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5% Invoice Price Cut on Leftover '05's?
by anduril on Sun Nov 13 23:37:38 PST 2005
...into the parts department of a Jeep dealership in the Sacramento area, where I live, on Sat. to inquire about trailer hitch accessories for the new Laredo I bought in IA two weeks ago (see my post #282). Nice sunny and warm weekend afternoon - the kind that usually brings out buyers. The showroom was empty and there was only one "up" on the lot, so I engaged a salesman killing time and asked about incentives currently available on '05's still in inventory. I asked, "In addition to the direct customer rebates that DC is currently offering customers on '05 models, is the manufacturer providing any incentive to dealers?" He said, "Yes." I then asked if the incentive is a 5% reduction in the invoice cost and he replied that he didn't know, but reiterated that an incentive exists in some form. It's my understanding that most auto manufacturers grant Edmunds access to internal company Web sites where manufacturer-to-dealer incentives are listed. Edmunds then consolidates this information and posts it. However, Edmunds does not list any such incentive (i.e., marketing support) on ’05 JGC's at the present time. But other incentives that not even Edmunds has access to can exist. In fact, before the days of direct customer rebates a 5% (of MSRP) discount by U.S. and most foreign auto makers was common practice at the end of the model year. Dunno for certain, but based on my buying experience and that of a few others on this board since the end of Employee Pricing, I suspect that that is the case today, even with the juicy customer rebates. (That should tell you how slow business really is!) So, when determining the current invoice price of an '05 left in dealer inventory, as well as a reasonable purchase price, I suggest you make the following calculations: adjusted invoice price = Edmunds invoice - 5% of MSRP (with the destination charge included) purchase price = adjusted invoice price x 1.03 – direct manufacturer-to-customer rebates For argument’s sake I assume that a 3% (of invoice) profit, before rebates are applied, is fair and reasonable. Offer 4% if you feel generous, but with a 3% profit your salesman shouldn’t try to work you to death over incidental dealer costs and regional charges, like advertising. (And note that the dealer still gets the usual holdbacks.) Of course, you can try to work deals even closer to invoice. That’s your decision. After all, bus is competitive and slow, and you won’t embarrass yourself in the store if you try. So...what evidence do I have for a 5% end-of-model-year discount on leftover ‘05’s? Only circumstantial and, yes, the discount could - repeat, could - be greater than 5%. A message posted last week on the Lease Questions discussion board in this forum described a deal with a 2.5% profit by my calculations. (See my posts #8 and #10 on that board.) Furthermore, when I bought my Laredo two weeks ago my dealer offered a purchase price, before rebates, nearly $680 below Edmunds' invoice. That left the store with about 3.7% profit, not including holdbacks. I didn't even ask for the discount and, yes, I might have been able to negotiate a slightly better price (by $100-$200, say), rather than accept the offer. (Sigh.) I did insist that the store waive its usual doc fee and it did - reluctantly. Bottom line: just about anyone who can fog a mirror should be able to get a great deal on a leftover ’05 if he or she assumes that, in addition to the direct customer rebates, a manufacturer-to-dealer incentive in the form of an invoice price cut, say 5% of MSRP, also exists.
Re: '05 Jeep GC Limited: 27 Mo. Lease!! [asd302]
by anduril on Thu Nov 10 12:40:56 PST 2005
So the dealer has not one, but TWO left! There's no need to hurry; business is almost certainly very slowwww...and the dealer has TWO!!! Using your figures and Edmunds' lease calculator I compute a monthly lease payment of $288 + tax. The calculator at LeaseGuide.com yields the same result. So why the discrepancy between this figure and the dealer's $349? I suspect the dealer is including assorted fees in the payment, like documentation, registration, license, acquisition, disposal, and heaven knows what else (possibly at inflated prices). The reg and license fees are likely state mandated, but the others are negotiable - or should be. I suggest you ask that they be waived! In my opinion that's a reasonable request on an '05 left-over, particularly in today's slow bus environment. A doc fee of, say, $250 is a rip-off, since it probably costs no more than $10-$20 for a dealership to prepare paperwork on the sale or lease of a vehicle. Refuse to pay it. Car_man is correct about the $29,000 reduced cap cost. I estimate that your negotiated lease price of $35,500 before rebates is ~$1100 below Edmunds' invoice. Has the manufacturer discounted the invoice price to your dealer? A 5% (of MSRP) discount wouldn't surprise me and that wouldn't include any holdbacks, either, which the dealer would still get. (In your case, 5% of MSRP = $2000, approximately, which would reduce the invoice cost to about $34,600. So your negotiated price leaves the dealer with about $900 profit, less advertising and assorted incidental costs, but not including holdbacks. That $900 is about 2.5% of the adjusted dealer invoice - a reasonable profit in my opinion). Before the days of customer rebates a 5% discount by auto makers was common practice at the end of the model year and may still be, even when manufacturers are offering direct customer incentives. If so, that should tell you how slow business really is. My own experience with the purchase of an '05 Laredo at the end of October was similar; my dealer offered to sell me my JGC, before rebates, nearly $700 below Edmunds' invoice (leaving him by my estimate with about 3.7% profit after a 5% invoice discount, not including holdbacks). In fact, I didn't even ask. See my post #282 on the Prices Paid & Buying Experience discussion board in this forum. It's my understanding that most auto manufacturers grant Edmunds access to internal company Web sites, not available for public access, where manufacturer-to-dealer incentives and marketing support are listed. Edmunds then consolidates this information and posts it. But other incentives that not even Edmunds has access to can also exist.

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