Do you remember the many years of cutomers buying cars and overpaying ? I can remember back in 2004 when the 997S was launched . Most dealerships were sold out . BMW was also thriving and the attitude.... sheesh .

And now they all have cars . New cars , Used cars .. 997S cars ,M3's , Gts's . 750i's -- all of them.

They still don't get it . One of the great things about these price threads on 6speed is that one can read and research the a price point range of the entire country and the disparity is significant .

The most successful dealerships of the past must be taking this the hardest . They had years of volume buyers and now those customers are looking elsewhere for cars to save money .

I think most would not mind paying 1 or 2K more to buy a car in his own back yard . It's convenient . But when it's more than that or even if that 2K can be saved by a two hour drive the dealership loses a customer.

Yet they scratch their heads and ask "why?"

Here's why ( advice to the dealerships who are reading and wondering)
Because no one wants to pay too much for a car anymore !!!
Lower your prices and people will buy cars from you .
Keep internet inventory updated and priced to sell .
Offer out of state sales and transport .
Stand behind the respected employees because if they are miserable the customer can see it .

That's why.

 

You are soooo right...cars are a commodity...you can get it from anywhere, as it is covered by the manufacturer for the warranty period, and can be serviced anywhere...much like a Rolex, etc...you don't want to overpay...I think we have all learned in this downturn in the economy that we have to look after ourselves financially and make smarter decisions than perhaps we did in the past...getting a good deal never felt better, especially with far fewer consumers out there these days...it should take more to earn the business of those actually doing the consuming...just my opinion.

 

Another odd position, taken by the manufacturer's financial entity or a leasing company, is the handling of the sale opportunity at the end of a lease. A lot of cars went out in 2006 on three year leases that are now ending, but my experience is that they still want the price stated on the original contract. Of course they are entitled to ask for that, but the market has changed dramatically and they seem more inclined to send the car off to auction than negotiate a new price with the lessee. Doesn't make sense to me to lose a buyer they already have in order to risk an unknown result at the auction or dealer's lot.

 

With respect to their current poor pricing I've heard the following: "the manufacturer is producing far fewer cars with less being available"...

 

Supply and demand can only go so far when the depreciation curve carves a wedge . A 997 Turbo which two years ago cost 140 can be bought for 20K less than a new C2S and 30K less than a C4S . That's huge .

There's enough old cars to make used pricing attractive and the price increases on the new cars (factoring in trendy options) price them out of todays market enough to sit on lots all over the country .

So now dealerships have less less volume available to try and sell . The dealership can't control the manufacturer but they can sell cars and if they do .. Porsche will build more . I can't help but remain skeptical about a manufacturer claiming limited production . BMW tried this tactic with the E46 M3 and the roads were filled with them . Porsche did this with the Turbo and look at the used inventory . The GtS too . Even the Gt3 and Gt2 cars can be bought .

It's no longer the customer pleading with the dealership of years past --it's customer walking out and finding a better price. That's a huge shift in dynamics .

 

Well said and I completely agree with you 100%

I remember when people would pay $5-10k PREMIUMS for M3s, M5s and AMG models - now they can't discount them enough. Not even a year ago I remember my dealer at Alexander Imports showing me a new M3 with a $10k markup - I laughed when I saw it.

Only people that have no concept of finance (or they just have crude in their backyards) would say "great, I'll take it."

Now, when you take a stroll through BH Mercedes you see dealers playing Solitaire, a CL65 with a $20k markup and a deserted showroom floor - gee, wonder why guys?

Sure, the downturn in the economy has played a major role - but just as major a role as the Internet and the savvy consumer who will spend hours researching, looking around and talking to people to get the best deal. In the end, everyone wins. We get great deals, dealers move more cars - what more could you ask for?

I remember paying $1700 / month for an '06 E55 - today, this seems absurd, but times have changed.

I'm glad I came here to listen to what members have to say and because of this I'll end up getting a better deal, which will make me cut that check with a smile instead of a grin. The more you know.

I hope dealers are reading these posts because they just need to face reality and adapt to the changes at hand.

(BTW, I'm ready with a check in hand this weekend, if Rusnak wants to play great - if not, there are so many cars on porschedealer.com )

 

daKrisht-
This article was not too long ago (30K markup for a new M3) http://wot.motortrend.com/6232919/de...30k/index.html

Times sure have changed .

 

Larry, you are bringing up a point that a lot of Canadians have realized for years. We have a smaller population base, and therefore less dealers. I have found that not only are the cars less money in the US, there is also a bigger supply of inventory (both new and used). The Canadian to US dollar was on a roller coaster for about a year and the Canadian Dollar was worth more then the US Dollar in October of 2007 (coincidently when I bought my car) and what would have cost me $100000+ Canadian at the time was only $82000. This caused a lot of Canadian arms of the Manufactures claim that the US models didn't meet the Canadian models crash standards, therefor they could not be imported into Canada without major bumper retrofits costing thousands of dollars.

