When the new beetle came out, weren't most sold above MSRP?

Yup. The crook I worked for was charging a few grand above sticker. When other dealers stopped selling with ADMU (Additional Dealer Mark Up), this guy loaded every one with dealer installed options. Some he even ruind with the cheapest, ugliest custom paint.

You aren't going to get much of a deal on one right now as they haven't been out long and the "new" hasn't worn off them. Two places I would look would first be this thread where people who own them are talking about them: How Much Did You Pay for Your Wrangler Unlimited

And this Jeep online dealer website has a very good reputation for both low prices and being honest: http://www.jeepwarehouse.com/

Are you dealing with those crooks at the Richmond Auto Mall by any chance???

Run - don't walk - from that Jeep dealership.

Watch that train wreck on A&E, The King of Cars. Season 2 Tuesday @11pm. They seem like a laid back dealership.
All kidding aside if you are a member of a credit union some offer deals on new vehicles.

For those of you who have USAA, they also offer a car search service. My credit union does as well.

We've got phone quotes from them, as well as Marine Chrysler and many others. We're central interior and things don't move as fast. But I'll tell you this... the offer Richmond and Marine in particular proposed to my wife was ridiculous for high volume dealerships, $2000 above MSRP and wholesale only on our trade ( without seeing it of course). Our local guys undercut them by $3000 on their first offer. This is a bit of an amusing game for me as I'm detached from this purchase. The Vancouver guys did call back several times after I thanked them politely for their time, but this BS can get tiring after awhile. Their "floor manager" called to ask what they could do for us after I said thanks anyway to their sales guys' initial insult. My first thought... why would I want to talk to their Janitor? (floor manager, get it?) My second thought... why am I wasting my time with a salesman when the floor manager is the guy to go to?? Another case of good cop, bad cop?
It's all good. No sweat on my end, but antics like these were the reason for me to ask the question in the first place.... how much wiggle room is there really? Marine Chrysler would have my wife believe that full retail was their cost.

Don't know about Marine Chrysler - but run from the Richmond Automall guys. I won't bore you with my stories about them - but they should be behind bars.

I bought two Jeeps and a 300C in the past few years - and after a bit of comparison shopping always bought at Mountainview in North Van. Hassan Bani Sadr, the owner, is a cousin of the former Iranian President - and a wonderful old-school gentleman. Lovely guy - really - and great prices.

My 2 cents.

Look, I know McDonalds operated on a 3% margin and makes it up on the volume, but I find it hard to believe that car sales do.

I know this much first hand, I used to sell high camera equipment, Hasselblads, Linhof, Nikon Pro gear, etc. Yes, we had a "book price" which we would show the customer if need be, to show them that there was a 8% markup on Hasselblad, and that everybody paid the same price. But what's not in the book is the 3% discount for "check with order", and if you order 10 cameras, you get one free. Or buy 5 lenses get one free ($2500 per lens avg.) Factor all that in and the store is making 8+3+10= 21% profit. And that's not counting "Demo" gear, special deals on "rental" equipment, etc.

You can't tell me this kind of business model does not exist in the car world. The bigger the dealership, the higher the volume, the deeper the discount. Some dealers will sell cars at invoice to keep the volume up and keep their discounts maximized, otherwise it wouldn't make sense to have a huge lot with a huge staff.

I hate to hijack this thread, but there is quite a bit of bad informtion being given here about how the car business works. Sometimes I can't help myself.

First off, I used to be a new car dealer. So, you might say I know the business. I got out of it quite a few years back but my brother stayed in the business until last year, so what I am going to say is still relevant. One more thing; there are people out there that hate dealers so much that they will refuse to believe what I am going to say. Fine with me; it was those jackasses that convinced me that there had to be a less painful way to make a living. I actually quit the business because too many of the customers were dirtbags. That is a long story and for another time.

Anyway, the markup between dealer invoice price and MSRP varies by brand, with the more expensive brands having a higher markup. Sometimes, it will vary within the brand, with the more expensive models having a higher markup. It has also varied over time and is generally less today than it was in the past. As an example of this, have you noticed that Mercedes has magically dropped their prices over the last decade and a half? I bought a 1993 S-class that cost mid-nineties. Today, you can still buy an S-class for that amount, although the dollar is worth much less. Why? Because Lexus kicked their butts bad enough that they had to lower their prices. Mercedes AG paid for some of that and the rest came out of the dealers' pockets, as Mercedes dropped the markup drastically. Lastly, the markup will be quite different between national markets. Go price a car here in the US and then price that same car in the UK. After allowing for VAT and the exchange rates, the UK car will be way higher. Count your blessings that most of you live where cars are cheap.

Okay, the dealer pays the manufacturer what's on the invoice. The timing of this payment varies but you like to pay for the cars after you get them. Sometimes the manufacturer is screwed up enough to bill you before you get them, so you have the occasional argument. If the dealer has a lot of cash, he writes a check. If he has a floor plan account, some bank pays for the cars and the interest clock starts ticking.

Some manufacturers have what is generally called holdback. This was an ancient practice from the US car companies that basically means the dealer gets a small amount back from the manufacturer for every car sold. These payments weren't great, usually $500 to $700 per car, but they did exist. Many manufacturers, notably the imports, didn't have this.

The dealer pays shipping for the car, the "destination fee." Every brand I have been associated with has had this and it's non-negotiable. The dealer HAS to pay it. Period.

There may also be, from time to time, charges the dealer HAS to pay for advertising by the manufacturer, in the dealers' local market. This is also non-negotiable and a sorry deal in most dealers' minds.

