enough to make page 1 or I'll respond in a Moderators Note. Sorry about that.

Chip

____________________

Moderator's Note

All posts have been restored. I'll try to control my urge get to the front of the line in the future!! Again, my bad.
 
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Superfly

HERITAGE GT OWNER
Mark II Lifetime
Jun 23, 2008
2,210
Edmonton, Alberta
Kendall,

Your post was fine and so were the other 14 posts I hid from view so I could selfishly push my lengthy blowhard post up onto the first page. :lol It had nothing to do with what anybody said. I have restored your post and will do the same for anybody else that requests it. Normally when I answer an original post with a lengthy response I catch it early enough to make page 1 or I'll respond in a Moderators Note. Sorry about that.

Chip
Chip, Noblesse Oblige my friend. With great power comes great responsibility. I'm glad to see you're cracking your moderator whip for personal gains! LOL Just joking brother.
 

nz05gt

GT Owner
Apr 28, 2006
380
taupo new zealand
There's a lot of questionable dealers out there and it seems they are out numbering the good ones! In our searches for the LS's, I spoke to reps from a couple of dozen dealerships. Certainly affirms my opinion that there is more bad than good. Sorry you are experiencing this, Neil. By the way, if it is by chance on the LS and the deal has fallen through, I can hook you up with Chip's buddy who will lock you in at $5K over MSRP. Just let me know. (Car is supposed to be a July build.)
I may just take you up on that I'm still working on this deal,and July would not be a problem as the 302s thats coming may be sometime in august so shipping 2 at once is cheaper
thanks
Neil
 

2112

Blue/white 06'
Mark II Lifetime
Some dealers don't know you can shear sheep over and over but cut them only once.
 

gtjoey

Keep Smiling - GT Owner
Mark IV Lifetime
Oct 14, 2005
3,437
I may just take you up on that I'm still working on this deal,and July would not be a problem as the 302s thats coming may be sometime in august so shipping 2 at once is cheaper
thanks
Neil
Neil......long time my friend.....so your issue is a NEW Mustang?, seems alot of us have brought this up? It shows though in their new consumer reports with a huge drop in quality and dealer LISTENING......I LOVE FORD, But after my wifes Honda deal.........its gonna be a long time.........sorry to hear what a lot of people are saying...Its a buyers market , the dealers are dying but somehow they still jerk around, even the euro's but not as bad as the big 3.....gtjoey1314
 

MAD IN NC

Proud Owner/ BOD blah bla
Mark IV Lifetime
Feb 14, 2006
4,198
North Carolina
Neil......long time my friend.....so your issue is a NEW Mustang?, seems alot of us have brought this up? It shows though in their new consumer reports with a huge drop in quality and dealer LISTENING......I LOVE FORD, But after my wifes Honda deal.........its gonna be a long time.........sorry to hear what a lot of people are saying...Its a buyers market , the dealers are dying but somehow they still jerk around, even the euro's but not as bad as the big 3.....gtjoey1314
Yo Neil..... Long time. Good luck... and somebody please tell me what Joey said...

BTW - I CANT WAIT FOR THE AROUND THE WORLD IN 80 DAYS POSTINGS GUMBA!
 

Triheart7

GT Owner
Mark IV Lifetime
Apr 3, 2007
2,540
Northern California
Hi Neil,

That dealership that you checked out the Laguna Secca Boss Mustang is an example of a dealer who is primarily interested in making money, and not really a car guy. Other Dealers such as Dave Hellenge in Sacramento, is a big car guy and is fair in his fees and does not do crazy mark ups!
 

Chris A.

GT #32
Mark II Lifetime
Feb 6, 2007
1,201
Ortega Mountain, CA
and somebody please tell me what Joey said...
Perhaps this link might come in handy http://mybigmonkey.com/gibberish/
 

canuck

GT Owner
Mar 4, 2006
280
The dealership purchasing process is made to grind on you.
My dad once said this is what these people do day in and day out and it is their living. The number of cars you buy compared to what they sell eclipses your abilities compared to theirs in the "game". If they know you want the car that bad and refuse to accept your reasonable offer the best thing is to show them your behind fading away or you will be getting it in your behind.
 

