[2000Z-71]

On the way home from Sunday's autocross I stopped in at Power Dodge just to see if they had a new Challenger RT. No, I'm not serious I already have an overweight undertired pig and the Challenger is at least another 350lbs. heavier than my GTO.

I pulled up in my car, parked, and walked over to the Challenger they had parked out in front. It was an RT with an automatic and a $5K "adjusted market value" sticker in addition to the $35K window sticker as well as $2K worth of floor mats, undercoating, and window tint I actually had a few minutes to look it over before the salesmen descended. The doors were unlocked with a key in the lockbox on the driver's side window. Here's the first laugh, it has a keyless ignition, if the key is in close proximity, the car will start. Yes having the key inside of a lockbox mounted on the driver's side window is close enough.

Salesman comes up asks me if I drove up in the GTO and I said yes. Here's the second laugh, he informs me that I should trade it in because the Challenger is faster. Really I asked, how is that possible when it weighs more and has less horsepower and torque? His answer was, "It has a Hemi!" Now I'm amused, "Really what's a Hemi?" I ask. He replies, "It's like a turbo only it's not." I ask if he could pop the hood and show it to me. He pops the hood and points to the plastic cover over the intake manifold. "See it says right there Hemi!"

He asks if I want to drive it. I was honest and said that I really only wanted to take a close look and get a brochure. We go inside, the salesman starts to run all over the dealership looking for a brochure. I looked in the rack I was standing next to, grabbed a brochure and tried to make a discrete exit. No such luck, numbnuts sees me and comes running across the showroom floor.

For the last laugh he insists that I take the car for a test drive, he's even brought a dealer plate out. My pacience is blown and I just decided that I'm going to have some fun with him. I told him to wait by the car and I would be back. I went to my car, got my helmet out of the back seat, walked back towards the saleman and proceeded to put my helmet on. Sat down in the driver's seat, tightened up my chinstrap looked over at numbnuts in the passenger seat and asked, "What's the matter don't you have one?"

" Sir, I just wouldn't feel comfortable with you driving."

[00 Trans Ram]

Classic!

"Adjusted market value" - it's just like MSRP and Dealer Invoice. They're all fictitous numbers that are invented by the manufacturer to sell the car at a profit.

[trackbird]

Classic!

"Adjusted market value" - it's just like MSRP and Dealer Invoice. They're all fictitous numbers that are invented by the manufacturer to sell the car at a profit.

Um...no.

I am an ex car salesman.

MSRP is just a suggested retail price. If you go buy a gallon of milk, it has a price tag on it. That way you have an idea what they would like you to pay for it. And, since most grocery stores don't haggle, you probably will pay the sticker price for milk. MSRP is calculated based on a target profit margin on the vehicle (calculated off of "Dealer Invoice"...see below). It's a number, generated by other numbers. And it is very real...because it's calculated and then printed on the sticker.

Dealer invoice is "actual dealer cost" plus "holdback". Adding up those two numbers will get you the "Dealer Invoice" price. Holdback is typically 1-3% of the price of the vehicle. So, if you buy at "dealer invoice", the dealer will make 1-3% over what he paid for the vehicle (typically running towards 3%). Dealer invoice is a very real number, generated by other real numbers (cost + holdback).

Now, with all that said, a dealer is in business to make money. Just like the grocery store. This is a capitalist society (well, it used to be until recently) and that's the goal, making a profit. Some dealers are less than scrupulous about it, and others are more open and seem a bit more honest. For some reason, people seem to feel that if a car dealer is making money, they are screwing the customer. I don't get upset at my grocery store for making money, so why would I get upset at the local car dealer for making money? Beats me, but it happens. On the other hand, more money is made off of the service department than is ever made on the sales floor. If you want to get mad, get mad at service, not the sales force.

You don't ask your local grocer to give milk away at cost, do you?

[00 Trans Ram]

Classic!

"Adjusted market value" - it's just like MSRP and Dealer Invoice. They're all fictitous numbers that are invented by the manufacturer to sell the car at a profit.

Um...no.

I am an ex car salesman.

MSRP is just a suggested retail price. If you go buy a gallon of milk, it has a price tag on it. That way you have an idea what they would like you to pay for it. And, since most grocery stores don't haggle, you probably will pay the sticker price for milk. MSRP is calculated based on a target profit margin on the vehicle (calculated off of "Dealer Invoice"...see below). It's a number, generated by other numbers. And it is very real...because it's calculated and then printed on the sticker.

Dealer invoice is "actual dealer cost" plus "holdback". Adding up those two numbers will get you the "Dealer Invoice" price. Holdback is typically 1-3% of the price of the vehicle. So, if you buy at "dealer invoice", the dealer will make 1-3% over what he paid for the vehicle (typically running towards 3%). Dealer invoice is a very real number, generated by other real numbers (cost + holdback).

Now, with all that said, a dealer is in business to make money. Just like the grocery store. This is a capitalist society (well, it used to be until recently) and that's the goal, making a profit. Some dealers are less than scrupulous about it, and others are more open and seem a bit more honest. For some reason, people seem to feel that if a car dealer is making money, they are screwing the customer. I don't get upset at my grocery store for making money, so why would I get upset at the local car dealer for making money? Beats me, but it happens. On the other hand, more money is made off of the service department than is ever made on the sales floor. If you want to get mad, get mad at service, not the sales force.

You don't ask your local grocer to give milk away at cost, do you?

OK, perhaps "fictitious" was the wrong word. I think that "whimsically derived" or "infintely variable" is better. They are based on actual numbers, but then "variables" are added. Variables whose only basis in fact is what profit margin the individual dealer thinks they can get.

Here's what I mean. GM advertises its "Dealer Invoice" price for a 2009 Pontiac G8GT is $29,819. However, they are running a sale right now where the price for that car is $29,537. They want me to believe that they are losing ~$300 on every G8 they sell? If so, then no wonder GM is going out of business!

Rather, they are using that "holdback" that you mentioned. Regardless of the name given, the dealer is telling you that they paid a certain amount for the car (definition of invoice is an itemized bill for goods sold or services provided, containing individual prices, the total charge, and the terms). However, they did not actually pay that entire amount for the car.

Now, I don't really blame the dealership. After all, as you said, they need to make a profit. I blame society in general (I sound like a conspiracy theorist, now). Why should we have to haggle over the price of a car at all? It should have a SKU and barcode just like that gallon of milk. A reasonable 3% (or so) profit should be built into that price. And the public should accept that they are going to have to pay that additional 3% (or so) just like they do for every other durable good.

A little caveat - you know what I find hilarious? People buying cars go balistic over the dealer getting an additional few hundred dollars on the purchase price. But then they go pay 9% in sales tax on that same car and give thousands to the government. I'd rather give that money to a dealership over the government ANYDAY!

Oh, and I'm not upset at salesmen, Kevin. 99% of the time, I don't think that they even know what's going on. After all, I had a BMW salesman tell me yesterday that the BMW 135i had "4 piston brakes up front, and 2 pistons out back . . . or the other way around". I don't expect that guy to know the intricacies of automobile retail pricing.

And, I'd buy pretty much any car you tried to sell me. I'm always VERY impressed when a salesman knows the product he/she is selling.

This post has been edited by 00 Trans Ram: Nov 13 2008, 06:37 PM