you can choose as much as you want... if your offer is close enough to market value, you can probably get it.

on a car like fit, shop enough and u most likely find one at msrp. must have one right away, 500-1000 over is the norm.

as for there is plenty of money to be made selling at msrp? a fit at msrp is a pretty shitty sale. a mini deal. 500-600 over invoice, hardly any profit...

as far as fair price sells cars. couldnt be further from the truth. flat price, X amount over invoice dealerships tends to be some of least grossing dealers, with some of poorest paid salespeople. high demand cars they can sell, everything else, they cant.

one of my best friends works at one those high volume flat price toyota dealers, he probably doubles my volume in sales units, but i double his salary.

 

Thanks aywwsd for your response...I think you touched on three major things that are wrong with the car sales industry.

1) "...if your offer is close enough to market value, you can probably get it." The idea that if a consumer pays close to market value, then they are somehow getting a deal is a concept that plagues the mindset of the car salesperson. By definition, market value is a fair price, an average price, like a C on a report car. Not a deal or a bargain from the consumers perspective... I would interchange the term "market value" with "fair price"...and fair implies fair for buyer and seller. The forces of supply and demand go only so far...consumers should never be willing pay a markup on a markup! And if you need a car now, you probably shouldn't be shopping for a Fit, because paying 500-1000 over MSRP doesn't make the boat from Japan arrive any faster! In that sense, the dealers exploit the idea of a supply and demand issue by creating an environment of "gotta have it now or gotta buy now" pressure. That isn't necessarily a fault of a dealer, what would a salesperson be if not persuasive? But the consumer should be able to see through that.

2) "500-600 over invoice, hardly any profit..." This is another big problem with the car sales business. In many industries, a 4 or 5% return (for little or no effort on a product that sells itself, in the case of the Fit) is pretty darn good. Look at the restaurant business with margins often in the 3% range. The perspective of the car salesman has been distorted by bloated prices and lack of disclosure to their customers to the point that a decent profit seems like a "shitty sale". The practice of keeping the customer in the dark is no longer sustainable in the age of the internet.

3) I disagree with your equating a fair price with a flat price. On the contrary, in some instances a fair price might actually be below the "invoice price" (another arbitrary number it seems). In other cases, a fair price might be msrp like what seems to be the case with the Fit right now. But it seems like the fair price (or market value) is usually somewhere between the invoice and the msrp. I could see how a flat price dealer would have a problem moving undesirable cars if they are unwilling (or unable) to move their prices into the realm of a fair price. But that is precisely the issue and that is a great example of how fair prices can sell cars. Every commodity has a fair price. And it seems ridiculous for an industry to rely on bloated prices for their real profit where information is readily available. The one component that has supported this idea all these years in the auto industry, namely withholding info from consumers, is no longer present.

As for doubling your salary for half the unit volume of your friend, I get that. Your job is to make money. And for now, you surely can find customers willing to be taken on a ride (or for a ride!) But I guess what I am getting at is that the car industry is changing and the days of the customer being willing to play the game and pay inflated prices are numbered IMO.

These three issues illustrate how far the car industry has (or hasn't) come in more than 50 years of booming business...archaic mindsets and archaic business practices. Those dealers that don't see the light and accept the reality that there customers have access to more information in the car buying process than ever before, will not survive. There are some sales people as some dealerships that appreciate this, yet many, even most, are still clinging to the old tactics of the 4 squares, the bait and switch, etc, and if they don't learn who there customers are now or who they will be in the future, they will be left in the dust unable to compete.

By in large, the only segment of the car sales industry that has made this realization are those sales people that sell primarily or exclusively online. But the folks that troll the lot looking for ups, the ignorant masses, should look a little farther out into the future. The mere fact that this forum exists (and the many others like it) for example, is evidence that the landscape of the auto industry has changed dramatically.

The structure of the dealership needs to change to meet this challenge. The way it is now, most salespeople won't be able to make a living as the customer changes if the dealers supporting them don't change as well. The whole way in which dealerships and salespeople earn needs to change because the profit margins are moving back towards a more realistic place. The "good ol' days" are won't likely be returning anytime soon.

Anyway, this is just my perspective as a consumer fresh off the front lines of the car buying experience. I'd love to hear the perspective of the car salespeople out there on the state of their industry...

 

I agree!


I had many dealers turn down solid offers and refuse to drop their bloated markups....they definitely turned down opportunities to move a car! I couldn't believe it. That's not a supply and demand issue, that's a greed issue....i know the salespeople sometimes are under a lot of pressure, but I just don't get how turning down a good offer is a smart business practice!

