Markups and more: The Death of Car Dealerships

[ElpacoSV]

What do you guys think about this?

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[zeroptzero]

My dealer sells all of their cars at MSRP, not a single complaint about them and I would prefer to buy cars from them rather than some other format. The bad dealers need to go, but not all dealers are bad.

They have a business to run and employees to keep working so they have to make a profit, and the past 2 years have been extremely hard on all dealerships Some have found inventive ways to make more money on fewer sales, their sales numbers have to be way down compared to previous years.

 

[Jimi]

American problem, against the law in Canada and UK. I guess USA is built off greed

 

[Whitboy82]

American problem, against the law in Canada and UK. I guess USA is built off greed

And yet tons of Canadians talk about how dealers work around this to add costs and add-ons to the purchase price of a vehicle… good try though.

 

[zeroptzero]

And yet tons of Canadians talk about how dealers work around this to add costs and add-ons to the purchase price of a vehicle… good try though.

Not everyone buys the add-ons, we don't have dealer mark-ups but we do have dealer add-ons with extra parts tossed into the deal. I did pay about $500 extra for some things added on the car deal. But you do get something tangible for the money that you can touch, and I would have wanted some of the items even if not forced to buy them (all weather mats). I think I got a $200 gift card which I applied to Honda winter rims that I needed anyhow. I probably paid $150 bucks more than I would have, but my car was sitting in the dealer showroom (no order delay) and they could have sold it to 10 other people waiting in line if I didn't buy it.

The dealer mark-ups in the US are strictly taking advantage of the consumer and market conditions, you get nothing for that extra money that you pay, so greed is not far off in terms of a description. Thankfully there have been some US dealers who did not go overboard with it and some who only charged MSRP, but some others have been pathetic about it.

 

[Whitboy82]

What is the difference in dealers charging markups for cars in high demand, with low supply, and someone selling a used R34 GTR for $150,000? Couldn’t you also say that’s greedy? Considering new it cost 1/4 of that? Do people not take advantage, in the same way, in Canada?

 

[TypeSiR]

Dealerships become restaurants and retrain employees for the necessary skills. I'm down for that. Bright future ahead.

"Likewise, the dealer network also poses some opportunities for automakers to build out their charging infrastructure. Unlike EV companies such as Tesla that lack a brick-and-mortar presence and have to build their infrastructure from scratch, legacy automakers already have physical locations.

The legacy automakers and their dealerships “haven’t even scratched the surface” in figuring out how to leverage the distributed franchise dealership model to rapidly deploy charging stations across the country, Wall said.

Building off of the amenities many dealerships currently offer, Wall said stores in some areas could capitalize on serving as a “destination charging” location.

“Not every dealer is going to want to be in the restaurant business, but could that present an opportunity for a lunch spot, or some other destination opportunity? Maybe it’s retail or shopping in general,” he said. “This isn’t going to work for every dealer, but it has the potential to recast the conversation around the dealer itself and it can create some additional opportunities.”

https://mibiz.com/sections/manufact...ev-sales-model-could-change-dealership-format

 

[Shiba Speed]

This is my opinion that I wanted to share since I have nothing better to do as I wait for the next sliver of official news from Honda. I'm not writing this to argue a point or against someone else's belief. Also, I'm not hard set on it. Happy to change my mind as I read others' perspectives and thoughts. I also understand that my thoughts may not be realistic for a variety of reasons (e.g. the current sales commission structure, powerful lobbying groups, etc.), so this is my potential idea of a "perfect" world. I am speaking strictly of new cars, sales people at dealerships, and markups.

If the FL5 is announced with an MSRP of $40k and dealers on average charge $10k over, I'd rather have the MSRP set to $50k. I don't have an issue paying for what a car is worth. My hope is that with Honda getting this $50k, they can more fairly distribute the money across team members who contributed to getting the FL5 into my garage. A quick Google search says that a Honda production worker in the US makes ~$34,317 yearly while a Tesla production worker in the US makes $40,625. This might be an apples to orange comparison, but I have to wonder how much more a Honda factory worker would be paid if they went the Tesla route for car sales.

Maybe I'm an idiot, but I just don't know what additional value car sales people bring that is worth a $10k markup. Rather, it seems like potential negative value that I'm paying for. Spending hours trying to negotiate to get the markup potentially lowered (or more than likely not lowered at all) or some of the add-ons removed. Maybe I'm blind and sales people do a lot of work behind the scenes like paperwork that warrants the $10k markup. Or maybe I'm not aware that they share a portion with the mechanic that did the Pre-Delivery Inspection, the truck driver who transported the car from the port to the dealership lot, and so on. Like how a waiter/waitress shares tips with the dish washers, line cooks, etc.

I'm just a random ignorant idiot on the forum. Please educate me.

