Reader wonders if bottom line is really the bottom line?
Posted Jul 22, 2010 By Brian Turner
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Tweet ThisEMC Lifestyle - "Hello Brian Turner! This is further to your article 'You've done the tire kicking now get down to number crunching', which was in The EMC - Thursday, April 8, 2010. Well, I've decided on the car - I like the Buick Enclave. I'm dealing with two GM dealers to see if I can get a little something extra (lower financing, oil changes, or whatever). They both say the same thing: "Because GM is offering employee pricing, there is nothing else they can give." Because the options I want cannot be found on the 2010 models available, I am thinking of ordering a 2011 model. The employee pricing deal will still be in effect until August 31, but the cash back on the 2011's will be reduced from $2,000 to $500, and the financing will increase from 1.9 per cent to 2.9 per cent for 48 months. I'm just waiting for the 2011 prices to come out to see how much the base price will go up before I make any offer. I've offered to pay cash (hoping to get money off the base price) - but to no avail.
For a car maker which is/was on the verge of bankruptcy, I find that GM is not very flexible at all (or perhaps my negotiation skills are not as sharp as they were when I bought my last car in 1997). The Enclave is $45,000+ - what gives? It seems like a "take it or leave it" situation with both the dealers I've visited. Both car dealerships have told me that there is just no negotiating these days because of the employee pricing discount. I had been discussing buying an Enclave from one dealership before the employee pricing discount came into effect and I was told then that the price they quoted me was the bottom line. Also, dealing with the sales rep from the first dealership is a whole other story - that's why I decided to go to a second GM dealer. Your input would be appreciated - am I missing something to try for a better deal or, as they say, any price they quote is the bottom line?"(
Thanks,
Bill
PS: The axe over the head: both sales reps say the same thing - this offer could be taken off the table at any time.
What isn't always common knowledge is that with many rebate or incentive programs offered by auto makers, the retailer is often required to take a smaller profit along with the manufacturer. This sometimes leaves dealership sales personnel and management unwilling to budge during negotiations. But there are a few things you can do to improve your position.
Buy from dealership inventory. Sales reps deal in the here and now and they may be more flexible if they can make an immediate delivery (and therefore get an immediate pay-cheque). Dealership managers are much happier to move their own product rather than locate a model at another store (known as a dealer trade) and then have to negotiate with another retailer after negotiating with you. And as a factory order seldom gets delivered in the same month as it's placed, there's even less incentive for discounting.
Let the dealer know you will be a future customer. Many new vehicle sales are completed with an amazingly low profit margin because dealer owners know that providing parts, accessories, and repair services over the ownership years of a vehicle will earn his or her business more profit than the original sale (even at full mark-up).
But if you're shopping several dealers, and have no history of purchasing parts or service from any of their stores, and if your home address is far enough away that they will assume you'll not likely return for routine maintenance, then they will make their profit on the sale by standing firm on the sale price.
Give the dealer a chance to make some profit from your purchase. When it comes to a used or new vehicle sale at an auto-maker's outlet, the profit comes from two main sources, the mark-up on the vehicle itself and profit from the sale of financing plans, accessories, and protection packages such as rustproofing and extended warranties. Offering a dealership cash, automatically eliminates one of those profit points and puts you down a rung or two on the rating scale. Now I'm not suggesting to go out and purchase products you don't want just to get a discount (that's a bit counter-productive) but at least check out the value of their offerings of extended warranties and such.
And of course I wouldn't be the only one who thinks it's odd that a shopper that bemoans GM's near-bankruptcy finds it ironic they want the most profit they can get out of every deal. One of the factors that led to some automakers teetering on the brink was their seasonal mad headlong rush into deep discounting.
You'd think they would have learned some lessons, but here it is less than a few quarterly reports since the deep of last season's recession and almost every car manufacturer is at it again. The first things I think of when I see ads for massive rebates is, that just before these programmes started, a lot of poor saps paid way too much for the product they're driving, and that if for example, a $32,000 vehicle is marked down $8,000, then it was priced $8,000 too high in the first place.
This Sunday, July 25, the Super Ford Spectacular is on again at Campbell Ford on Carling Avenue in Ottawa. Registration is from 9 a.m. to noon and the show runs rain or shine and spectators are more than welcome. Check out www.campbellford.com for details. Make a day of it and take a scenic route to Smiths Falls on the same Sunday to find the Rolling Thunder Car and Motorcycle Show at Lower Reach Park.
If you have any questions, opinions, or stories on anything automotive please drop me a line, (By email to emc@perfprint.ca listing 'Question for the Car Counselor' on the subject line or by post to Record News Communications, 5 Lorne St., P.O. Box 158, Smiths Falls, Ont. K7A 4T1).
Yours in service,
Brian Turner
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