I have been a Auto Dealer for 7 years by the way!

 

That's why the sales manager makes a nice living selling cars and we don't. Auto Gallery will already have inspected that car for the CPO and they know exactly what it's going to cost them to add that. Say it's four thousand. That's a significant chunk of the margin they're negotiating for in a sale. Why give it away before the negotiation starts?

Gary

 

Sure, if they weren't asking such an above market price, that would make sense. However, when you are asking $15k or more above market, you would think they would at least have it CPO'd. Under your logic, why would any dealer certify any car if they could just leave them all uncertified to try and use the certification as a negotiating tool to increase margins?

Just because someone is a sales manager or works at a car dealership it does not mean they know more about the cars or markets they are selling into. I'm amazed at how many dealers don't know basic details on the cars they sell or what the true market for the cars are. I see many dealers overpaying for trade-ins or auction cars.

Do you have some connection to this dealership?

 

You ever hear that song by the Gatlin Brothers Band? "All the Gold in California"? There's a line: "It don't matter at all where you played before, California's a brand new game..." It sure as hell is true in the computer business and it's going to be true in cars as well.

Maybe the difference in your perception has to do with Auto Gallery selling in a market where most options are chump change and the dealership costs $100,000 a frontage foot. I've never had that kind of money, but I was born in Hollywood and grew up in Newport Beach. I know how people think in that area and I know that "clueless morons" don't make it in that market. Whether you make cars, computers, or chili con carne, you succeed only by worrying about trying to be the best, not by worrying about the price.

I would bet on Auto Gallery knowing their market better than us.

Gary

 

I've got chores right now, but briefly you add eye-catching goodies to a unit that has squat to attract buyers. With a unit that has lots of stuff already, you hold back a few deal-closers. CPO would be an obvious deal-closer for a car that is essentially new in every other respect and already optioned liberally.

As for the market price, that's a fiction. The car is worth what someone will pay for it. You would not, so your opinion is meaningless. But in that neighborhood, with Carrera GT's and 458 Italias coming in for service every morning, the price is trivial. It's in the "Oh, that would be a fun car" range of purchase and somebody is likely to pick it up as a Christmas present since it's so cheap.

No. I have nothing to do with any car dealership.

Gary

 

Makes a lot of sense. Some people do have money to **** away. You said it."oh that would be a fun car".Good point gary.

 

Personally, I don't see a reason to get irritated. It's up to dealer to price it as they think best, and up to customers to do their homework as well. Neither side is compelled to do anything, so market forces sort these things out. A dealer that was consistently way off on pricing wouldn't last long.

 

Just because a dealer CAN take advantage of a less researched customer, doesn't mean they SHOULD. In my opinion, this is what separates the good dealerships from the bad. This opens them up to the question - if they try to take advantage of the less researched customers on the sales side, are they doing the same on the service service side? That's why I'm irritated by this and pointing it out but I agree, over time these things sort themselves out and if that's the case, the business will not last.

 

A few things I learned selling $5M mining trucks:

1. The seller never gets the price he doesn't ask for.
2. The buyer never gets the discount he doesn't ask for.
3. The only good sales for both parties are when they both have reasonable expectations.

I'm certain the sales manager in question has good reason from his experience in his market to start the " dance" at the price point he has.

 

I'm not sure though that they're "taking advantage" of customers, especially when so much info is available online. The higher their price, the longer it's likely to take to sell the car, and the greater the chance that customers will buy somewhere else, so it's a calculated decision (or should be) on the dealer's part.

I agree that the issue is thornier on the service side, since it's much more cumbersome for customers to shop around on that.

 

No, market price is not what one person may or may not be willing to pay for it - it's the statistical calculation of the prices cars are offered/sold for, wholesale, trade, retail etc. (that's your Blue Books, Black Books, etc). To say that a car's value is what someone might be willing to pay for is simplistic.

I don't think that a 2009 C4S would be considered a particularly "fun car" by the folks rolling in with GT's and 458's (maybe they'll pick up a Tesla, Smart, or something like that as am impulse purchase, but what's the allure of a used Porsche Carrera?)

Location is irrelevant, too - buying cars under warranty (especially with CPO) is not a mircro market anyomore, thanks to Craigslist, Ebay, Carfax, digital photography, etc.

There's no pricing strategy here. I really think the dealer ist just lazy, careless, and ignorant ... not a good way to get a car sold, but maybe they get lucky and someone will indeed pick it up as a stocking stuffer for a loved one (hmm, maybe my wife will).

 

Well yes, but you're wrong. They don't "take advantage" of anybody. Some people just don't care about the price in small amounts like twenty or thirty thousand. Moreover, even to people who care, location is an important element of value because leisure time can be a lot harder to find than money.

A 'savvy' buyer, meaning one who did care a lot, would do research and then call around Southern California or use an internet service for the same purpose. Someone who really wanted the most he could get for a limited budget would do that research and then study the auction lists and buy a car through those one of those channels. Somewhere in that range come most of the people who buy from a private seller. But all of those methods take more time than dropping by your local dealer and picking up a car where you'll go to have it serviced.

A free marketplace has room for all sorts of buyers and all sorts of sellers. But all across the spectrum, location matters and being 'local' to the professionals and show business people who live around Auto Gallery means paying a lot of money for the land and another very large chunk in property and business tax every year. I don't assert that their buyers all have the technical knowledge of this business reality that I do, but I'll bet all of them understand that dropping in to look at a Porsche in that neighborhood means they won't get the price they would by shopping the classified ads next weekend.

Let's not be naive. Can you picture Tom Selleck making calls all over Southern California to see where he can get the best price on a "cute little Porsche" for a nephew? Can you imagine trying to justify the time those other routes require when you're talking about professionals who already work 70-hour weeks? I'm assuming the cost of their leisure time is nil monetarily, but these people have lives, or they want to. Doctors everywhere will know what I mean. In that part of Southern California and especially in that particular neighborhood, high-end professionals of all sorts are clustered. People who earn seven figures every year and work proportionately are not being taken advantage of when you take the service/product to their doorstep and give them special attention to help them relax when they drop by.

A cappuccino while you look through the brochure sounds like a silly luxury, but when it's the first time you've sat down in six days long enough to think about anything but work, that's an added value. Cappuccino machines are cheap -- relatively -- but dealers in such neighborhoods have to spend the money on employees who think such things matter. Another example in the case of celebrities: it means a lot to have places you can avoid having to "turn on" just to get an ice cream cone or a new car. Knowing the local place has a strict confidentiality policy and won't let anyone pester you for an autograph is enormous added value.

Expensive furniture in the waiting room, expensive employees, and hefty competition who will provide things you overlook. That's part of what it takes to compete in an area where price is not the first consideration, but the resulting higher margins don't mean anyone is being taken advantage of.

Gary

 

Look at it this way. Porsche has the highest profit margin in the industry, and I recall reading that their average profit per car is about $20K to $25K. Does that mean that they're "taking advantage" of us? I would say no. Many buyers still find Porsches desirable at these prices - even a "bargain" - in comparison with the competition, especially exotics. Porsche's profits are their reward for their high level of design expertise. If someone doesn't want to enrich Porsche's bottom line, they can always buy something else, but that would be to their own detriment.

 

This thread cracks me up Instead of the OP spending time looking for a deal he will be happy with, we are trying to get into the mind of a dealer and their pricing.

Do you question why one plumber gives you a 30% higher quote than another?

Or a bakery that can provide you a cake for $200 when cake boss charges $800?

Why pick on car dealers only?

Time to move on, especially if you don't like the price.

 

^^^^^^^