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Discussion Starter #1
How come they came markup the crap out of popular/low production car? Don't give me the typical supply and demand crapola. I took econ, I know what's up about that. But how come it's legal for dealers to markup cars, while something like Playstation 2 can't be marked up?

Imagine this scenario. Back when PS2 first came out, we all know the chaos it caused right? Now imagine back then, say a number of stores, say like Target, Toy r Us, etc...decided they need to markup the price of the PS2 from $299 to $499 due to supply and demand. Or say, if you could only get the PS2 from Playstation stores/dealers, and Playstation of Southern California decided to markup the price because supply and demand. There would be in an uproar!!! I doubt even Sony would allow stores to do that, especially after they accounce the retail price of $299.

So why can car dealerships do it? Why is it legal for them to sell they way they do? Why doesn't car manufacturer company's like Mitsu or Subaru step in and change that? The dealer still makes great money at MSRP. They usually make about 15% profit, like most businesses. Plus they make more money buy selling more cars from incentives. But, sadly, the only place consumers can buy an Evo or STi is at a dealership. It would be great if we all could order cars from the factory, and test drive display model cars for camparisons, like we do with every other product.

Anyone with a definitive answer, please educate me on this topic. Thanks.
 

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Dont quote me but I believe it has to do with the franchise rights of car dealerships. they are not bound by the manufacuters SUGGESTED retail price.
 

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Well, the bigger fact is that cars are the only things that have a sticker from the MFGR!!! If you think about it, the XBox doesn't have a MS price anywhere. In fact, the store selling the units are literally allowed to sell them for whatever they want to. In fact, most people don't now this but you can negotiate on the price of almost ANYTHING you buy if you are willing to make a scene!

Pretty amazing stuff. Everything out there get's marked up based on the whole economics crapola that you didn't want to hear about. The true "market value" of ANY item is that of which someone is willing to pay. If someone is willing to pay $1000 over MSRP when every other dealer is charging $3000, then that market bairs for $1000 over.

If you pay $199 for an XBox that cost WalMart $120, then that's what the market will bair. Now, if you go in and tell them that you won't pay over $175 and that you'll go somewhere else if they don't give it to you, then they will more than likley change their price FOR YOU. Try it some time, you'll be Amazed!
 

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murley said:
If you pay $199 for an XBox that cost WalMart $120, then that's what the market will bair. Now, if you go in and tell them that you won't pay over $175 and that you'll go somewhere else if they don't give it to you, then they will more than likley change their price FOR YOU. Try it some time, you'll be Amazed!
Yep i gotta step in on this one. If someone came in and said they would give me $175.00 for a new PS2 i would say sorry its $199.99(they are about to drop to $179.99 brand new just FYI). If they went into walmart, target, bestbuy, etc. and asked for a ps2 for $175.00 they would say no way its $199.99 too. My wholesale on PS2's is $196.00. Most of my distributors sell them for $198.00. Big chain stores get them directly from sony so their wholesale is usually in the $190.00-192.00 range. When we sell new systems we make no money at all. The only reason we stock them is to sell games and accessories that we do make money on with the systems. Its basically the same way for cars. True they make more than $4.00 profit and they get their dealer holdback too. But I think car dealerships make most of their money on service. Think about it....you take your car in after warranty for a repair that takes 5 hours. You are paying $60.00 an hour plus the price of the parts. Its nothing but pure profit baby. So a big reason that car dealerships sell cars is so they can clean house in service costs 3yrs/36k miles down the road.
The main reason stores don't mark up goods like some car dealerships do is because they know that if they do people will stop shopping there. And the reason most car dealerships don't mark up is because they know this too!! They realize that repeat business and good word of mouth is worth much more than a quick buck. But alas some dealerships are just greedy.
Example:
When i got my Type R my closest acura dealer was selling the yellow ones 5K over sticker and black ones 3K over sticker. I said screw you and drove another 20 miles away to Nives Rizza acura in Orland Park and bought it there for MSRP. I will never buy an acura ever from Mullers Woodfield acura because of that. When I was looking for an NSX i went to Nives. The funny thing is Mullers ended up selling most of their Type R's eventually for sticker cause no one was willing to pay a mark up. But the time they did try to screw the consumer cost them alot of customers like me i bet. Peace!!
 

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My dealership said they would do me a "favor" and only mark it up $1000. I told them to call me when they get mine in and we'll talk about their markup. All you have to do is stand strong and don't bend no matter how much you want it. Honestly, there's not a lot of people who appreciate this car enough to swallow its price tag. 90% of people out there only want horsepower and a straight road.
 