Kingman

GT Owner
Mark II Lifetime
Aug 11, 2006
4,072
Surf City, USA
After making your presence known to the sales manager and laying out the deal you want, they will attempt to bring you back to a salemen's desk and wear you down as stated above. That is when you walk out and call the SM back while driving away telling him - 'I can't believe you just let me walk out'.

I don't let them play their game. I play mine.

I have always received the deal I wanted in the first place. Refuse to deal with anybody but the SM.
 

PILOTJPW1

GT Owner
Mark IV Lifetime
Sep 22, 2005
867
Maryland
Here we go again.

Please post your profession. So I may assume and bash at will.
 

nz05gt

GT Owner
Apr 28, 2006
380
taupo new zealand
Here we go again.

Please post your profession. So I may assume and bash at will.
National service manager is my profession
 

gtjoey

Keep Smiling - GT Owner
Mark IV Lifetime
Oct 14, 2005
3,437
Yo Neil..... Long time. Good luck... and somebody please tell me what Joey said...

BTW - I CANT WAIT FOR THE AROUND THE WORLD IN 80 DAYS POSTINGS GUMBA!
Hey babe, if im going to Amelia Island next march, you in for steaks along the way?:thumbsup
Was trying to be discreet Neil is part of a purchasing group who has VERY SUCCESSFUL FORD RACE DRIVERS IN HIS GROUP. You would think there would be a person to cater to these guys , a Steve Denmbi of the Gt's at the time.....
I think thats what Neil means, Ive heard this from a couple of people that wanted to buy a New mustang 302/Laguna Seca......
Its a great car, but you have to cater to a guy spending this kind of money...Yes 60 +grand today is alot of money...
There is alot of competition from ALL manufacturers...
After a total culture shock of purchasing a HONDA PILOT....its easy to understand what Neil means........
This isnt a Ford culture thing only , but the SMALL THREE are worse than most....I dont want to start a whirl wind, just my opinion...GTJOEY1314:thumbsup
 

ChipBeck

GT Owner
Staff member
Mark IV Lifetime
Le Mans 2010 Supporter
Feb 13, 2006
5,608
Scottsdale, Arizona
How dealers actually work.

Chip/DBK,
If you think this is inappropriate please delete. I can't understand how you can make a deal with a salesman [can't deal direct with manager] and then they will come back and say that the sales manager or owner says he can get more or wants more. Is this how the US dealers actually work or are there some that actually think it's good to not ripoff the client. Just interested in you comments. It never used to be this hard to buy a damn car. :frown

Cheers,
Neil
Neil,

1. You can deal direct with a manager at just about any dealership. I do it all the time. For example, if my sister wants a Mercedes I call a couple dealerships that sell them and ask to speak to the fleet manager. I identify myself and ask the manager how much over invoice he would charge me for a XX series. I require a photo copy of the invoice. The price may or may not be different if I'm willing to order and wait. Any fleet manager is happy to sell cars one at a time BUT.....he does not have time to waltz you all over the lot looking at cars for hours, going on multiple test drives, spend 30 minutes taking your credit application, and then having you go home and "think about it" after he wasted two hours.

2. It's not hard to buy any car. The price is on the window sticker. Pay it and drive away. If you pay full list price the dealer will only make 7 to 10%. Probably the lowest percentage markup on any thing you'll buy all month and that's if you pay full list. Buy a new shirt or pair of shoes and you'll pay a 100% markup and the dealer will not negotiate or take your old shirt in on trade. If it's a very limited production car like the Boss 302 where demand greatly exceeds supply, the dealer may charge more than list. The vast majority of new cars are sold for well under list price.

3. Sales people are necessary because most auto transactions are very time consuming, require trade appraisals, credit applications, test drives, funds verification, etc and add to that fickle customers, 90+% of whom never make decisions in their daily lives and are afraid to make one buying a car.

