Question: is there any grounding in reality to the 'values' that these car websites have on their websites? All of them seem to have their own form of this, e.g. "CARFAX Value", "Car gurus IMV" ,etc. In theory they should be able to provide good data because they have access to, well, data, that an average consumer would not have, but somehow it seems a bit of a gimmick.
Car Website Valuations
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Some of these tools are HIGHLY advanced. For example, KBB ICO and TrueCar Acutrade ICO, both compile their data from every major auction in the US (Adesa, Mannheim, etc.) They are so accurate if the input is truthful, they even guarantee the value as an offer (buy-bid)..(hence ICO - instant cash offer). If the dealer can’t justify the value, we can just sell it to the appraisal tool company. KBB is owned by Cox Automotive, which owns Mannheim and Black Book (and 80% of the entire customer-facing auto industry).
As with any big-data product, non-effective if garbage-in/garage-out. If customers were truthful on their trade-in condition on the evacuation tools, they are typically spot on w/in $500, sometimes too cheap. I often find customers are not truthful and disappointed when we (the dealer) are not as high as the tool. I always use the analogy (as a father), “your daughter is the beautiful girl in the world” most would agree I hope. But if she has a crooked nose you better not be judging her. However, with your car that has a dent, bad CarFax, missing keys, holes in the carpet, etc. not being truthful on the appraisal tool will only set you up for disappointment at the dealer (they will bring up the “crooked nose“ on your car if you’re asking for too much). My advice is to be truthful, and you just may find that the dealer is truthful/fair too.
With all that said, Land Cruisers, and other low-production/rare-to-find used vehicles, can have very inconsistent book values. This is a result of a small sample size. I put $4k over book in a 21k miles 2015 LC200 last week. Why? Because there was not one in the entire US, and it was PERFECT. My advice: be fair/be honest. The tools are good to answer your question.
The online tools may be legit but asking us to trust random dealers is a bit of a stretch.
Dealers have a decades-long, well-earned reputation for being crooked, despite the odd one or two like yourself who are honest. I worked as a porter for several dealerships when I was in college and the things I saw, heard, and witnessed at those places were pretty awful. The smarmy disrespect and blatant gouging at every possible turn of the customers was rampant. It’s like every civilian that walked in the door had a big target painted on them.
It may be a bit different today, but in my opinion the dishonesty and gouging has just moved to the back where the finance manager pressure-sells all of the useless undercoating, etc., trying to squeeze another $100 there or $500 here. Most sales people are useless as they just throw cars at you till something sticks instead of listening to what a person wants/needs.
And to be fair you don’t do the online tools or dealer reps any favors by finding a reason to charge $4k above book when the book price is supposed to be the price. Are you also currently charging sticker (or above) for the 2020 army green TRD Pro Tacomas and 4Runners like my local dealer?
I don’t mean to attack you because I know you have a reputation on here for being fair and honest, but I’d say you’re the unicorn. Please don’t use your good reputation to try to tell us that other dealers are as honest as you, though. I’m currently talking to a Lexus Dealer who is trying to pull every old trick in the book and then some.
If I had my way I’d change all the laws to permit the manufacturer to sell directly to consumers and let the dealerships die.
Dealers have a decades-long, well-earned reputation for being crooked, despite the odd one or two like yourself who are honest. I worked as a porter for several dealerships when I was in college and the things I saw, heard, and witnessed at those places were pretty awful. The smarmy disrespect and blatant gouging at every possible turn of the customers was rampant. It’s like every civilian that walked in the door had a big target painted on them.
It may be a bit different today, but in my opinion the dishonesty and gouging has just moved to the back where the finance manager pressure-sells all of the useless undercoating, etc., trying to squeeze another $100 there or $500 here. Most sales people are useless as they just throw cars at you till something sticks instead of listening to what a person wants/needs.
And to be fair you don’t do the online tools or dealer reps any favors by finding a reason to charge $4k above book when the book price is supposed to be the price. Are you also currently charging sticker (or above) for the 2020 army green TRD Pro Tacomas and 4Runners like my local dealer?
I don’t mean to attack you because I know you have a reputation on here for being fair and honest, but I’d say you’re the unicorn. Please don’t use your good reputation to try to tell us that other dealers are as honest as you, though. I’m currently talking to a Lexus Dealer who is trying to pull every old trick in the book and then some.
