Should you Overpay to get the last RAM
Professional
Joined: Apr 2009
Posts: 179
Likes: 0
From: GA
Here's my 2 cents:
There are 3 main ways a dealer makes money on a new car, it seems to me:
1. Profit on the actual sale
2. Profit on the trade (if any)
3. Finance kickback.
That's not including all the nickel & dime stuff like extended warranty, paint protector, gap insurance yadda yadda. Not to mention sales volume incentives etc.
One or more of the 3 main factors may be zero or even negative on any given deal.
In an ideal world, I'd ask the dealer how much money he would honestly be able to live making with on a new car purchase. Then have him be totally transparent, open the books to me, so to speak. Show me how much he's making from each of those areas, and then how it works out to the total price.
I've no objection to them making a reasonable profit, they are in business. Why can't it be transparent? The woman who answers the phone makes no money at all for the dealership, but has to be paid. I understand that. Same for the detail guys, the lot minders etc.
Instead, you deal with a "nice guy" salesman, who has to go cap in hand to the faceless sales manager, and and as a result, I have no idea if they made $500 or $5000. I suspect nearer $1 or $2k, but I really don't know.
To some extent I would feel bad if I had driven such a hard deal that they made almost nothing, because it isn't going to help my cause if I need their help to fix something later. Equally, if they made $5k, and I found out, it's the last car I'd buy from there, and would make sure my neighbors and friends knew too.
Obviously the current "shady" system has worked for them, or they would be out of business already. The art/science of selling cars has been well honed and documented. Maybe the game is changing now though.
Just like the UAW are having to take the medicine, maybe the dealers need a wake-up call too. There aren't going to be anything like as many of them, and those that are left would be best served having something new to offer, to differentiate themselves. Same-old same-old isn't working now.
There are 3 main ways a dealer makes money on a new car, it seems to me:
1. Profit on the actual sale
2. Profit on the trade (if any)
3. Finance kickback.
That's not including all the nickel & dime stuff like extended warranty, paint protector, gap insurance yadda yadda. Not to mention sales volume incentives etc.
One or more of the 3 main factors may be zero or even negative on any given deal.
In an ideal world, I'd ask the dealer how much money he would honestly be able to live making with on a new car purchase. Then have him be totally transparent, open the books to me, so to speak. Show me how much he's making from each of those areas, and then how it works out to the total price.
I've no objection to them making a reasonable profit, they are in business. Why can't it be transparent? The woman who answers the phone makes no money at all for the dealership, but has to be paid. I understand that. Same for the detail guys, the lot minders etc.
Instead, you deal with a "nice guy" salesman, who has to go cap in hand to the faceless sales manager, and and as a result, I have no idea if they made $500 or $5000. I suspect nearer $1 or $2k, but I really don't know.
To some extent I would feel bad if I had driven such a hard deal that they made almost nothing, because it isn't going to help my cause if I need their help to fix something later. Equally, if they made $5k, and I found out, it's the last car I'd buy from there, and would make sure my neighbors and friends knew too.
Obviously the current "shady" system has worked for them, or they would be out of business already. The art/science of selling cars has been well honed and documented. Maybe the game is changing now though.
Just like the UAW are having to take the medicine, maybe the dealers need a wake-up call too. There aren't going to be anything like as many of them, and those that are left would be best served having something new to offer, to differentiate themselves. Same-old same-old isn't working now.
Registered User
Joined: May 2009
Posts: 5
Likes: 0
Need some help on a 2500 purchase
09 2500 4x4 sxt CTD
Sticker $45.56k
invoice ~41.5
dealer cash $4k
owner loyalty $1k
Last offer was 37k +ttl from the dealer.. kept them hanging
Is it reasonable to get down to 36,000 +ttl.. I figure lowest possible is 35,100 if you take out 3% holdback and all incentives, leaving min profit $900
09 2500 4x4 sxt CTD
Sticker $45.56k
invoice ~41.5
dealer cash $4k
owner loyalty $1k
Last offer was 37k +ttl from the dealer.. kept them hanging
Is it reasonable to get down to 36,000 +ttl.. I figure lowest possible is 35,100 if you take out 3% holdback and all incentives, leaving min profit $900
Ended up at around 39k out the door, which included 8.75% sales tax (ouch), approximately 35.9k + ttl with 5% financing. I think I got a decent deal, and probably could have gone 1k lower.
