vraa

iTrader: (2)

And sadly most all those people are idiots.
Wait a few months or find a better dealer and you'll find MSRP or much lower. AMG is flooding the market.

jjbodean

when we take a deposit for a vehicle we are getting a signed buyers order with the msrp listed as the selling price and then the customers bottom line amount. we have not in the past nor will we now begin adding pinstripes, etch, etc up front as a way to pad the margin. dealers who do that give dealers like me a bad name.

regarding the deposit process, yes, there are dealers out there who operate as discussed previously. then there are plenty of dealers who actually make the deposit system work properly. heres how i do it: i have a book with customers buyers orders in chronological order. when i get my allocation i try to match up sold orders with vehicles i have received. if theres a no match, i will try for a day or so to trade with another dealer. right now it is extremely difficult to trade these cars with other dealers due to the whole supply/demand thing. if i cant trade for my number one customers car, then i call that customer, tell them what i have available and give them a time frame to let me know with a first right of refusal. if they take what i have available, its theres. if they would rather wait until i can get their exact color combo and equipment, thats fine, too. then i will go to the next customer and follow the same first right of refusal process.

this, in my opinion, is the only fair way to handle deposits. it has worked well in the past and i will continue using it. a customer who is flexible on color and options will typically get their car faster than one who is firm.

exBMWowner

Thanks for responding and letting us know how your dealership works. That is how it should work when buying a Lexus. Since you are here representing a dealer, I have a few more questions for you:

1) Why am I getting such wildly different lease numbers from every dealer I speak with, and why are the numbers consistently higher than the estimate that shows up on the Lexus web site?

2) On top of selling the car for MSRP, are the dealers trying to mark up the lease amount to make additional profit? If so, how much profit is typically added on by the dealer?

3) On my first Lexus, an LS430, the dealer first quoted me $1300 per month, but we ultimately reached on $1,000 per month. How could that be, unless the dealer was trying to make an extra $300 profit per month on the transaction, on top of the profit being made on the sale of the car itself?

jjbodean

1 - the dealers are probably using a cap cost that varies from msrp to above msrp, as well as using different money factors which are marked up varying amounts in order to make more money on the finance side. also, dealers may be calculating your money factor based on differing tiers based on credit scores. i have a certain money factor i use based on tier 1 credit since most of my customers fall into that tier. however, there is a tier 1+ as well that gives a better money factor, but many customers wont qualify, so you are safer using a more conservative approach. also, different dealers may use leasing companies other than lfs which have varying residuals and money factors as well. the lexus site is notoriously inaccurate from my real world experience.

2 - answered in question 1. yes, dealers are allowed to increase your money factor a certain amount to increase finance margins.

3 - probably a combination of lowering the money factor as well as the selling price. also, if you had a trade they may have put more money in your trade as well.

oftentimes i can lower a customers payment when they come in to do their paperwork once i see they qualify for a better tier than had previously been quoted. the customers seem to like this and it helps with my overall csi scores.

exBMWowner

Thanks, I guess that all makes sense, although it seems a bit greedy to me when they are already making $13K on the car. I also noticed some information on the Lexus web site regarding Lexus Financial Services, with whom I have my current lease with. Are you familiar with any of these programs, and are they worth looking into?

1Pay Lease

This program saves you money and allows you to avoid the hassle of monthly payments. It permits you to prepay all monthly payments in a single total lease payment at lease signing. This single total lease payment is less than the amount you would pay over the life of a conventional lease.


Multiple Security Deposit

Multiple Security Deposit (MSD) allows you to make up to nine additional security deposits at lease inception, thereby reducing monthly payments substantially. The additional security deposits reduce your monthly payments and are refunded to you at the end of the lease period.