If I had my way I’d change all the laws to permit the manufacturer to sell directly to consumers and let the dealerships die.
...and who is going to do warranty work?
Yes, there are an inordinate amount of sleazy dealers out there (I'm sure Eric will agree) that gives the entire industry a black mark and makes it so much harder for the honest dealers to survive (I'm sure that Eric will agree with that as well).
One problem is that many dealerships haven't kept up with technology and still live in a world where the customer is an idiot and the the dealer has the upper hand.
You see this when dealerships use deceptive advertising to inflate their "discounts". One tactic common in the DMV (DC/MD/VA) is to advertise the MSRP (including destination), subtract it, along with all possible rebates even if they don't apply and show that as their discount along with a tiny footnote that says "price does not include destination. Rebates may not apply"
As far as trades are concerned, over the last twenty years, I have yet to find a dealer that offers anything but "fair" value, regardless of how clean the car is. On a recent trade, a dealer offered me "fair" value on a car with fewer miles than normal, with a full ceramic coating and clear bra, recent new tires and completely spotless. I had a flawless service record and the car was garaged day and night (basically, when not driven with exception of the grocery store). Realistically, and objectively, the car was "above average", but the dealer would have earned my business had they offered "average".
Dealers are in the business to make money, but there should be a limit to how badly they treat a customer. It makes Eric's life just so much more difficult as he is working for a "non sleazy" dealership.
Indeed. All of the rebates, incentives, sales, dealer fees, certified this and that, special financing, etc, etc, ad nauseum do nothing but complicate the whole process and provide more opportunities for the customer to get fleeced.
It should be a simple 1/1 transaction where the manufacturer sells the vehicle to the customer like a laptop, loaf of bread, or a stick of deodorant. No gimmicks, no haggling, no secrets, no sleight of hand, no bull. Just a base price with a modest profit built in and done. The entire car industry from inception to today is proof positive that 99% of the middle-man dealer model can’t be handled honestly or responsibly.
It should be a simple 1/1 transaction where the manufacturer sells the vehicle to the customer like a laptop, loaf of bread, or a stick of deodorant. No gimmicks, no haggling, no secrets, no sleight of hand, no bull. Just a base price with a modest profit built in and done. The entire car industry from inception to today is proof positive that 99% of the middle-man dealer model can’t be handled honestly or responsibly.
...but you don't buy a loaf of bread or a deodorant directly from the manufacturer.
The problem is the pricing structure. Cars are the only new consumer product that has a flexible price and a decent negotiator gets a better price than a poor negotiator. The sad part is that if the car industry went to a fixed price, then the dealerships would most likely make more money - but the average consumer would also get a fairer price and wouldn't feel fleeced.
When was the last time you bought a tube of toothpaste and said "man, I got screwed"?
Lexus is currently trying to get dealers to move to a fixed price system. Sounds impossible to me. They would have to lower prices to be competitive with other brands selling at a discount. If every vehicle they sold had the cache of a G63 or gt3 then sure but that’s not reality.
Here’s the thing: Eric is selling a ton of landcruisers specifically because he isn’t shady. I’m sure it has taken years but through his hard work and honesty, especially in contrast with most dealers, word of mouth spreads and buyers with $100k to drop on a turn-key 200 build find him to buy their truck. Then warranty work is done at the local dealer.
With a manufacturer sales model there isn’t room for the s***ty business practices of most dealers, but there isn’t room for Eric either.
At the end of the day these are expensive investments that most people don’t understand the guts of, and even worse some people build an emotional connection with. I dislike how much effort the dealership lobby is putting into preventing Tesla selling cars in a way they prefer, but I also have questions about how the car ownership experience would go in a post-dealership world. Who does the warranty work is a great example.
With a manufacturer sales model there isn’t room for the s***ty business practices of most dealers, but there isn’t room for Eric either.
At the end of the day these are expensive investments that most people don’t understand the guts of, and even worse some people build an emotional connection with. I dislike how much effort the dealership lobby is putting into preventing Tesla selling cars in a way they prefer, but I also have questions about how the car ownership experience would go in a post-dealership world. Who does the warranty work is a great example.
