Can stealership charge above MSRP?

[FordGuy]

First of all, there is no auto manufacture that in the dealer agreement requires a dealer to adhere to MSRP, thats why it is Manufacture suggested ! Do you really think that in any other business they are adhering to a list price! who really knows what MSRP is ? The average auto dealer makes less than 5% net to gross. Costco is the only other large business that operates on a lower percentage and not by much. Think about when you buy a new car, paying 200.00 or less over invoice for a $30,000 product, thats a lower margin than you can find anywhere. The dealer I work for has a average flooring charge of over $45,000 a month, our nut each month is over $850,000.00, sneeze and you can be losing huge Money. Dealer owners could make more money by selling there property and investing it in a CD! but they don't because they just love the Automotive business. The bottom line is befriend your local parts guys and he will hook you up.

 

[bcmaxx]

First of all, there is no auto manufacture that in the dealer agreement requires a dealer to adhere to MSRP, thats why it is Manufacture suggested ! Do you really think that in any other business they are adhering to a list price! who really knows what MSRP is ? The average auto dealer makes less than 5% net to gross. Costco is the only other large business that operates on a lower percentage and not by much. Think about when you buy a new car, paying 200.00 or less over invoice for a $30,000 product, thats a lower margin than you can find anywhere. The dealer I work for has a average flooring charge of over $45,000 a month, our nut each month is over $850,000.00, sneeze and you can be losing huge Money. Dealer owners could make more money by selling there property and investing it in a CD! but they don't because they just love the Automotive business. The bottom line is befriend your local parts guys and he will hook you up.

A little closer reading in the our contract states msrp is in fact the manufacturers recommended price and dealers are under no obligation to accept msrp, and the dealer can charge more or less, but if the price is greater than msrp, no where can you state directly or indirectly that the inflated price is msrp. this probably changes from manufacturer to manufacturer.

 

[RichP]

First of all, there is no auto manufacture that in the dealer agreement requires a dealer to adhere to MSRP, thats why it is Manufacture suggested ! Do you really think that in any other business they are adhering to a list price! who really knows what MSRP is ? The average auto dealer makes less than 5% net to gross. Costco is the only other large business that operates on a lower percentage and not by much. Think about when you buy a new car, paying 200.00 or less over invoice for a $30,000 product, thats a lower margin than you can find anywhere. The dealer I work for has a average flooring charge of over $45,000 a month, our nut each month is over $850,000.00, sneeze and you can be losing huge Money. Dealer owners could make more money by selling there property and investing it in a CD! but they don't because they just love the Automotive business. The bottom line is befriend your local parts guys and he will hook you up.

Care to discuss 'hold back' a bit, that adds a couple of grand to the 'margin'... I just have to laugh, had relatives that sold new and used cars, back in the early 70's it was common for a good salesman in a good dealer to take home $50,000 to $100,000 a year and back then considering the average income was about $15,000 that was pretty good. Have friends that sell them now and take in 6 figure incomes and do very well so I know the dealer is making money. I don't mind paying MSRP for something, thats no big deal but when a retailer charges me OVER msrp that tends to tick me off. I almost made the mistake of buying an Rx5 or was it Rx6 back in 80 or so, Sticker was a tad high but still OK but when I sat down to price it out they added an additonal $2500 to the price because it was 'in demand and the supply was limited'. I walked out. Guess they made it selling it to someone else but not me.
If I NEED IT NOW and the overpriced place is the only one who has it I'll probably pay but I'll also remember that he bent me over and it usually does not happen a second time.

 

[McQue]

Seems to me that this pricing problem is brought on by the fact that there is a MSRP list...not clear to me why Manufacturers put their Dealers in this position, as without their Dealer partners who will sell the product?...I am glad there is a MSRP list...it's a reference point for making buying decisions based on needs and wants... all part suppliers should make a profit, including dealers. I just don't want to get raped for a must have part that only the Dealer stocks...now you are talking a monopoly with the vendor that you made a major financial committment to when you bought the product....just my .02 cents

McQue

 

[PhotographerMike]

The lady across the street works for Chrysler and when I complained about the local dealers mark-up she said that a mark-up of 40% over MSRP is customary with many dealers.

Here's a quote from one of my posts about pricing and buying a factory Harmonic Balancer;
". . . went to the local "Stealership" to look at the genuine factory part, very well made and quite different looking (from aftermarket made in China part), made in Canada. List price is $76.50, stealership wants list PLUS 20%! ($91.80 + CA tax) and offered to come down to $85 after I mentioned the list price, no thanks. Finally ordered it from Jack Miller Jeep (http://www.allchryslerparts.com) for list MINUS 20% ($52.80)."

Mike

 

[iBarsky]

What do you expect when cars cost what houses should and houses cost what small islands do? Read somewhere recently where Ford clears $15k or more on the top of the line SuperDutys and a relative that works for Toyota said that the profit on the Tundras and Tacomas is $10k and up. If they can get people to pay what they do for a new vehicle, why shouldn't they try to rob us at the parts counter too?

