Mark ups

[NJMike]

no they aren't. as you wrote 2 sentences back, BANKS are financing the lunacy. It's ALWAYS the damn banks doing STUPID shit and eventually blowing sky high.

Loans for durable consumer goods with a 15-20% first year depreciation schedule should NEVER be financed more than 90% LTV. If the consumer has to pony up 10% cash AND the ADM, this nonsense would stop immediately.

does the bank really care? Its the people making the decisions, but I get it the banks make it a bit too easy to borrow too. My other son sells used cars only. Many of the people who come there to buy cars are being charged interest rates of 10-15%. One guy last week had his car repossessed for default and was there trying to get another, even with horrible defaulted credit the bank would still lend him money.

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[Fastoldman]

Shogun,
To be frank I have never really viewed a Dealers profit based on percentages because it is constantly changing. We, as consumers, want a flat simple answer but like any business it is never that easy. A good example would be Dodge Vipers, which clear back in the late 90s and early 2000s had around 7K in mark up. Move forward to 2016-2017 ( last years of the build ) and they were still close to 7K in mark up. Dodge decided years back to reduce the Dealer profit on performance cars and so from that point on the Dealer profit was lower in many cases than what is was on more plebeian machines. The actual amount varied so much that one could not base a simple percentage figure on a Manufacturer. Add in rebates, that also varied , and it became a crap shoot. The only simple issue is that the structure of profit changed many years back to give Dealers who made their quota bonuses and that lowered the cost to many consumers. Many Dealers could not hit those so they did not offer as low a price when things were super competitive. Right now I tell friends to give me a call and I will get them with someone I know and that an order will be their best bet. By the way I did raise a huge stink when the profit changed on Vipers, because discounts I gave changed dramatically over 20+ years. The reasoning that this change occurred was something few were aware of and the real situation would surprise many , but it is a long, complicated story and not worth wasting space. By the way similar things have happened with GM and Ford and most Worldwide Manufacturers have reduced margins while demanding new buildings, etc. --- that is the stupidest thing in my mind to not help consumers. Hope this is of some minor help.

 

[shogun32]

Hope this is of some minor help.

appreciate the update. Thing is it doesn't have to be near so complicated. The manufacturer sets the dealer price (in at most 3 tiers based on annual aggregate sale $$ with an inverse for units) and the MSRP.

What profit margin the manufacturer reserves for itself across various models is not the dealer's concern. If the dealer cost of a Viper is only 3% below MSRP but it's 20% below for F150, that's what you get to work with. Or you surrender your dealership and find some other venture/brand to represent. Ford/Dodge et. al. don't owe you the dealer a living. You can't tell me the carrying cost of a Viper was in excess of the margin permitted by Dodge. But even if so, Viper sales would naturally migrate to outfits who could paper over a 'loss' with voluminous other sales, or where operating expenses were less. If your dealership is too small/poorly positioned to carry Vipers, then you don't. Or nobody sells any and Dodge has to revisit their numbers. That's how it's supposed to work. You don't get to say "well I'm accustomed and/or chose to operate my business in such a way that it takes 10% margin for me to remain viable, so I'm going to hit the buyer for 7% over MSRP because Dodge trimmed my purchase margin on this model." Well, not unless Dodge wrote a contract that allows you to take such action and you can find enough buyers to get away with the practice.

It would have been trivial to include language prohibiting sales over MSRP EVER or your dealership agreement is revoked immediately. Ford et. al. are more than capable of ascertaining they misread the market and to make adjustments. If they want to leave money on the table that's their call. That they've permitted dealers to arbitrage the market is on them. So Ford et. al. need to quit lying about being upset about ADM or write+enforce contracts that prohibit the practice.