4. If you choose to deal with a sales person you should know up front that you will need to pay for his services and that he does not own the cars he is selling so he must get any deal OK'd. It's no different than buying a house. You can't "make a deal" with your real estate agent and then be pissed because the home owner does not accept it.

5. What really bothers me is the notion that any new car deal, even at list price, is a "ripoff of the client". The new car business is one of the most competitive and toughest ways to try and make a living. The ONLY car companies that allow most of their dealers to make money selling new cars after paying flooring, commissions, inventory, maintenance, and other costs are Honda, Toyota, and Mercedes. My new car department lost money EVERY YEAR FOR 20 STRAIGHT YEARS!!! I had GMC, Pontiac, KIA, and Lotus franchises. Dealerships need to cover that loss with service, body shop, parts, used car sales, and finance & insurance business. Most dealerships struggle to make 1% on total sales every year. The real studs with the best franchises might make 2%. Ripoff my ass.

We buy an Apple Powerbook and Apple makes 50% and that's fine. We buy a candy bar and the store makes 125% and that's fine. We buy a new house and the builder makes 20% and that's fine. We go out to dinner and our favorite restaurant makes 80% and we leave a 20% tip and that's fine. BUT THEN.....we buy a new car burning several hours of dealership personnel time and the dealer makes 6% and that dealer is a f**king ripoff who doesn't give a damn about his customers and the whole car business is filled with a**holes!!!

The reason that people are fine paying 50 to 200% markups on many purchases but are pissed off about a 6% markup on a car is because car dealers must negotiate and dealers of most other products have fixed prices. Negotiating on cars is necessary because trade ins and financing are often involved. Most people think cars are marked up 20 to 40%, the actual markup at list is about 5% on small cars and 10% on big cars. A lot of people are afraid they will pay more than the next guy so they make offers that are 10 or 20% below the dealers cost and when the deal does not get approved and management makes a counter offer, he's a greedy rip off artist.

Let me give you a little insight into how difficult it is to sell cars. Only 1/3 of customers today have good credit and a reasonable down payment. 2/3rds of the public require "special financing" for bandits who don't pay their bills regularly and/or have little or no money to put down. 50% of car deals never get delivered because financing can't be found. Customers pass bad checks, lie about mileage on their trades, lie about clear titles, some just want to joyride in a new car, and whole families come in every weekend just to feed on the free hot dogs and soda. Everybody comes in with a chip on their shoulder and a bad attitude expecting "the big ripoff".

My biggest frustration as a dealer who really tried to make it a good experience was getting beat in total sales by very high pressure dealers. Customers would come in and tell me all the time what a lousy experience they had buying a new car at my competitor's dealership BUT THAT'S WHERE THEY BOUGHT. They would tell me that we were much nicer at Beck Pontiac-GMC, but they responded to the high pressure at Showcase Pontiac-GMC and bought there.

So most customers reward dealers who they feel treated them poorly by buying a car from them and then they bitch about the experience. Ah...OK.

So here's my summary. If you know what you want and will sell your own trade, call the fleet manager and get a price. Don't waste his time. If you require a lot of time, assistance, and hand holding (which most average customers do today), you'll need a sales person and you'll have to pay for it just as you need to pay for a waiter or a real estate agent. But no matter how you buy a new car, even if you pay full list price, it will be the lowest percentage markup on just about anything you buy all year. Compared to the absurdly low markup on a new car, everything else you buy is a "big ripoff" and that car is the best deal you have made in a long time.

Chip Beck

Former Auto Dealer (who got tired of the carping about 6% car markups and now enjoys selling you sodas and car washes at a 300% markup at my Chevron and you are happy to pay it!! Cheers.)
 
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BlackICE

GT Owner
Nov 2, 2005
1,415
SF Bay Area in California
Nice post Chip.

Gasoline has a very low markup, but the soda, beer, etc have more.

Kind of like the car business where the cars have low markup, but service and parts have better margins.
 
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Tomcat

GT Owner
May 23, 2013
954
North Carolina & Perdido Key
I think major brand dealers have evolved to respond to the "general public"...and this forum is populated by enthusiasts that are under-represented by the majority of the population.
 