It is a well known fact that car dealers do not need to sell any new cars to stay in business, they make there money on the service department, and therefore any and all vehicle sales are just the gravy on top. Your local dealer knows that you will be in for warranty and maintenance, and effectively earning the value added dollars instead of the straight line markup the sales division generates. So when you buy your car from your local dealer and they don't give you any deals, you are only providing them with a lot more profit.

 

When dealing with end of lease buyout figures many leasing companies bought residual value insurance, so if the actual buyout is more than the market value, they take the car back, sell it at market and collect the difference. This is how it was once explained to me. If they take a lessor value for a buyout then the insurance might not payout.

It seems that under this scenario the lenders and the insurance companies should work together to determine the "market value" and offer this to the leasee so that they could avoid the transaction costs of taking the car back. And they also are selling the cars at wholesale, typically at auction, so they realize a lower "market value" then the retail a leasee might be willing to pay.

Hoever, the auction houses don't want to see this, the dealers don't want to see this, and all the other parties that are involved in processing the cars don't want to see it because they all make money along the way. Particularly dealers that want to buy cars at low auction prices and sell them at retail, even if it is a low retail.

 

I don't remember reading this article, but I remember searching on Auto Trader maybe a week before the car came here and there was more than one dealership pricing the car at 90K... seeing as it's SoCal there probably was one or two people who probably negotiated it down to 85K and thought they were getting a steal.

 

North Van -

Within a 2 hour radius of my home I can select 5 dealerships . Even service is competitive and with all the independent tuners and technicians in my area it adds even more of a playing field . BTW there are other regions which offers even more variety than mine . Now I understand that the guy who lives in aplace with one or two dealerships is in a different situation. This can occur in Canada as well as select regions of the USA too .

In fact I recall reseaching a car for forum member H man (on an old pricing thread) when he posted the stats . He had only one dealership and they had only one C2S CPO low miles . Oddly enough they gave him the best price . Why? Because in the US if there is only one Porsche dealership in a tough economic region it may have such few buyers that they might be desperate to sell. This differs greatly from years past when a single dealership charged the highest price and had customer pleading for a car .

Times have changed.

I have read a lot of post on the Canadian dealerships where forum members have expressed disappointment . They may still have enough buyers or service clients but that can not go on forever .

If dealerships don't adapt to the changing economic climate and consumer sentiment they will slowly drive their own sales numbers into extinction .

 

Regarding lease buyout --

I am in full agreement and have a example . In 2007 Mercedes had this great lease on E350's . 27 months with low monthly payments .

I leased one and it sounded great until I wanted to get out early to buy my M3 . The disparity between the wholesale cost and lease buyout was approx 8 grand . They refused to negotiate and it was up to the BMW dealerships to help be hedge the loss in order to drive a new M3 . It was tough deal and I ended up losing 4 grand and will NEVER lease another car again .

Now .. look at all the E350 2007 models on used lots . Dealerships are swimming in inventory because no one bought out the car and they are worth MUCH less .

In short as much as i lost it looks like Mercedes is takinga bath .

BTW --if one is looking for a great daily driver a used E350 is the way to go because there are so many available that the dealerships are flooded . Plus the car with sport package is quite nice and reliable too . Just make sure to get an 07 or newer .

 

Dharn55-- Thanks for the comments on the lease return process. I didn't realize the lessors had a possible insurance payment they could collect. It is certainly true that there is a food chain of people making money off the lease return process, but you would think as stated above that the manufacturers wouldn't want to be flooded with these cars right now given the general market conditions.

 

I have one dealer about 5 miles from my office, and one dealer on Vancouver Island, about 3 hours+ away with a ferry ride to get there. I also have another dealer in Bellingham, WA (Roger Jobs) that is about 1.5 hours + the time it takes to get through US Customs. We have a few independent shops around, in fact short of any warranty work (which has been none so far on this 997) I only deal with an one. Great Service, great advice...and guess what I keep going back.

I don't think that the problem is just with Car Dealers, if any business refuses to adapt, then they are going to be in trouble.

Great thread Larry!

 

at least in the case of the M3 and early 997's, the price did come down in good time.

the car that created the biggest frenzy and thus the biggest markups and for the longest time has to be the C6 Z06. for the latter part of 05, all of 06 and most of 07, the cars were sold at mark up prices and only people who had deposits down and waited in lines, for at times, more than a year got the car at msrp.

it seemed no matter how fast the factory churned them out, there was still yet more demand.

after waiting in different dealer lines for well over a year, i scored a used 06 for $72,500 which was a few hundred above new MSRP and even that was considered a good deal at the time. car had 2300 miles.

i wanted the car so bad, i was willing to loose a little money.

15k off msrp is the norm nowadays.
how times have changed