 

[Fastoldman]

Sounds simple the way you put it but in the 30 years I was selling it was constantly changing. Let's just say I completely agree, I am not in favor of ADMs at all and in fact never charged one on a single Viper I sold --- we must have done a few things right as we were often #1 in the US and virtually always in the top 3. Since I am now an old man and retired I have often felt like it was time for a tell all book, because having worked mainly with Ford and what is now Stellantis, one comes to realize Corporate America is no different than small companies of say 5-50 people. Mistakes are made, often by conflicting departments, which may later determine a complete change in policy when everything was running well. With Manley and Kuniskis firmly waging small battles against Dealers charging exorbitant ADMs, there may be some change coming, but it will be in a unique form as each ( Corporate and the Dealer Franchises ) is independent of the other. Nuff said this is probably putting plenty of folks to sleep.

 

[docday64]

then have a chat with your insurance company. they're not ponying up for the ADM are they? Maybe the insurance companies should have a sit down with dealers and have a 'total loss' certificate program that stipulates no participating dealer can sell for over MSRP if it's an insurance-involved need?

It's YOUR choice to buy new again or go used. Dealer has nothing to do with it, aside from trying to convince you to buy from them instead of someone else. And therefore they have an incentive to knock off the ADM. The profit margin they make at a MSRP or Invoice sale on that unit is no different than it was back in 2019.

That is why gap insurance has become so popular lately. When I was setting up the insurance for mine the agent asked me about it and I had to get him to explain what is was all about.

 

[LowFlying65]

does the bank really care? Its the people making the decisions, but I get it the banks make it a bit too easy to borrow too. My other son sells used cars only. Many of the people who come there to buy cars are being charged interest rates of 10-15%. One guy last week had his car repossessed for default and was there trying to get another, even with horrible defaulted credit the bank would still lend him money.

I've heard Carvana, Shift and the other on-line only dealers are making all their money on the financing, not the car sale. While manufactures have been doing their own financing for a long time, I don't know if that has been their primary profit driver.

 

[RobZ71LM7]

I've heard Carvana, Shift and the other on-line only dealers are making all their money on the financing, not the car sale. While manufactures have been doing their own financing for a long time, I don't know if that has been their primary profit driver.

Probably true, I have excellent credit and terms and rates they offer me are significantly worse than my credit union and national banks.

 

[MAGS1]

Just thought I'd throw this out there if anyone in the Chicago area is looking for a Velocity Blue M1. I'm not in the market for one but my local dealer just knocked $1k off MSRP. He's been sitting on it most of the winter.

https://www.geraldfordnorthaurora.c...ng-Mach_1_Fastback-North_Aurora-IL/5220238040

 

[stageron]

I ordered mine last February. I lucked out. Took about 3 weeks of shopping but I was able to locate a dealer 20 minutes from my house who was willing to order the car for me at MSRP. Got in just under the wire before the chip shortage hit hard but the markups on the car were hot and heavy. I asked the dealer 3 times if he was sure I would get it at sticker. He had the manager assure me that he knew about the mark ups on the car but they didn’t do that at their dealership. They were true to their word. Took exactly 2 months and I was in the car at sticker. There are good dealers out there. If anyone cares it was Crown Ford in Lynbrook.

 

[Unreal4all]

Under invoice….but I work for the dealership…sold my last 22 allocation for MSRP because it was to a very good customer of mine…we were $5k over for our only 21 we were allocated.

 

[Atlas1]

Under invoice….but I work for the dealership…sold my last 22 allocation for MSRP because it was to a very good customer of mine…we were $5k over for our only 21 we were allocated.

What do you mean last allocation? The Mach 1 hasn’t been done with a traditional allocation process like the Shelby’s. There are no limits on the number of cars a dealer could order as long as they had retail customers, or employees willing to pretend they were customers lol

 

[Unreal4all]

Not true with all the shortages and other bs we are dealing with at the dealership. Mine was going to be the only retail Mach for the store and they issued us a replacement stock unit because they canceled our 21 we had scheduled for production last fall and told us we would get it back for a 22. Plus now we have to have name match on all our retail units and can’t just “order” a sold unit without a home for it already without being penalized if we dip below 70% name match.

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