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Re: Suggestion for DCX: dealer markup crackdown
I am definitely not an advocate of the dealer fair market value gouging. The dealership I currently work for has a $5000 markup on the SRT-8 300's. We currently have dealerships that try to buy them from us at MSRP. Apparently the demand is still high enough that there are still many people out there who will pay more than MSRP. We were also trying to purchase a new Charger SRT8 that was at the auction lot, it went for over MSRP. While I do not work at a Dodge store, I will be searching as well for a dealership that will sell to me at MSRP. There are just too damn many people out there that want to have the bragging rights of being the first to own one. I guess that’s supply and demand for us, if the demand is high, and the supply is low, the prices will reflect this.
Look at the recent record profits that Exxon reported from the gas price increase. Just because the refineries were out of commission, they felt that the lack of inbound inventory would justify the price increase. So they increased the prices they charge on the current inventory they had. Of course this rolled right on down the chain, so we all end up paying the higher prices. Now we are used to the fuel prices being higher, and they don't want to drop them back down. Why, because we paid the higher price! They had one hell of an inventory appreciation. Being a parts manager, I know about inventory appreciations and depreciation's.
(Example of inventory appreciation profits)
Current acquisition cost of product A - $100.00
Current MSRP price of product A - $167.50
Current on hand quantity of product A - 1
New acquisition cost of product A - $150.00
New MSRP price of product A - $251.25 (same markup percentage of 67.5%)
Current inventory appreciates $50.00 because replacement cost is higher.
When the on hand sells at the new price, generates $101.25 gross profit.
add in the inventory appreciation and we get $151.25 total gross profit.
I only made $67.50 before, now I make $151.25 from product A that I purchased at the old acquisition and had in inventory.
Now I won’t make as much on the next one, because it cost more to resupply.
The key is to have as many in inventory as possible before the acquisition cost price increase.
and for the oil companies
What was the old cost per barrel?
What is the new cost per barrel?
How many barrels did they already have in inventory before the new cost?
Millions upon millions!!!!
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