Suggestion for DCX: dealer markup crackdown

[Gregory Pegg]

BULL$#!T !!
Where were you when the PT Cruiser first hit the showrooms ??


#6
1 Day Ago
brasskeys22 vbmenu_register("postmenu_5518", true);
Junior Member
Join Date: Jan 2006
Location: ontario, canada
User ID: 976
Posts: 3


Re: Suggestion for DCX: dealer markup crackdown
We are lucky here in Canada.....dealers are not allowed to sell over manufator list price. Price on the window is the price you pay. Some dealers will license the car as a demonstator so they can then sell it as a used car, ask any price.
But Canada is very well regulated and if you get caught doing that too often, the parent companies hold back on car allotments and so forth as punishment.

[Legion681]

Originally Posted by DARK AGE 53

We've all heard this before " Build it and they will come ", well here's the message to DCX. " Build it and we will come/buy.....Gouge us and we will walk ", and BTW not to return.

I couldn't have said it better myself !!!

[Ted@MPSC]

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!!!!

[Madmopars]

Oh yeah, When I said in a different thread about definately buying this car, it certainly not be at a gouging price (I can't afford to go bankrupt)
I am a Dodge tech, and I have seen this price markup crap and it disgusts me. The first SRT-10 Ram we sold was for $55,000! Now we've had one (quad cab) on the lot for about a year at about $8,000 under MSRP.
People probably got discouraged from buying them I'd imagine.

[Madmopars]

Again I will definately not tolerate high demand price gouging. I will talk to the owner and new car manager about this and see what their opinions are.
I think personally (not going on facts), that for every 1 person who can afford/tolerate price gouging, 3 people would have bought it at MSRP.

[Ted@MPSC]

You know, there is a funny thing about the so called supply for the SRT's. I accidently intercepted a phone call from Chrysler vehicles last week. They were trying to find a dealership to unload a bunch of SRT-8 Chargers, and Magnums to. They asked me if we would be willing to take 3 Black, 1 Red, and 1 Silver SRT-8 Chargers and 2 Silver SRT-8 Magnums allocations. I told her we would love too, but we are not a Dodge dealer.

[DanRealtor]

The dealership buys cars from the manufacturer.

The manufacturer "Suggests" a retail price.

The dealership is in business to make a profit.

Overhead is a function of location.

The more expensive areas cost more to do business in. As in, buying or leasing land in Mahnattan, or San Diego or Scottsdale is a lot more expensive than operating in Iowa or Idaho or some other area where land is cheaper and per capita income is lower.

That is why a car costs more, as does a house, a gallon of gas, a steak etc... in those areas.

If YOU want to save some money, go get your car somewhere cheaper. My friend Cbutler32 flew to Michigan to buy his '06 300C SRT-8 and drove it home to San Diego rather than paying 20k over sticker in San Diego. That was his choice. He could have shipped it but driving it is so much fun!

I paid 3k over sticker for my '06 300C SRT-8 from a local dealer and that was my choice.

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.

The practice of charging over MSRP is not Price Gouging. It is simple economics: Supply and Demand. It is the exact same principal that allows you and me to go negotiate a price BELOW MSRP on a car at a dealership. When the dealer has too many cars (excess supply) we can go in and demand to pay less than MSRP. Why is this not Gouging on our part?

The long and the short of it is: It is perfectly legal and moral and ethical for a car dealer to sell his or her inventory to the person willing to pay the most money. That is how profit is made.

If you do some research on these forums you will see who gets the most allocations for DCX's Higher end vehicles: California (huge state), Florida (lots of retirees and money) and Michigan. Michigan is startegic for car manufacturers. DCX wants their employees and executives AND the other car manufacturers (Ford & GM) employees and executives to see these BAD ASS cars on the road.

For thos of you waiting for Challengers who cannot or will not pay over MSRP you are going to have to wait until there are a bunch on the road and/or travel to get one. If that offends you then, well, too bad. It is NOT bad business. It IS business. Wanting DCX or the government or anyone else to start Price Fixing is DEFINITELY NOT the answer.

And, in case you were wondering: No,I do not own a car dealership. I don't work for a dealership. I am a business owner (Real Estate) and do have an understanding of how businesses succeed or fail.

I am not knocking any or all of you who think it sucks to have to pay over sticker to get the car you want. I didn't enjoy paying over sticker for my car but, after 5 1/2 months of driving my BAD ASS "Sedan" I can tell you, honestly. I would have paid MORE. Please dont tell DCX though

[Mike Penner]

I understand your point of view and respect it. I am not talking about the difference in car prices between areas where the cost of doing business is high versus the cost being low. If a dealer wants to consistently charge $10000 over MSRP because he's selling out of downtown manhattan I have absolutely no problem with that. Presumably the wages earned by customers in that area will be in line with those markups as well. But the moment he drops the price to MSRP and still stays in business I call it price gouging. We all know the laws of supply and demand. The key point here is *excessive* markup (which granted is a subjective thing). Yes he has the right to charge whatever he wants, but DCX as the supplier of those cars has the right and the power to retaliate if its needs aren't met. If the dealer isn't moving units because he is putting the screw to his customers then DCX can (and hopefully will) sanction him. Its certainly in their best interest to do so because DCX isn't getting a cut of his markup while he is costing them precious sales.

BTW I'm curious how your friend saved 20k by buying his car in Michigan (?) and then driving it back to San Diego. The state of CA is very strict about emissions and his car probably won't pass smog as bought. Also he has to be a resident of and have the car registered in the state of purchase for a certain period of time before CA even allows him to import it as I understand it. If this is not the case, please let me know. Obviously if this is a legitimate option its worth considering.

[DanRealtor]

My understanding is that anyone can buy a car anywher they want. All of the SRT-8's are supposedly 50 states (including CA) legal and will pass the smog check from the factory with no modifications needed.

He is CButler32 on 300CForums and LXForums. He did buy it in MI and drive it back to CA. You should ask him directly about the ins and outs.

Dan

[Mike Penner]

Very interesting... will do, thanks. And I'm a big fan of long road trips, driving from MI to CA in a 6 speed hemi challenger could draw easy parallels to a certain classic movie...