Question - I'm responding to your article asking dealers to tell you what a dealer really pays for the cars he sells. I've been retailing cars and trucks for almost nine years now, and I can personally tell you that new car dealer profits have gone in the toilet. Not only do I have to compete with the competition's prices, but now I have to fight Consumer Reports, too?
You're right that the dealer invoice is not the true dealer cost. But with all of the information available to consumers about dealer costs, thank goodness we at least have the "holdback." What right does anyone have to get the dealer cost of anything that is for sale? Can't the salesman make a living?If a new vehicle is sold at invoice, the salesman typically makes what is called a "mini." I've seen minicommissions range anywhere from $50 to $100. So if he or she sells 15 new cars in a month, and sells them all at close to "invoice" due to the competition and information out there, that means the salesman will make $1,500 to $2,000 a month. It's hard to make a living and raise a family on that.
I haven't seen any articles lately on the wholesale cost of furniture or clothing. Have you? Last I checked, everyone needs furniture and clothes, so where are my wholesale lists? I want to buy a bedroom set at invoice! Why not? Everyone expects to, and thinks it's his right to do that when he buys a new car. I dare anyone to go into a furniture store and ask for a copy of the furniture invoice. - Scott
RAY: You raise an excellent point, Scott. And I happen to agree with you. We don't ask for the invoice price of a bedroom set, a TV set or the real cost of our cable TV service. We ask the price, we decide if it's worth it (to us), and we buy or don't buy. So why do we treat car dealers differently?
TOM: The answer is because you guys have treated us differently . . . for decades. Over many, many years, you commissioned sales people have trained us to battle for price, by rewarding those who badger you and beat you over the head, and punishing those trusting souls who don't. So how can you blame people for seeking more information to avoid being one of the "suckers"?
RAY: I agree with you that it would be a better world if cars were priced like cartons of milk and salespeople worked for salaries plus some incentives based on long-term customer satisfaction, or something that didn't encourage a short-term commission-sale mentality (that is, wringing the most out of each individual sale). If the playing field were level for all buyers, then I, as a buyer, wouldn't be afraid that I was being asked to pay more because your last customer came in better prepared than I was.
TOM: Some dealers have gone to non-negotiable pricing and salaries for salespeople. And it's a trend I hope catches on. Then I'd think you'd see all of this invoice price research fade into the background. And we'd probably be writing a "Furniture Talk" column and looking for inside information on the wholesale prices of bedroom sets.