 

[FordGuy]

Care to discuss 'hold back' a bit, that adds a couple of grand to the 'margin'... I just have to laugh, had relatives that sold new and used cars, back in the early 70's it was common for a good salesman in a good dealer to take home $50,000 to $100,000 a year and back then considering the average income was about $15,000 that was pretty good. Have friends that sell them now and take in 6 figure incomes and do very well so I know the dealer is making money. I don't mind paying MSRP for something, thats no big deal but when a retailer charges me OVER msrp that tends to tick me off. I almost made the mistake of buying an Rx5 or was it Rx6 back in 80 or so, Sticker was a tad high but still OK but when I sat down to price it out they added an additonal $2500 to the price because it was 'in demand and the supply was limited'. I walked out. Guess they made it selling it to someone else but not me.
If I NEED IT NOW and the overpriced place is the only one who has it I'll probably pay but I'll also remember that he bent me over and it usually does not happen a second time.

 

[FordGuy]

Hold back is earned to offset flooring. Hold-Back on a $50,000 Truck is about $700.00, Do you have any idea how fast that is sucked up by flooring? When you see all those vehicles that have been on a Dealers lot for 6-8 months do you really think there is any profit left. Then there is dealer trades, when we go out and trade for the exact vehicle you want, we lose most of the hold back and even go in the hole when we have to trade for a lesser vehicle. It is way more complicated than what meets the eye. Look at all of the Dealers that have closed in the last couple of years. If you want to talk about the true issues look at frivolous lawsuits and unions, when you pay the guy $32.00 an hour to sweep floors, how much do you think that inflates our parts and vehicle costs? We all pay over msrp all the time, we just dont know it, look at the i-phone.

 

[RichP]

Interesting, the hold back on my 98XJ was $2300 bucks, I know the salesman, he's fellow jeeper, guess chrysler/jeep paid better but then they also made $11,000 profit on a $19,000 chrysler mini-van. As for dealers closing, boy, not up here, every time I turn around there's a new showroom going up, 6 in the last year up here.

 

[FordGuy]

Interesting, the hold back on my 98XJ was $2300 bucks, I know the salesman, he's fellow jeeper, guess chrysler/jeep paid better but then they also made $11,000 profit on a $19,000 chrysler mini-van. As for dealers closing, boy, not up here, every time I turn around there's a new showroom going up, 6 in the last year up here.

 

[FordGuy]

I don't about the area where you live, but every domestic auto manufacture has had a substantial reduction in there dealer body. Ford has closed over 900 stores nation wide 900! with at least 500 to go. $2300.00 hold back on a 98 xj? do the math. don't confuse hold-back with incentives that are given for customer satisfaction or contest incentives, $2300.00 was probably the total gross profit which would make more sense. Then how do you figure a $11,000 profit on a $19,000 van ? The one thing people don't realize is the banks wont lend over 10-12 % over MSRP, they don't want to be buried if it is a repo. Believe me, I am not trying to say all dealers are going broke, but here in Orange County California, and as you probably know our economy is pretty fair, the Ford dealer I work at is the only profitable Store in our Region.

 

[RichP]

I don't about the area where you live, but every domestic auto manufacture has had a substantial reduction in there dealer body. Ford has closed over 900 stores nation wide 900! with at least 500 to go. $2300.00 hold back on a 98 xj? do the math. don't confuse hold-back with incentives that are given for customer satisfaction or contest incentives, $2300.00 was probably the total gross profit which would make more sense. Then how do you figure a $11,000 profit on a $19,000 van ? The one thing people don't realize is the banks wont lend over 10-12 % over MSRP, they don't want to be buried if it is a repo. Believe me, I am not trying to say all dealers are going broke, but here in Orange County California, and as you probably know our economy is pretty fair, the Ford dealer I work at is the only profitable Store in our Region.

The minivan profit was straight out of a Forbes report of the top profit and top loss vehicles for the year, they had a listing of all the manufacturers by name and model, cost, profit, advertising, etc. Pretty much a whole spread sheet. I have not bothered looking for a while, this was a few years ago, maybe 4 or 5. Yea, I noticed two ford dealers vanish and they are now Dodge and Chrysler dealers. I know what the hold back on my 98 was as well as the sticker, I paid $17000 for my 98 off the lot in dec of 97.

 

[philip_g]

200%,,,that explains the bolt for my gas tank (strap to frame) costing me $18.00 at my local dealer and only $5+ at a dealer out of Texas. Needed it right away, but ordered two spares (from TX), delivered...for less than one at my local dealer

I needed a new locking ring for the fuel pump, dealer wanted $50 for the crappy, flimsy OE one, NAPA wanted $5 for a much superior, thicker version.

 

[FordGuy]

I needed a new locking ring for the fuel pump, dealer wanted $50 for the crappy, flimsy OE one, NAPA wanted $5 for a much superior, thicker version.

 

[FordGuy]

Its crazy how some of the parts are priced, if there are not used often it is unbelievable. A friend of mine makes brake kits and buys the factory calipers from Bosch and pays pennies on the dollar for new ford calipers his cost is like 20.00 each and we pay 150.00 same part.