My local dealers attitude towards MSRP and below dealers

[Shazamalingo]

So on a whim I decided to stop by my local small town Ford dealer yesterday to see where they were at with Bronco orders and allocations. I have bought from them in the past but it has been a while. Talked to the sales manager. Sales guy I have dealt with in the past was out to lunch.

First question was how many unfilled orders do you have??
Answer: He wasn't sure but went to his desk and pulled out a stack and made it seem like it was a lot. He counted 29. I guess for a small dealer in a town of 11k that's a lot.

Second question was what are your allocations for the year??
Answer: I have no idea.

Final question. The big one. Are you selling for MSRP on customer orders??
Answer: (With a chuckle) No we are selling all Broncos for $5000 over MSRP.

This is where the fun started. I said I currently have an order and I am paying $2500 under MSRP. He didn't believe me and proceeded to drag another sales guy into the conversation. Telling him what I am paying. He said no way and started on the "dealers are getting $30k over on Broncos. I said yeah but there are several dealers across the country selling for MSRP and below as well. They started on "they're not making any money then. What is the benefit of them selling for that cheap??" I said I hardly think they aren't making any money or they wouldn't be doing it. Sales guy said if he worked at a dealer that was selling Broncos for at or below MSRP he would quit. LOL I told them flat out not all dealers are greedy and want to be opportunists. They need to remember, that in a few years these will be on dealer lots with rebates and incentives. These are not limited production vehicles. And if they do forget it, the customers that they tried to take advantage of will remember how they were treated in the future.

Gotta love that small town mentality. It happens all the time around here. Try to walk into a local dealer and buy a Wrangler or a Gladiator for anything below sticker and they will tell you straight to your face there is no buying one at a discount unless there are factory incentives.

I really don't understand why dealers that don't discount find it completely unfathomable that some dealers do. And insist that those dealers are losing money on every sale.

I had the same thing happen to me with my 2016 Honda Pilot. Everywhere in the Bay Area they were selling for $5k over sticker. (The good old days when $5k over was a lot). Then, one dealer in the North Bay offered me $500 below sticker. I told this to my local dealer and he laughed in my face saying that there is no way I am getting the car for that price. Guess what, I got it for that price, bud.

So, it happens in big towns, little towns, and everywhere there is a person selling to someone they perceive to be uninformed.

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[UNBROKN]

Yes, every DEALER has the right to sell at whatever price they choose. Only a few people on here have bitched about that. The problem 99% of the people on this forum have is when a dealer has an agreement with someone for MSRP or below, be it verbal or otherwise, and then changes the deal once the vehicle gets there. They want to make more money right now instead of build a lasting relationship. I paid MSRP for mine and I was happy to do it. I will ONLY have my Bronco serviced at my dealer for at least a few years. I can do my own work, but I have not had the time to do anything lately. A dealership makes lots more money on warranty and service work than they do on selling cars. This is their bread and butter. I know this because I have seen the numbers at a couple of dealers that I have quoted their insurance.

 

[Macjr]

Watertown area?

Yes!!!

 

[Bronco wannabe]

Seems like a smart guy.

500 Broncos x $1000 = $500k
29 Bronco x $3500 = $101.5k

Except no dealer in the country is getting close to 500 Broncos. I find the best model is to sell at MSRP, provide excellent customer service, and not promise a price you cannot deliver within a reasonable amount of time.

 

[Coloradonatives]

So many people think invoice is what the dealer actually pays. Holdback, dealer incentives and volume bonuses make up for selling at or below invoice. There are dealers that have been selling at or below invoice for years. If they weren't making money they wouldn't be doing it.

I was a sales manager and leasing manager at one of the largest Ford dealers in Colorado and also one of the largest Chevy dealers. It is not a blanket scenario. Invoice IS actually what the dealer pays to Ford AT THE POINT SALE, holdbacks (paid back or credited at year's end or on the next year's invoice pricing) vary by volume plus incentives based on selling distressed and fleet vehicles. SO, they are banking on a certain level of a future refund. It is completely different for each dealer. "End of Year" sales are from dealers trying to better their holdback/future pricing level by wholesaling leftover inventory. Folks here bragging about paying "3% under invoice" are NOT living in the real world that 99.99% of the rest of us live in.

 

[Rubicon 2 Badlands]

Yes!!!

I grew up in that area, up by Morristown on the River. Beautiful area, but I don’t miss the winters.

 

[goatman2]

Competition is not allowed, there are territories, backed by state laws. You could not open up your own 'car store' and start selling new Ford vehicles in someone else's territory if you thought you could sell the same product without offensive dealer markups.

They do not operate like a (non franchise) restaurant or other business, but I think they should. Real competition would eliminate most of the things people hate about stealerships.

How is competition not allowed? If there are three dealers in town, or ten, you can go to any or all of those dealers. How is that not competition? If you have one dealer in town you can drive to the next town. So, you think there should be "car stores" that carry all brands, like Best Buy or Walmart. OK, how about service and parts? And warranty?

So, you don't like the franchise model. I assume since you don't like the franchise model that you think you should be able to buy a Big Mac at a Burger King, or a Subway sandwich at a Taco Bell. You think you should be able to order off of a Cracker Barrel menu at a Denny's? Can you imagine how poorly informed a salesperson would be about a vehicles features and attributes and finer points if they had to know every brand at the same store? At least with the current model the salespeople get trained on their own products, after the training it's up to them how competent they want to be.