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A few points to hit on.
1) You can’t make trade-ins a “fixed price” because no two are the same. Mileage, condition/recon costs, accidents, documented issues, etc... So even if you had new vehicles on a fixed price model, you would still have the “trade game”.
2) Yes, there are dealers that will lie and cheat. But that is a short term business model and is not sustainable, that doesn’t work today. It’s all about reputation. We will make mistakes (trust me, I’ve made plenty), it’s all about how you handle those mistakes. Selling a car is NOT in any way about making money on a single sale. It’s about minimizing your loss. By the time I pay my managers, salesman, lights, advertising, vendors, rent for our Taj Mahal, and the countless other expenses, I am still happy if I lose less than $200k a month on 400 vehicle sales. The modern “velocity” business model is to move metal.... TRUST finance/parts/service to do their part and make it all back ++. It’s about earning a customer for life. (Fun read: Customer for life by Carl Sewell)
3) This one; I’ll probably take some heat on, but I’ll throw it out there anyway. Let me preface by saying NOT everyone does this. But when we get an older car in on trade, do you think the customer is telling us about all the problems they have had with it? I.e. Transmission slips? Do you think they tell us in needs brakes all the way around? Maybe the radio doesn’t work? Etc.... We negotiate a trade based on customers telling us their car is “in excellent condition” and then run it through a two-hour inspection to find a $3000 bill from the technician to make the car retail merchandise. I can’t count how many “perfect cars” this happens to per month (several per week).
4) If we went to fixed pricing dealers would make more. Like @GBman said, Lexus is doing it in some markets, it is highly successful in Indy market. If we (me and my local dealers) decided to do that, it would be price fixing, which is illegal. My understanding is Lexus can do it in some markets because they don’t have competition (two per metro), so it’s not “collusion”.
5) @Doomstar Manufactures selling cars would be a disaster for everyone. That I guarantee you. Oversight can be good but regulating industries is not a good thing. Quite frankly, with all due respect to my past/present/future manufacture reps, they know nothing about retail selling. They know how to make great cars and that’s it. They bleed resources and money like the federal govt. They hire suits and ties to run their top down initiatives (that change all the time) and don’t ask the grass-roots (customers) / boots on the ground (dealers) what people want. They take for granted we literally talk to the customer every day and have deep relationships with our customers.
6) Not sure we’re “crooked” as you say. I’ll give you there are some crooked dealers out there for sure, but I would say that’s a 95% unfair assessment. I would guess there are a lot of journalists, politicians, lawyers, financial advisors, college professors, business executives on here that have the same bad rap, but are awesome upright and honest people. Somehow profit became a dirty word. That’s kind of sad. I have 105 employees that reply on us making profit to feed their family’s. If you care for/take care of people right, the first time and then those people keep coming back, for service/sales/referrals. It’s really that simple. No we don’t ever charge more than MSRP for Supra/TRD Pros and never have.
7) Finance selling useless products? No doubt finance is a profit center, w/o out it, frankly we would not be in business. We sell loans to banks, not really any different that your mortgage getting sold off. I don’t think that makes anyone mad per-say, they made a profit selling it. No big deal. As for warranties, I would never buy a new vehicle without one, even a Land Cruiser. I bought one on mine. If you chose to feel otherwise you can say “no”. I don’t get mad at Apple Store because they offered me Apple Care+ on my phone. I also didn’t get mad when they offered me a screen protector. I bought both and I know there was 500% markup in both. I know that because they have 100 billion cash in the bank. (FWIW, they are fixed pricing/manufacture controlled stores primarily)
I’ll stop ranting now, but just be careful who calls who a “bad guy” because every industry has their own rotten apples. Every industries has their own shining stars. Let’s be fair not to start pointing fingers and give each other some love and benefit of the doubt form time to time?
1) You can’t make trade-ins a “fixed price” because no two are the same. Mileage, condition/recon costs, accidents, documented issues, etc... So even if you had new vehicles on a fixed price model, you would still have the “trade game”.