Rookie
Joined: May 2009
Posts: 61
Likes: 0
From: NorthWestern New Mexico - near Mt. Taylor
BTW -- the tax you paid will most likely be refunded on your 2009 income tax - so be happy.
Also - are you happy with the deal you made? Are you happy with your new truck? To me it sounds like you did OK - but it's all about where your head is at. And if you're happy - be happy brother!
Admin formally known as 94rt10ohio
Joined: Apr 2005
Posts: 9,025
Likes: 3
From: Curtice, OH
Did that include an extended warranty?
BTW -- the tax you paid will most likely be refunded on your 2009 income tax - so be happy.
Also - are you happy with the deal you made? Are you happy with your new truck? To me it sounds like you did OK - but it's all about where your head is at. And if you're happy - be happy brother!
BTW -- the tax you paid will most likely be refunded on your 2009 income tax - so be happy.
Also - are you happy with the deal you made? Are you happy with your new truck? To me it sounds like you did OK - but it's all about where your head is at. And if you're happy - be happy brother!
You had to buy after mid feb through the end of the year.
You can claim the tax you paid on a vehicle purchase price up to 49K and change.
Only new vehicles
THis is WAY off topic, but Obama's tax rebates, you know, the ones where you got a little more money on your check starting Arpril 1, well if you make an adjusted gross income of over 85K or so you will get screwed! You still are getting less pulled out of your check, but, because your adjusted gross income is over X dollars you really should not have gotten anything extra to begin with. Sort of like those checks they sent out a few times, only this time you are getting it back whether you are suppose to get it or not. This means come tax time, if you are in this group, get ready to pay!!
I ran through this calculator, I do not like surprises come tax time! Of course that was before my truck purchase, which means I will now get a refund.
http://www.irs.gov/individuals/artic...=96196,00.html
Professional
Joined: Apr 2009
Posts: 179
Likes: 0
From: GA
Just so everyone is clear on this tax issue. The tax he paid will not be refunded, but can be used as a tax credit. Much like interest on a home loan. Basically what it will boils down to is he will get a percentage of it back. How much? Well, if anyone can explain tax tables you are a genius!
Tax brackets for dullards
Now the tax tables, they're ridiculous. All the information you need is on the page I posted, but then they go and make it ubercomplicated with the tables, that just work out the correct values for any given amount. Something that your average 10 year old with a pocket calculator could have done in less time than it took to write this post!
Record Breaker
Joined: Feb 2007
Posts: 1,564
Likes: 0
From: Austin/Round Rock, TX
I do not think dealers are getting $3500 per truck now, and at least according to Edmunds it's only $2500 for the rebate and another $1000 for the dealer, which means $3500 total. You can add the $1000 if you own a Chrysler product, but statisically most people do not. The same applies for the $500.00 military rebate. Not many people will qualify. The credit union $1000 is a much better chance to qualify for. Still that means $4500 plus the $4000 or so markup ($5000 is a close to best case scenario since a ST RC won't have near that built in margin) they have puts you at about $8500 if the dealer is willing to sell at invoice.
Also, DAVIDNM posted the F-150 is the best selling truck and has been for years. I disagree with that statement. If you add the Sierra and Silverado numbers up (and they are the same truck), they outsell the F-150 regularly. To me, it's always been odd that GM did not claim that title since it's clearly theirs in a reasonable person's viewpoint.
Also, DAVIDNM posted the F-150 is the best selling truck and has been for years. I disagree with that statement. If you add the Sierra and Silverado numbers up (and they are the same truck), they outsell the F-150 regularly. To me, it's always been odd that GM did not claim that title since it's clearly theirs in a reasonable person's viewpoint.
Dodge/Chrysler lost the spot of best selling minivan for 2008 to the Odyssey, but if you add up Caravan and T&C sales, they are clearly #1. Same story, different players.