 

[SP R KiD]

This is my opinion that I wanted to share since I have nothing better to do as I wait for the next sliver of official news from Honda. I'm not writing this to argue a point or against someone else's belief. Also, I'm not hard set on it. Happy to change my mind as I read others' perspectives and thoughts. I also understand that my thoughts may not be realistic for a variety of reasons (e.g. the current sales commission structure, powerful lobbying groups, etc.), so this is my potential idea of a "perfect" world. I am speaking strictly of new cars, sales people at dealerships, and markups.

If the FL5 is announced with an MSRP of $40k and dealers on average charge $10k over, I'd rather have the MSRP set to $50k. I don't have an issue paying for what a car is worth. My hope is that with Honda getting this $50k, they can more fairly distribute the money across team members who contributed to getting the FL5 into my garage. A quick Google search says that a Honda production worker in the US makes ~$34,317 yearly while a Tesla production worker in the US makes $40,625. This might be an apples to orange comparison, but I have to wonder how much more a Honda factory worker would be paid if they went the Tesla route for car sales.

Maybe I'm an idiot, but I just don't know what additional value car sales people bring that is worth a $10k markup. Rather, it seems like potential negative value that I'm paying for. Spending hours trying to negotiate to get the markup potentially lowered (or more than likely not lowered at all) or some of the add-ons removed. Maybe I'm blind and sales people do a lot of work behind the scenes like paperwork that warrants the $10k markup. Or maybe I'm not aware that they share a portion with the mechanic that did the Pre-Delivery Inspection, the truck driver who transported the car from the port to the dealership lot, and so on. Like how a waiter/waitress shares tips with the dish washers, line cooks, etc.

I'm just a random ignorant idiot on the forum. Please educate me.

Just to give you a little reassurance, I can assure you the average production worker makes a lot more than 34k a year. Its realistically probably closer to 45-55k a year and that's not including their benefits. They do very hard work, I won't discredit that. But they do get paid better than that lol

 

[tacthecat]

Salary depends on who you google glassdoor says " The lowest-paying job at Honda of America Mfg. is an Assembly Line Worker with a salary of $87,954 per year " - The Tesla # you quoted is average in USA.
Seems like there may be a little ADM in any on-line numbers.

 

[Tickle]

What is the difference in dealers charging markups for cars in high demand, with low supply, and someone selling a used R34 GTR for $150,000?

Exactly.

Let's say I have a 22 Golf R come off the truck. The dealer could sell it at MSRP and look like a hero or send it to the auction and sell it for 54-55k.

So instead they charge the public.

Or let's say I trade a 22 Golf R with 5k on it. It'll go for about the same at the auction. Any appraiser knows this so now I want top dollar for my Golf R and I have multiple quotes. So I trade it for over MSRP. Now the dealer has to sell it because they are in business to do so, but they sell all their new cars at MSRP. So as a buyer which do you want? You basically need to not have a new one in stock.

These are business decisions dealers make.

I am against shady practices. However market value isn't shady to me. I know I've explained this several times but.. I dunno. Felt it couldn't hurt.

 

[Whitboy82]

Yeah, I am not a fan of it, but I always find it strange when people complain about it with new vehicles, but in literally everything else, nobody ever complains when they sell something, and try to get as much out of selling it, as they can.

 

[FL5ogger]

If the FL5 is announced with an MSRP of $40k and dealers on average charge $10k over, I'd rather have the MSRP set to $50k. I don't have an issue paying for what a car is worth.

This is basically how it works in Australia for New cars.
The Manufacturers advertise a vehicle at a "Drive Away Recommended Retail Price" which includes registration and government charges. This RRP is a ceiling that the dealer must stick to as per Australian consumer law. The margin is built into the price and any discount is deducted from the dealers margin. Quite often the dealers are incentivised by the manufacturer with additional bonuses for reaching their target, so its not unheard of to buy a car at a significant discount if that meant the dealer would reach target.

Don't believe the Manufacturers that they a concerned about the consumer for a second!
They are worried about their Brand and want the mark up for themselves! Honda have actually gone direct to market in Australia and prices have gone through the roof. Funnily enough their market share has also plummeted!
Dealers now essentially get a small hand over fee and prices are non negotiable. My local dealer said if they weren't a multi franchise dealer they would have closed the doors after 3 months. No one wins.

 

[VarmintCong]

What is the difference in dealers charging markups for cars in high demand, with low supply, and someone selling a used R34 GTR for $150,000? Couldn’t you also say that’s greedy? Considering new it cost 1/4 of that? Do people not take advantage, in the same way, in Canada?

Yes, or someone goes to buy Apple stock and complains that it's $150 when they think it's worth $120. It's supply and demand - if demand is too high, the prices go up until there's no more demand at the higher price.

 

[Xchax3]

American problem, against the law in Canada and UK. I guess USA is built off greed

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