Encore

This program rewards qualifying repeat Lexus Financial Services customers with lower monthly payments and a security deposit waiver. You can also combine the benefits of Encore with other programs' features.

bitkahuna

iTrader: (20)

clambros - suggest you talk to jjbodean about getting your car - AL ain't so far, and it sounds like jjbodean is a good salesperson!

jjbodean

thanks, actually i am the general sales manager!

jjbodean

1Pay Lease

i do a lot of these, you get a significant reduction on the lease money factor and the dealer also has extremely limited markup as opposed to regular lease


Multiple Security Deposit

dont do a lot of these anymore, i used to but lfs cut the benefit in half so its not quite as attractive any longer


Encore

reduces the money factor slightly. most customers qualify for tier 1 rate anyway which automatically comes with security deposit waiver

1QWKGS4

iTrader: (3)

How much can you save by going with the 1Pay Lease?
Can you give any examples?

btw- what the dealership are you with in AL? - PM me if you don't want to post - but I'm interested in dealing with a fair minded dealer - I live 2 miles from Nalley Lexus - Galleria (Atlanta) and prefer not to deal with them.... Thanks..

exBMWowner

All good points regarding the car sales negotiations. Although I would hope they use a slightly more sophisticated approach when selling an LS460 over a Honda Civic.

I am an opportunity buyer with cars. I only buy when I can get a good deal, because I know when I sell the car I'm going to take a huge hit on depreciation, and so I don't want to pay too much over dealer invoice when I purchase it. That is not something which can be done at this moment on an LS460, but I suspect it will only be a few months before the dealers all have inventory sitting around, and their arrogant attitudes in the early months will have turned away a lot of good customers. That will be when there is some opportunity to negotiate a deal.

A few other points. Dealers care about month end and year end numbers, so that is always a good time to be around a dealership. And weekedays tend to be slower for dealers, so they are more motivated to move a car on a weekday when the foot traffic is slow.

It also helps to talk to the owners of the dealerships when something is not going well. Don't waste time with the sales manager or general manager. They have heard it all before, hundreds of times, and they have such thick skin about it that you are just wasting your time.

Owners have big egos, and they don't want to hear that people do not think well of their dealerships. If you let them know their salespeople are not acting professionally, you will have a better chance of getting some results.

Finally, as I've said with everything I buy, never fall in love with a car or a deal. They are just material items, and if you don't like the deal today, there will be another one tomorrow.

And I guess if you are a billionare and just don't care about what anything costs, go out to one of these dealerships and pay MSRP.

jjbodean

that would mean a civic would have to have $3000 markup, which i dont believe that they do. the es350 has just over that markup, i dont think civics are working on the same type margins


youre not nearly as knowledgable as you think
thought about it once, but i am too shy in front of big crowds

thats not the case either. tier 1 and up dont automatically get the "best" rate, every single tier can be marked up. and not everyone is so smart like you and knows leasing in and out and knows how to convert money factors, etc. just cause they have money and good credit doesnt mean they are all knowing when it comes to leasing a car.

jjbodean

that may be true at a dodge dealer who offers 0% apr that is broadly advertised and cant be marked up, but lexus rarely runs promotional aprs, and even when they do the dealers are allowed to mark them up to a point, just not as much as a standard apr. perfect example, ending today is a certified apr special of 2.99% up to 36 months and 5.99% up to 66 months. lfs will allow the dealer to mark up each of those rates by 1 point each.

i understand what youre saying, it is more difficult to make finance money on a tier one customer, but it does happen frequently, especially since most of our clientele happens to qualify for tier 1 rates. customers are far more astute when shopping aprs as well and not so much on leases, especially since they cant go to their credit union and lease the car, they almost always have to use the dealer, and people just arent as well versed when it comes to money factors.

jjbodean

i did. heres my answer again, go back and see:

3 - probably a combination of lowering the money factor as well as the selling price. also, if you had a trade they may have put more money in your trade as well.

jjbodean

cant argue with you there. we tend to start losing credibility when we pull our pants down all the way to get a deal at the end of the month and it becomes apparent that we were trying to make our month on that one deal.

fortunately i hit my objective last week so i am not clamoring here at the last minute trying to reach my quota for lexus. its nice to have a little breathing room.

exBMWowner

Just to clarify, I always do leases with no money down, so the $1300 monthly payment was based on zero down, and the ultimate price of $1000 per month was based on no money down. All other terms were the same in both cases. The dealer did lower the price on my LS430 substantially below MSRP to get to these numbers, and I suspect he took less profit on the lease markup as well. It just demonstrates how easy it is to get a less than great deal if you don't do your homework up front and know exactly what the cost of the car is, how much mark up there is, how to convert money factors into something meaningful, how the residual values can be played with to adjust the monthly payments, etc. I suspect many buyers are not patient enough to learn the ins and outs of the leasing business enough to be able to negotiate them properly.