Record Breaker
Joined: Feb 2007
Posts: 1,564
Likes: 0
From: Austin/Round Rock, TX
Ok. which part of FAIR profit did you all NOT get? That is what I said. But like I said, look at what you do for a living? Anybody in a construction trade of any kind? Why is it I can get different bids on the same exact job and the prices can vary wildly? Hmmmm, sounds like someone else in America is trying to run a FOR PROFIT business! Is it shame on them? Look at whatever business you are involved in, does it make money? I would assume so since they employee you and probably others. It is not a good business model to sell your goods or services for LESS than what you pay for them. Is it? You have NO IDEA what it cost us just to keep the doors of our dealership open every month. The cost that ANY business has and has to recover somewhere. And just like in ANY business, there are shady people and they will screw you around. I'll be the first to tell you, if that's the type of dealer you're buying from, DON'T. They will be the ones closing their doors.
And just to address the situations that can happen with more money having to be put down the next day and all those types of situations, that is very likely the bank screwing the dealership around. Just getting a deal financed for a customer is a flipping nightmare these days. And it doesn't matter if your a 800 on the credit bureau's. Chrysler Finance is so worthless we can't even use them anymore. We now have GMAC as a captive lender, who knows how that's going to work.
So I'll again just say pay a FAIR profit to the dealer. They cannot give up very nickel they can find and stay in business. The amount of time consumers invest in this process is crazy! What's your time worth?
And yes 94rt10ohio, I'm exactly what I say I am.
And just to address the situations that can happen with more money having to be put down the next day and all those types of situations, that is very likely the bank screwing the dealership around. Just getting a deal financed for a customer is a flipping nightmare these days. And it doesn't matter if your a 800 on the credit bureau's. Chrysler Finance is so worthless we can't even use them anymore. We now have GMAC as a captive lender, who knows how that's going to work.
So I'll again just say pay a FAIR profit to the dealer. They cannot give up very nickel they can find and stay in business. The amount of time consumers invest in this process is crazy! What's your time worth?
And yes 94rt10ohio, I'm exactly what I say I am.
And if the dealership can't stay in business then they shouldn't be in business. We had too many dealerships as it was. As has been mentioned in this thread, if service is good, dealerships will make money on parts & service and even with poor sales, they'll be able to stay alive.
Record Breaker
Joined: Feb 2007
Posts: 1,564
Likes: 0
From: Austin/Round Rock, TX
utour,
You should marry the truck
Actually we've all been trained by, usually, our fathers to cherish the purchase of a new car. I think that back in the early 1950's scientists discovered a special kind of pheromone made from oil, leather and rubber. When sprayed into a new car - the pheromone bonds to the upholstery. When a human even leans into the car to look the pheromone enters the body through the olfactory sensors in the nose.
From that point on you go nuts wanting to buy a new vehicle. You stop eating, start dreaming about the vehicle, start finding ways to rationalize selling your child on the black market in order to raise the down payment.
I understand the Pheromone will last for approximately six weeks - but normally fades and becomes ineffective about the same time the first payment is due on the vehicle.
Car dealers pay about $20,000 for a 2oz bottle of the spray that contains the pheromone - and most keep their stock in a special safe that is hermetically sealed and cooled to 63 degrees which is optimal for the storage of the pheromone. The cost of the pheromone spray is passed onto the car buyer and appears on the paperwork as "destination charge". The word "destination" is actually Portuguese and means "pheromone".
I believe that AIG currently holds the patent to the formula.
You should marry the truck
Actually we've all been trained by, usually, our fathers to cherish the purchase of a new car. I think that back in the early 1950's scientists discovered a special kind of pheromone made from oil, leather and rubber. When sprayed into a new car - the pheromone bonds to the upholstery. When a human even leans into the car to look the pheromone enters the body through the olfactory sensors in the nose.
From that point on you go nuts wanting to buy a new vehicle. You stop eating, start dreaming about the vehicle, start finding ways to rationalize selling your child on the black market in order to raise the down payment.
I understand the Pheromone will last for approximately six weeks - but normally fades and becomes ineffective about the same time the first payment is due on the vehicle.
Car dealers pay about $20,000 for a 2oz bottle of the spray that contains the pheromone - and most keep their stock in a special safe that is hermetically sealed and cooled to 63 degrees which is optimal for the storage of the pheromone. The cost of the pheromone spray is passed onto the car buyer and appears on the paperwork as "destination charge". The word "destination" is actually Portuguese and means "pheromone".
I believe that AIG currently holds the patent to the formula.