2) Yes, there are dealers that will lie and cheat. But that is a short term business model and is not sustainable, that doesn’t work today. It’s all about reputation. We will make mistakes (trust me, I’ve made plenty), it’s all about how you handle those mistakes. Selling a car is NOT in any way about making money on a single sale. It’s about minimizing your loss. By the time I pay my managers, salesman, lights, advertising, vendors, rent for our Taj Mahal, and the countless other expenses, I am still happy if I lose less than $200k a month on 400 vehicle sales. The modern “velocity” business model is to move metal.... TRUST finance/parts/service to do their part and make it all back ++. It’s about earning a customer for life. (Fun read: Customer for life by Carl Sewell)
3) This one; I’ll probably take some heat on, but I’ll throw it out there anyway. Let me preface by saying NOT everyone does this. But when we get an older car in on trade, do you think the customer is telling us about all the problems they have had with it? I.e. Transmission slips? Do you think they tell us in needs brakes all the way around? Maybe the radio doesn’t work? Etc.... We negotiate a trade based on customers telling us their car is “in excellent condition” and then run it through a two-hour inspection to find a $3000 bill from the technician to make the car retail merchandise. I can’t count how many “perfect cars” this happens to per month (several per week).
4) If we went to fixed pricing dealers would make more. Like @GBman said, Lexus is doing it in some markets, it is highly successful in Indy market. If we (me and my local dealers) decided to do that, it would be price fixing, which is illegal. My understanding is Lexus can do it in some markets because they don’t have competition (two per metro), so it’s not “collusion”.
5) @Doomstar Manufactures selling cars would be a disaster for everyone. That I guarantee you. Oversight can be good but regulating industries is not a good thing. Quite frankly, with all due respect to my past/present/future manufacture reps, they know nothing about retail selling. They know how to make great cars and that’s it. They bleed resources and money like the federal govt. They hire suits and ties to run their top down initiatives (that change all the time) and don’t ask the grass-roots (customers) / boots on the ground (dealers) what people want. They take for granted we literally talk to the customer every day and have deep relationships with our customers.
6) Not sure we’re “crooked” as you say. I’ll give you there are some crooked dealers out there for sure, but I would say that’s a 95% unfair assessment. I would guess there are a lot of journalists, politicians, lawyers, financial advisors, college professors, business executives on here that have the same bad rap, but are awesome upright and honest people. Somehow profit became a dirty word. That’s kind of sad. I have 105 employees that reply on us making profit to feed their family’s. If you care for/take care of people right, the first time and then those people keep coming back, for service/sales/referrals. It’s really that simple. No we don’t ever charge more than MSRP for Supra/TRD Pros and never have.
7) Finance selling useless products? No doubt finance is a profit center, w/o out it, frankly we would not be in business. We sell loans to banks, not really any different that your mortgage getting sold off. I don’t think that makes anyone mad per-say, they made a profit selling it. No big deal. As for warranties, I would never buy a new vehicle without one, even a Land Cruiser. I bought one on mine. If you chose to feel otherwise you can say “no”. I don’t get mad at Apple Store because they offered me Apple Care+ on my phone. I also didn’t get mad when they offered me a screen protector. I bought both and I know there was 500% markup in both. I know that because they have 100 billion cash in the bank. (FWIW, they are fixed pricing/manufacture controlled stores primarily)
I’ll stop ranting now, but just be careful who calls who a “bad guy” because every industry has their own rotten apples. Every industries has their own shining stars. Let’s be fair not to start pointing fingers and give each other some love and benefit of the doubt form time to time?
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Would this be different if the owner had an inspection done at an authorized dealership? It can't be too expensive (I think), and if it meant a few thousand $$$ in difference seems it would be worthwhile, for both parties.
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PM me the VIN/your email and I’ll pull CARFAX/and Toyota Service Lane records on the vehicle for you. Then get an inspection by the dealership (ask for a Master Tech) and see what you’re in for. Then you’ll have most of your puzzle pieces to make an educated decision.
Eric - while I agree with most of what you said, I believe that the biggest problem with new car sales is the need to negotiate. When Apple offers you the $99 Apple care, it may be overpriced but that is the price. Go to another Apple store and it is $99. Go to Walmart and it is $99. AT&T, Sprint, T-Mo and VZW all sell the same product for $99.
As I said earlier, no other consumer item requires haggling to get "your" price.
