Originally Posted by DanRealtor
...
The manufacturer dictating the allowable price to the dealerships could never work. Here is what would have to happen: The dealerships would no longer be able to operate and and make a profit in expensive areas. We would all wind up having to drive to BFE to buy our cars AND to get them serviced. Or, the dealers would have to raise prices on parts and service to recoup the loss and stay in business.
...
With all due respect, I disagree at 100 %.
I happen to be a foreigner (I am a Swiss citizen) that moved to the USA fairly recently (3 years ago).
Before this, because of my job I worked in several European countries and, seen that cars are my # 1 passion, I was able to observe how it works in some of them as far as car's buying/selling is concerned.
Well, even though I can only be sure at 100 % about Switzerland and Italy (= nations where I bought cars), I can tell you that manufacturer-dictated prices
work very well.
No matter where they are located, it's mandatory for dealership to sell cars at the price the manufacturer feels appropriate. And let me tell you, I have never seen any dealership go bankrupt and as a matter of fact they seemed to thrive quite well (and this in spite of prices over there: cars are
much more expensive in Europe. Example: a Z06 in Italy will cost you 83,950 Euros or a cool $100,740...My last car over there was a BMW M3...it costed me 101,000 Swiss Francs...or roughly $77,700...so, just to be clear, it
isn't cheaper than here...).
And it all makes sense to me: if you mark up a car $10k, you might sell 1 or 2 of them, if you sell them at MRSP you might sell 10 or 20 or more.
If you can't afford to have a dealership in Manhattan (or for that matter in the middle of London or Zuerich or Milan), you don't have to. You can always sell your cars in the suburbs with equal or even more success (who the heck will buy cars in Manhattan ? You don't need to), so IMHO to use the excuse that selling cars in Manhattan has more costs than selling them somewhere in Iowa, it's not a reason why car dealerships should try to rip possible clients off with mark ups.
This also makes even more sense in this day and age, where big companies like GM and Ford are struggling. Dealerships that have mark ups are acting as bottlenecks: for their own greed, they'd rather sell 1 or 2 cars with a 10k mark up rather then sell 20 of them, while in the mean time Ford and GM are in dire need of selling as many vehicles as possible.
The bottomline is simple: selling cars at MSRP would be better for everybody (manufacturers and their workers, thousand upon thousand of them, mostly American people. And all possible buyers...again most of them Americans...and with this I mean that people that are screwed up aren't some poor idiots on the other side of the world. It's happening to YOU.) but greedy dealers, selling cars with mark ups benefits
only dealerships.
And this is even more of a sin when this ridiculous system that allows mark ups could be easily changed and it would work, as it works in tons of other countries in the world.
I don't know how someone could defend dealerships that apply mark ups, honestly I can't see why.
My $0.02