 

Is there really a shortage of Fits in the US or are the markups because of the popularity of the car? I'm in Canada and I just bought mine last week for $350 below MSRP for a Fit Sport with MT.

 

if everyone insists on getting the best bargain, and everyone after them insist on getting even better bargain? where does it end? it doesnt. it's not realistic to assume everyone should be getting the best bargains when to be fair to both parties, everyone should be paying market value. the dealer is running a business for profit. the dealers are asking markup because they are able to find someone to get them. when everyone stop paying markup, and supply catches up with demand, they will discount, markup value drops. remember civic hybrid in 06? 2000/3000 markup, now, invoice, a swing of almost 4000/5000 bucks. if the cosumer can accept joe somebody from down the street must have the hottest toy on market and is willing to 500-1000 more then i am willing to, he gets to have his before i can buy my. is markup fair? no. would i ever pay markup? no. joe somebody can have his, i'll wait. my last car (wrx sti, was marked up 20-30k when they first came out), i waited until late 05, and bought one for 500 under invoice with .9% financing. in late 03 when the car first came out, there is no way, regardless of anyone's ability to bargain, how desperate for the dealer to make a sale, everyone who boughted a sti around time paid through their nose for one. the market value was high. the same is for the fit, if you want one where it's hard to get one, you pay for it, dont want to pay that much, you wait, like i did. when the market value drops, you can pay less, but until then, dont bitch and moan about markup.

restaurant profit margain at 3% can be very profitable. a car dealer that averagers 4-5% is not. most dealer keeps a multi million dollar inventory. you have any idea how much just the flooring for a multi million dollar inventory is?? when a restaurant keeps around 3 million dollar worth of food in the back, and see if they can still charge you 3% profit. as far as the internet allowing the cosumer to be better informed, good for them. im asking for fair profit, im not asking them to pay 30k markup.


fair price could very well be under invoice, after all, that's why we have dealer cash rebates. as for bloated prices, if you are turned off by that, now imagine running people trying to buy cars 3000-4000 below cost. it's a 2 way street.

it's the internet age, it's already over.

do you know what is the quickest way to bankruptcy? to consistently be the lowest bidder.

i use to be internet sales, later moved back to floor, and now back onto internet. i actually grossed more on the internet, then the floor.

i wasnt selling back in those "good ol' days", so i cant comment. as far as realistic profit margin, your idea and my idea, and my management's idea, is pretty different. but i can tell you a dealer that averages 3% profit margin before cost will be out of the business.

the dealer sells the car for what the market is willing to pay. if your offer is lower then what the dealer perceives as market value, they will refuse. you can try your luck some where else. the odds of the second dealer turning it down is pretty high. you'd be surprised how similar profit margain level is at dealerships.

 

both. however, supply is getting better.

 

because they can turn around and sell the same car for 500-1000 more.

you can call it greed, the opposite is cheap. 2 ways street. in our society, just because cheap is more accepted, it doesnt make it any better then greed.

 

I had to shop around and haggle the sales rep and took about 4 hours, but they said i can get the fit MT transmission in white sport for $15,700 is that good?

 

I just paid $16,414 out the door for a Milano Red AT Fit.

 

That is $65 under msrp....not bad. Some people seem to be doing better, but I fear most have paid much more than that...

 

i got my fit from concord honda. it was funny. they had it advertissed on autotrader for MSRP. *i printed the page out*. when i got there, they had HAND WRITTEN +$1500 dealer fees on the tag. we showed tehm the page from autotrader and tehy were shocked lolz.

they started speaking in tagalog to each other, thinking two tall white guys (my dad and myself) wouldn't know what they were saying. well, my dad speaks fluent tagalog. he started speaking to the salesman in tagalog and the salesman was dumbfounded. it all turned out well though. the salesman even took me to dinner (long story, but we had to drive home to write a check for the down payment)

 

dude, when I run into a car salesman like you it just makes my day.

 

OK, with the US economy taking a dive (by most accounts), I see far fewer cars leaving the lots.

I want to buy a FIT. I have had 2 dealers tell me they won't sell a FIT for near invoice, and I think I would just as soon wait it out. One dealer was marking up something like $2800 over MSRP, but quickly changed the story to MSRP when I balked. I offered what I think the car is worth, and the dealer was reluctant to discuss it further, trying to steer me into another car.

So now the question is this. How long should I hold out?

Will the sagging economy increase demand for these cars, thus keeping the markups intact? Or will the desire to move more cars lower the actual prices paid?

 

As it turns out I bought a black MT Sport today for sticker plus the wheel locks. I fully expect the price to be more reasonable very soon, but my circumstances did not warrant the wait.

Thanks for all your posts, this forum was very helpful in my search for the right car.