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Pricing, markup, direct vs. dealers

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Old Jun 6, 2022 | 12:26 PM
  #691  
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Originally Posted by EZZ
I saw a new tactic by the dealers that I didn't ever see before. I found an ID.4 fully loaded for sale at a dealership, so I decided to purchase it because I didn't know when my Ioniq 5 would get here. I could always sell it later and could probably break even as I get the $7500 tax credit. So I pushed the purchase option on their website and it had me order it. So the sales guy calls me back and says that the way their ordering works is that they send my order form to VW and I have to wait about 6-9 months for the car to arrive. The car is at MSRP.

I told him that the specific car was in inventory so I thought I could get it immediately. He basically told me that the one I see was the showroom car and has a $10k markup! VW doesn't allow for markups if you order through dealer but if the customer cancels, they are free to markup their cars. So they use the showroom car to get the customer to order it (unbeknownst to the customer) and then they tell you about the whole process....this way, the dealer gets excess cars to markup. Very sneaky.
I can't wait for my next dealership experience. Just makes me all giddy and warm inside
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Old Jun 6, 2022 | 12:40 PM
  #692  
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Originally Posted by SW17LS
Its because you can't make any money, and its a horrible business. If you could make great money you would attract higher quality salespeople.
That's exactly what I was saying, for years people in the US were spoiled with cheap cars, automakers were competing with each other with razor thin profits if not losses, and in turn dealers also made very little return on their investment. When consumers have an such leverage that you need to be "elite" level salesman to make 100-150k salary, it's just not an attractive business model, and it's little wonder salesmen sometimes use dishonest tactics to try and make more money. In fact, many dealerships operate based on dishonest business model to survive, where the owner instructs the sales team to pull all kinds of scams.

But after then pandemic the tables have turned and it turned out that cars are an important commodity, and consumers need automakers and dealers more than they need us, so obviously the dealers taking advantage of it and more power to them. As far as getting rid of the dealers and going to direct sales model, we'll have to see if and how it will work out, but I doubt if consumers will see any benefits. Tesla sells direct, look how much Model 3 went up over the years.
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Old Jun 6, 2022 | 01:16 PM
  #693  
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Originally Posted by Och
That's exactly what I was saying, for years people in the US were spoiled with cheap cars, automakers were competing with each other with razor thin profits if not losses, and in turn dealers also made very little return on their investment. When consumers have an such leverage that you need to be "elite" level salesman to make 100-150k salary, it's just not an attractive business model, and it's little wonder salesmen sometimes use dishonest tactics to try and make more money. In fact, many dealerships operate based on dishonest business model to survive, where the owner instructs the sales team to pull all kinds of scams.

But after then pandemic the tables have turned and it turned out that cars are an important commodity, and consumers need automakers and dealers more than they need us, so obviously the dealers taking advantage of it and more power to them. As far as getting rid of the dealers and going to direct sales model, we'll have to see if and how it will work out, but I doubt if consumers will see any benefits. Tesla sells direct, look how much Model 3 went up over the years.
I agree with most everything you said except that consumers need dealers more than they need us. People only need them because they have no other options at this time, and in many states have used state laws and the courts to force automakers to sell through their networks. The Model 3's price increases didn't rise out of thin air...it's about supply and demand, and people wanting them so they pay the premium. If they were being sold through dealerships, there would be an additional markup because the dealership now needs it cut. You have to look at this realistically and not keep holding on to dealerships as an emotional crutch. It's time to abandon them
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Old Jun 6, 2022 | 02:14 PM
  #694  
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At the end of the day, a business ALWAYS needs its customer more than the customer needs the business.
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Old Jun 6, 2022 | 03:23 PM
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Originally Posted by SW17LS
At the end of the day, a business ALWAYS needs its customer more than the customer needs the business.
That may be true when it comes to small, easily replaceable businesses - bakeries, restaurants, etc. But when it comes to a few multinational conglomerates that have the entire market to themselves this principle no longer works.
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Old Jun 6, 2022 | 03:24 PM
  #696  
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Originally Posted by Och
That may be true when it comes to small, easily replaceable businesses - bakeries, restaurants, etc. But when it comes to a few multinational conglomerates that have the entire market to themselves this principle no longer works.
Plenty of carmakers who make cars, and plenty of dealers who sell cars.
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Old Jun 6, 2022 | 03:40 PM
  #697  
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Originally Posted by SW17LS
Plenty of carmakers who make cars, and plenty of dealers who sell cars.
There really aren't that many carmakers if you think about it, and not one carmaker can satisfy the entire global demand. Without independent dealers competing with each other, a direct sales model may very well result in higher OTD prices.
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