The dealer gets to pay one of his mechanics for a couple hours work to make sure the car is screwed together properly and gets re-imbursed by the manufacturer for this, at a lesser hourly rate than customers pay. A few bucks are made here, maybe $50 or so, not counting overhead.

The documentation fees are essentially additional dealer profit, in a sense. The costs are real. We usually had at least two people ( in a relatively small dealership-50 to 60 units per month) whose full time job was dealing with the paperwork associated with buying the cars from the manufacturer and selling them to the public. There's a lot of paper, especially if there is a floor plan. The dealer used to absorb this cost as part of the overhead; now the public pays for it directly, or a part of it. If you are a good negotiator, some dealers will waive this fee. He still has to pay somebody to do the work.

Occasionally, there will be a rebate program, or other incentive program, like low interest rates. Rebates can either be to the buyer or to the dealer and are common knowledge amongst buyers. The manufacturers make sure the public knows about them, generally. The more upper crust brands may be a little more reserved and tell only the dealers (they don't want to associate their brand with the stigma of low cost) but word will get out and 5 minutes spent on the internet will tell a buyer all he needs to know. I personally think that the use of rebates has made the relationship between buyer and dealer much worse and has done a lot of harm to the business. That cat is out of the bag now, so.....we are stuck with it.

Some dealers will show you the factory invoice and sell a car for x dollars over. We did this for years. Some dealer will make up their own invoices and show you this instead. These dealers are usually the really large ones. Buyer beware. Trucks used to not have MSRP stickers. Figure that one out yourselves.

Occasionally, a car will be so popular that it will command prices greater than MSRP. Some dealers will sell them over sticker; we didn't. Don't ***** if they do; it's just basic economics. Don't buy the car if you don't like the price.

Dealers will usuallly try to make a little money in the F&I department. If they arrange the financing for you, they will mark up the rate if they can. If the sell you an extended warranty, they will make a few bucks here too. If they install an accessory, or pinstriping, or "clearcoat protection" they will mark up their costs and make a little bit. All these prices are negotiable but no dealer will lose money on these items either.

That's about it, really. All the rest that you hear about is generally BS from someone that has a grudge to pass on to the world.

Have fun out there,

JR

Damn--I lived in Kellogg for a year--pop at the time 2,500--that is something for them to be the largest--esp based in that town.

JR- Good info, thanks. A few questions for you.

Is there a mark-up on the destination fee?

How much did you make on the mechanics' check-up?

Do you know if the Documentation fee gets marked up, and if so how much?

I have heard that dealers mark up the financing by 3% over the buy rate, is this correct?

Your dealership sold 50-60 cars per month. Do you know if a dealer that sells 2500 cars per month (e.g. Longo Toyota) gets a better deal on cars, or more holdback or some kind of perk?

Thanks,

Ken

P.s. I buy my cars used, from private parties, with a bank check in hand.

Ken,

With our brands there was no markup on the destination fee. You can look up the info for almost all brands on the internet.

Generally, on the pre-delivery inspection, we got paid around two hours, at a lesser rate than what customers paid. The manufacturers pay "warranty rate." We paid the mechanic his hourly rate, his benefits, some parts costs (fluids, and the like) and then we lost the ability to make money for two hours on something more productive. Believe it or not, I was limited by my shop area and couldn't economically take on more work. So, you have to factor in a little overhead expense. Without overhead, we probably netted between 50 and 100 bucks a car. With overhead, I doubt we made any money on a PDI.

The documentation fee is charged by the dealer to the customer. It has nothing to do with the manufacturer, so there is nothing to mark up. At our volume level, we didn't even completely cover the payroll costs of the two people on staff that did the paperwork so we lost money there. We just didn't lose as much as we would have if we didn't charge the fee.

The amount that the buy rate gets marked up isn't an set amount. It's basically what the customer will bear. We would have been tickled pink with 3%. Usually, it was much less. When I buy a car, I'm willing to let them make .5%, just so I won't have to screw with arranging the financing.

We paid the same price for cars as the big boys. The only exception I knew of to that rule was some Honda dealers in the mid- to late-eighties were handing sackfuls of cash to the Honda Sales reps under the table to get more cars. They paid the same amount per car, they just were able to sell more at a time when you could sell all you could get. We didn't play that game. Some did and there are now people sitting in prison as a result of their involvement.

Your relationship with the manufacturer dependent upon size. Usually the bigger dealers make more trouble and aren't rated as high because they tend to have a mentality that they want to rip you a new one on every deal. Listen to the BS they put out in their radio ads on Saturday and see if something doesn't sound right. They have some sort of BS sale every day of the year, and they make it all up. There is no "test marketing;" they didn't accidently order too many cars; they didn't run out of used cars and desperately need yours; they won't give you a trade in value equal to what you originally paid for the car; they won't pay off every thing you owe, no matter what; and all the rest. It's all crap.

In today's market, we could get all the cars we wanted. We didn't keep as many cars in stock as the big boys; we wanted low overhead. If we needed a car we didn't have, we'd just buy it from a big dealer that had it and they were all too happy to unload some inventory. The big ones have to hit more home runs because their costs are so high. I know of dealerships where the monthly overhead will be a 7 figure number. Just count the lights at one and figure their electric bill. It will blow your mind.

JR

Yep, they do it by selling for the lowest price anywhere...many of the other dealerships screaming uncle...my recently retired pilot friend has told me he's bought from them as a repeat customer. His home is in Nevada...