There is no perfect distribution or marketing system, so when a good system is in place we have to live with it's deficiencies. We can change the system and then we'll have a different set of deficiencies to deal with and bitch about.

Dealers should do what they say and keep their word. Just like any person or any business. Just because some don't doesn't change a good system. Change the system and there will still be people who do bad things.

 

[goatman2]

Here's the question you have to ask yourself: "in general, is the US population getting smarter or dumber?"

I keep seeing articles that half the US households cannot handle an unexpected $400 expense. So I'm thinking 'dumb & getting dumber by the minute'. The auto dealer model is a perfect fit for 90% of the market they serve.

I spent 29 years as a manager at a few dealerships. When employees would bitch about customers (just like customers bitch about employees) I would regularly say that if people in general were smart about buying cars that half of us wouldn't have jobs and be working here. Bottom line is any business can't sell or service what people don't want to buy. They are mostly successful by getting people what they want.

This is also true for the fixed price model. Saturn came into the market with a fixed price, no negotiating or discounts, or ADM allowed. Some other brand dealerships followed suit and adopted the one price strategy. It didn't work. Dealerships abandoned the strategy and Saturn went out of business. Surveys showed that 30% of customers wanted a one price, no negotiation model, but in the real world virtually everyone wants some kind of "deal". It's a weird system, but it's steeped in culture and is based more on who we all are than it is on the dealership model.

 

[Bike007b]

Except no dealer in the country is getting close to 500 Broncos. I find the best model is to sell at MSRP, provide excellent customer service, and not promise a price you cannot deliver within a reasonable amount of time.

Dealers make there money of parts and service. Why would you take your vehicle to someone that treats you like that?

 

[dwbronco]

So on a whim I decided to stop by my local small town Ford dealer yesterday to see where they were at with Bronco orders and allocations. I have bought from them in the past but it has been a while. Talked to the sales manager. Sales guy I have dealt with in the past was out to lunch.

First question was how many unfilled orders do you have??
Answer: He wasn't sure but went to his desk and pulled out a stack and made it seem like it was a lot. He counted 29. I guess for a small dealer in a town of 11k that's a lot.

Second question was what are your allocations for the year??
Answer: I have no idea.

Final question. The big one. Are you selling for MSRP on customer orders??
Answer: (With a chuckle) No we are selling all Broncos for $5000 over MSRP.

This is where the fun started. I said I currently have an order and I am paying $2500 under MSRP. He didn't believe me and proceeded to drag another sales guy into the conversation. Telling him what I am paying. He said no way and started on the "dealers are getting $30k over on Broncos. I said yeah but there are several dealers across the country selling for MSRP and below as well. They started on "they're not making any money then. What is the benefit of them selling for that cheap??" I said I hardly think they aren't making any money or they wouldn't be doing it. Sales guy said if he worked at a dealer that was selling Broncos for at or below MSRP he would quit. LOL I told them flat out not all dealers are greedy and want to be opportunists. They need to remember, that in a few years these will be on dealer lots with rebates and incentives. These are not limited production vehicles. And if they do forget it, the customers that they tried to take advantage of will remember how they were treated in the future.

Gotta love that small town mentality. It happens all the time around here. Try to walk into a local dealer and buy a Wrangler or a Gladiator for anything below sticker and they will tell you straight to your face there is no buying one at a discount unless there are factory incentives.

I really don't understand why dealers that don't discount find it completely unfathomable that some dealers do. And insist that those dealers are losing money on every sale.

I have had that same conversation with four of the dealerships in my area. Two of them said they would sell for MSRP, but anything below that would mean they got no profit The other two didn't know what they would be selling at and would not commit to MSRP. This was sometime last summer. I don't know what any of them are doing now. I went with a dealer that is below MSRP.

 

[MillerAndCheeto]

I would have just said “and this is why I’ll NEVER buy a vehicle from you”. Then walk out.

Word of mouth is the best form of advertising.

 

[Snowdogyyz]

Word of mouth is the best form of advertising.

No doubt. I cost a local dealership a few sales 25 years ago when they tried to pull a fast one after a deal had been made. Not only did I cost them, I haven’t even looked at Ford for over 25 years until the bronco.

 

[dwbronco]

I would have just said “and this is why I’ll NEVER buy a vehicle from you”. Then walk out.

That never even comes close to phasing them.

 

[Jroub21]

Same sh%# here too…and my buddy is the dang sales manager.

 

[dwbronco]

I'm curious what type of distribution system you propose would be better? There must be local outlets for sales and service. Are you proposing they should all be factory owned rather than (usually) locally owned? If this is what you are proposing, then how is the dealership model a monopoly? Factory ownership would be considerably more monopoly. Curious what is the reasoning behind your comment, and others who say the same thing.

I think the problem is that most do not really understand what a monopoly is. In the context of this discussion, it's a system that allows mark-ups that we find to be unreasonable. That's not a monopoly, but it's a convenient term that everyone knows is something bad.

Even Ford taking over all dealerships would not make them a monopoly. It would make things better, as far as price controls, but it would also mean an end to below-MSRP pricing (except for incentives and A/Z/M).

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