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  #1093  
Old 07-26-2011, 09:13 PM
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Re: 2012 Grand Cherokee SRT8 - MSRP Pricing

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Originally Posted by Marlin View Post
Can someone explain to me why US buyers feel it's ok, or a "right", to be able to buy at "invoice" or "employee" pricing?

I've read a little on this subject, and from an outsider's perspective it seems to be one of the big reasons the big 3 got themsleves into trouble, they and their dealers simply weren't making enough profit.
Not to mention, the auto manufacturer sells the car to the dealer, that is where they collect their money. Anything paid over that goes in the dealer's pocket. If the dealer sells at MSRP, the auto manufacturer still only collects what the dealer paid to add that vehicle to the floorplan.

Auto manufacturers also PAY THE DEALER holdbacks and rebates, as were mentioned already. It's a bit complicated here how to explain how all those work, I'd ay to Google holdback and read it for yourself as best to understand.

US buyers want to pay at or near invoice because the dealer is still making a good profit for a new vehicle. Dealerships in the USA make the biggest chunk of their income from their maintenance and auto body shops, then from used cars. New cars are kind of like a halo item. Get them in, make a little cash, but hopefully keep them around to come back for all your other services.

Of course, that's a general explanation. The US does have its fair share of dealers who simply don't give a crap about the customer and just shoot for the almighty buck.

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  #1094  
Old 07-26-2011, 09:23 PM
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Re: 2012 Grand Cherokee SRT8 - MSRP Pricing

There are a lot of misconceptions out there about what the dealer's pay, where their margin's are and what terms like invoice, supplier price and employee price. It's really quite simple but people like to make it more complicated than it needs to be.

Invoice IS what the dealer pays for the car initially. It's the price that shows up on their monthly floorplan statement and the amount they pay interest on every month it remains unsold.

Holdback is a percentage of the invoice price that is "held back" by the manufacturer and paid to the dealers on a monthly or quarterly basis, depending on the company. Holdback is not paid until the vehicle is sold so it could be months from the time the vehicle showed up on the lot until the dealer actually sees the money. There are also factors at play that may limit the amount of money or holdback the dealers will actually see, it's not guaranteed. There are situations regarding holdback that a consumer may be able to take advantage of. At the end of a quarter dealers know exactly the number of cars they need to move to qualify for their holdback and bonus. They will blow out some cars well below their true cost just so they quality for the payout. Think about it, they lose a couple grand on the top line but qualify for tens of thousands of dollars in bonus that otherwise they wouldn't get.

Supplier price, sometimes called Affiliate or friends and family pricing is a fixed percentage below invoice that the manufacturer agrees to sell the vehicle for and both credits the dealer for the sale and pays them a stipend to cover the difference between the sales price and invoice. It's manufacturer supported and dealers decide whether they want participate or not, not all do.

Employee price is another manufacturers program that dealers can choose to participate in or not. This price is fixed buy the manufacturer and is usually invoice minus holdback. When a dealers sells a vehicle under this program they receive a fixed payment that may or may not have anything to do with the price of the vehicle.

There's another program that is beyond employee price used by executives that get as much as a 25% discount and the manufacturer have programs in place to make sure dealers make some profit on these deals. There's even a retiree program where separated employees can buy 1 vehicle in their lifetime at as much as 40% off and of course the manufacturer makes the dealer whole.

With all that said I still think to many dealers have played so many dishonest games in the past that they are paying the price by having to sell a $40,000 product and only realize $1500 profit. That's less than a 4% profit! Do you think that Lexus or Mercedes dealer next door is working on those margins, hell no. That's one of the reasons they have loaners, beautiful dealerships and sales people who remember you year after year. You literally get what you pay for.

Sorry for the novel but i'm bored tonight
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  #1095  
Old 07-26-2011, 09:55 PM
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Re: 2012 Grand Cherokee SRT8 - MSRP Pricing

mjw930,

Your novels are appreciated. You provide a wealth of information. Thank you.
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  #1096  
Old 07-26-2011, 10:02 PM
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Re: 2012 Grand Cherokee SRT8 - MSRP Pricing

Thanks MJW, great post.

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  #1097  
Old 07-26-2011, 11:10 PM
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So, is it public knowledge what months are the end of the quarters? I had not even thought about that. I just assumed dealers only want to meet monthly goals.
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  #1098  
Old 07-27-2011, 06:14 AM
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Re: 2012 Grand Cherokee SRT8 - MSRP Pricing

[QUOTE=ORDER UPDATE: My guy said that mine is being built on the 29th. I didn't talk to him directly it was through his nephew, so I didn't get a VIN # yet (still!!) and for all I know it hasn't been assigned. But for some reason he seemed confident it would be built on the 29th, so we'll see![/QUOTE]

HMMMM, since I'm already in D1 and have a VIN, when does mine get built?
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  #1099  
Old 07-27-2011, 06:27 AM
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Re: 2012 Grand Cherokee SRT8 - MSRP Pricing

Seems like a crap-shoot. I've been in D1 since the 14th.

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HMMMM, since I'm already in D1 and have a VIN, when does mine get built?
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  #1100  
Old 07-27-2011, 06:55 AM
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Re: 2012 Grand Cherokee SRT8 - MSRP Pricing

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Originally Posted by rusty104 View Post
HMMMM, since I'm already in D1 and have a VIN, when does mine get built?
How can it be built without a VIN Dog? Something is not right.
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  #1101  
Old 07-27-2011, 07:38 AM
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Re: 2012 Grand Cherokee SRT8 - MSRP Pricing

Two corporate/line test vehicles ran last night... "Prepare for launch"
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  #1102  
Old 07-27-2011, 07:47 AM
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Re: 2012 Grand Cherokee SRT8 - MSRP Pricing

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Two corporate/line test vehicles ran last night... "Prepare for launch"
Whoop!
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  #1103  
Old 07-27-2011, 09:54 AM
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Re: 2012 Grand Cherokee SRT8 - MSRP Pricing

YAY!!!!

I think....
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  #1104  
Old 07-27-2011, 10:42 AM
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Re: 2012 Grand Cherokee SRT8 - MSRP Pricing

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Originally Posted by Milous View Post
Two corporate/line test vehicles ran last night... "Prepare for launch"
I think we need to be prepared for price first.........
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