Indy GT

Yea, I got one...too
Mark IV Lifetime
Jan 14, 2006
2,435
Greenwood, IN
Another great post Chip. And long overdue as our Forum membership has many new faces I am sure.

For those new to our Forum and wish to read another of Chip's literary treatises, I suggest you search out his comments on gasoline. Another of his favorite topics and one which he also has depth of experience.
 

david b

GT Owner
Jun 10, 2010
343
cleveland ohio
Chip,

I agree with you on your points. I think the 95% as you put it always seem to amaze me in decisions buying habits and in general life habits. Appreciate the insight from an insider.
 

STUNTS

FORD GT OWNER & LITTLE TIMMYS DAD!
Mark IV Lifetime
Apr 5, 2006
2,418
SoCal
Well, it's been a while since I read all posts on a thread, and I read through this one with amazement, laughter, a little sadness but in the end.... got (yes I said, GOT) here to type whatever it is that will come to mind... so lets see what it is...

True to what everything Chip said, loved the actual insight of the ongoings internally with dealerships.

True to the categorizing of of consumers, surprised that it's 5% and 95% thought it would be a little more 20%-80% but that's just assumption on my end :(

Loved that everyone who commented on their post being deleted didn't actually see that it was put back.... It made me confused but also made me feel a little sharper than the average shed tool :) and then I saw Chips post where he admitted in the court of GT Law as to what he did :) HAHAHA LOL Great stuff

So, I've had my great deals with cars but unfortunately and I've mentioned it numerous times here before, not with my GT..... I consider myself the 5% but at times like to be in the 95%, I guess that's because of marriage ;)

The one thing that amazes me is that no one else here seems to ever admit paying way over msrp on their GT??? I know I wasn't the only Duesche bag (spelling, sorry)

Let me get back to the topic...

The one thing where I think everyone is cautious or aware of when buying a car is the IMMEDIATE depreciation when you drive off the lot. This still to this day amazes me.
Pay whatever it is, 10% over, 10% under... drive off and lose 10%-20% of your well earned money you just spent.... Not sure as to why the market has dictated this event but it has and it stays with us, on most if not all daily driver cars anyways.

I understand that if anyone made a product that lasted forever, they would eventually lose sales or go out of business because their product is so GREAT... It's the scam in the lighting industry... They are meant to fail because going to pick up another box of lights for $1.99 is a lot easier than spending 30 minutes and trying to figure out which bulb it is that is causing the whole strand to go out :)

Now we could argue until we are blue in the face about depreciation on consumer products but its the immediate gratification we get with that product.... I think we get board with cars and don't need to get a new car every other year, but we do, or I use to... This is the longest I've gone without buying a NEW car... 6 years... My GT was the last NEW car I bought from a dealer

Ok, pay 300% over for a can of soda, but you buy that soda knowing what it's for... to soothe your taste and refresh your something or other... and 5 minutes after it's gone, it served it's purpose and did exactly what you expected.. POSITIVE REINFORCEMENT

OK, pay 10% over or under for a vehicle.... super excited for about 3 months (daily driver) 1 year and 9 months later, you're bored and decide to sell privately or trade to a dealer and you still take a bath on it :( who do we blame? not ourselves, the dealer gets blamed.... so we are pissed and don't want to blame ourselves, after all we the public do still determine the market on most consumer products, don't we???

I don't know, it's all soooo confusing.......

Sometimes I find it easier to just take the blame myself, I guess because of marriage :)

So what was the lesson?
Maybe that the grass will always be greener on the other side?
To never let stunts type another post again?
TO take this MAC (sorry HHGT) out of my hands now!!!!!

I just don't know.........
:wink
 

nautoncall

GT Owner
Mark II Lifetime
Apr 6, 2014
1,036
I think major brand dealers have evolved to respond to the "general public"...and this forum is populated by enthusiasts that are under-represented by the majority of the population.
So are you saying the "high end dealers" are better or worse?