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Thanks.
In this case I did not have a particular vehicle in mind, but rather was wondering generally if a neutral third party evaluation of condition might help prevent dealers lowering their offer based on potential, but diagnosed, issues.
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In Florida, I believe warranties are fixed pricing, let someone in FL chime in how well it’s working (I don’t know).
The problem I see is: You have some dealers selling Zurich, some sell All State, some sell CNA, etc. Some sell 6yr, some sell 7 yr, Some 8yr. Some sell 80k miles, some sell 100k miles, some 120k miles. Some sell $100 deductible, some sell $0 deductible, some sell waived deductible. Some are exclusionary some inclusionary.
That’s like saying State Farm is required to be priced like American Family on Auto insurance. These companies rate to their products according. Dealers price accordingly, it’s really their call to price how they wish IMHO. I can tell you I would sell a warranty for $1 over cost vs not selling one because I believe in the product. But I’d rather make $600 profit because it’s still a good deal and peace of mind to the customer spending avg $40k on a new vehicle now days. It’s all about value, if you build it, it’s worth it. If you don’t, it’s not. A good deal is when value exceeds price.
Eric, if you aren’t already, you need to be consulting with other dealers about their strategies. None of the experiences I have had seem to align with how you conduct business. Unfortunately for me I’m usually seeking a somewhat rare used vehicle so my ability to shop around is limited
Have any thoughts on Autonation’s policy of “up-front pricing/no haggling”?
Have any thoughts on Autonation’s policy of “up-front pricing/no haggling”?
Yes Eric, FL has fixed pricing on warranties and many companies won't sell warranties there.
The problem isn't Zurich vs CNA, but Toyota vs Toyota, Honda vs Honda etc.
When I bought my last Acura, the dealer wanted $2600 for a 7yr/120k zero deductible Acura warranty and $1450 for the 4yr/60k maintenance plan. An online dealer sold me the same warranty for $1100 plus $850 for the maintenance plan. I got the same letter from Acura in the mail and it showed up in the Acura system as if I had bought it from a dealer. That's my gripe.
The guy who doesn't know about ordering a warranty online (let's forget about FL for a moment) ends up paying more than double. That's my gripe.
I think that most everyone would rather pay a little extra to realize that they aren't getting a worse deal than the other guy.
It also has nothing to do with price fixing. Saturn sold cars at a fixed price. Tesla sells cars at a fixed price. The problem is with the auto manufacturer's association that refuses to face the reality of the modern world - and that makes life for honest dealers like yourself a lot more difficult.
Since new car sales aren't a profit center (and haven't been for awhile), what is the problem with creating a realistic new pricing structure with a small profit built in and let the used car sales and service centers make the profit?
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This may be hard to believe, but high volume dealers don’t really make money on the “sale”. Even used cars. If you want to sell vehicles, you need vehicles. Since you can’t just call up the used car store and get a truck of 2016 land cruisers, you pay blood for them. I buy mine off-lease from TFS when I can, buy I have to pay darn near retail. Them my service dept will kill me on recon, even if it’s perfect because TCUV constraints are so tight. Then I’m pricing to sell because I don’t want that much cash tied up for too long (heck, I can use that cash for three Camry sales right?). Used vehicles are like bananas. You have a VERY short window to make a profit (eat them) once they start turning brown, you are done, it’s not going to be pretty.
To answer the question, I think all pricing models fixed or variable are fair. It’s the sellers business and their choice how to do business. It’s their rope to hand themselves with. Cars sell when priced fairly. I typically do t wiggle more than $200 off my prices and it really ticks people off. 9/10 times they still buy because I price on the money every time. Even when it’s a loss on a green banana. Trust service and finance depts to make it up. It’s how the game is played.
The problem with Autonation's structure is that the customer has been trained to haggle and no one store can fix that. I can guarantee you that I can beat Autonation's price, so I'll think that their price is too high - but - if the Autonation (although a bit higher) is the same as Sonics (and everyone else), then I'll buy at the store that treats me better/has a better service department/is more convenient and whatnot.
That will build customer loyalty.
True. The problem is that most dealers start off high and stay high'ish. They buy from you because they've done their homework and know that your pricing is fair.