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Discussion Starter #6
Dealers charging over MSRP

Well, the bigger fact is that cars are the only things that have a sticker from the MFGR!!! If you think about it, the XBox doesn't have a MS price anywhere. In fact, the store selling the units are literally allowed to sell them for whatever they want to. In fact, most people don't now this but you can negotiate on the price of almost ANYTHING you buy if you are willing to make a scene!

If you pay $199 for an XBox that cost WalMart $120, then that's what the market will bair. Now, if you go in and tell them that you won't pay over $175 and that you'll go somewhere else if they don't give it to you, then they will more than likley change their price FOR YOU. Try it some time, you'll be Amazed!
Murley,

You are usually a respectable guy on this forum, and please don't take this as an offense, but what you just said is utter nonsense. Honestly, how many times have you gone into the grocery store and try to bargain the price milk, eggs, and sugar with the cashier or manager. They'd probably call security on you and kick you out. And okay, lets just say you tell them you'll never shop at their store again, since you didn't get the price you wanted, so you go to the next store. Guess what will happen? The same thing!!! Every store you go will think you're crazy.

Correct me if I'm wrong, but stores are like "distributors" (and I use the term loosely), and they do not own the products they sell. They get paid for stocking the item and getting it into customers hands. I remember a few years back, at was at Footlocker and overheard a conversation with a customer and the manager. The customer asked why this expensive Nike shoe isn't on sale after the manager admitted it was selling very poorly. The manager told him that Footlocker cannot change the price of the shoe without Nike's consent. If they did, Nike could sue them. Now I know the manager might be BSing, but it does sense why we don't see products prices fluctuate up and down so suddenly due to supply and demand.

Another point, remember the Tickle-Me-Elmo Christmas fiasco? I remember it was on the news that somebody auctioned one off to save a museum that was about to close down. I don't know what the price it sold for, but that shows the extreme demand for that product. Now since, the company that made Tickle-Me Elmo had a monopoly on it, and could of sold them for anything they wanted, why didn't they? Instead of $39.99 (I think that was the retail price of them), why didn't they just say due to supply and demand, the second batch of Tickle-Me Elmo's will be $99.99? $100 for a Tickle-Me Elmo is a bargain back then.

X-Japan,

I'll concede that dealerships make a lot of money in parts and services, but think about, if they made most of their money on parts and services, why not sell cars at cost or below cost and make bank on parts and services? That's what razor companies do. They sell you a razor for way below cost, and charge and an arm and leg for replacement blades. That's what drug dealers do, give you some dope for cheap, and once you're addicted, the price goes way up. And as for your comment on the PS2, that you only make 4 bucks on it, nobody makes money on video game consoles. I've read that Sony and Microsoft lose about $200 - $300 (it could be more) for every console they sell. Think about it. The Xbox is basically a small computer. Go out and buy all the parts you need to assemble an Xbox and see how quickly it adds up. Pentium 733, 64 meg nvidia graphics card, hard drive, dvd drive, ram, etc.

Basically, I think think there is some law that allows dealerships to do this, while every other type of store cannot. If someone out there knows what it is, please let us know. I know we're all tired of dealer markups, so let's start a petition or something to change it. Hey, that's what's this forum is for. Peace.
 

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Actually first few months no one could get their hands on PS2 so it was sold on Ebay for $500 and people were buying it faster than I could bid on it..


true9baller said:
How come they came markup the crap out of popular/low production car? Don't give me the typical supply and demand crapola. I took econ, I know what's up about that. But how come it's legal for dealers to markup cars, while something like Playstation 2 can't be marked up?

Imagine this scenario. Back when PS2 first came out, we all know the chaos it caused right? Now imagine back then, say a number of stores, say like Target, Toy r Us, etc...decided they need to markup the price of the PS2 from $299 to $499 due to supply and demand. Or say, if you could only get the PS2 from Playstation stores/dealers, and Playstation of Southern California decided to markup the price because supply and demand. There would be in an uproar!!! I doubt even Sony would allow stores to do that, especially after they accounce the retail price of $299.

So why can car dealerships do it? Why is it legal for them to sell they way they do? Why doesn't car manufacturer company's like Mitsu or Subaru step in and change that? The dealer still makes great money at MSRP. They usually make about 15% profit, like most businesses. Plus they make more money buy selling more cars from incentives. But, sadly, the only place consumers can buy an Evo or STi is at a dealership. It would be great if we all could order cars from the factory, and test drive display model cars for camparisons, like we do with every other product.

Anyone with a definitive answer, please educate me on this topic. Thanks.
 

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Scenerio for 350z. The dealers were charging $1000 plus above MSRP (and they were being sold for that price too) for the first few 350z's. A few months later you can go to almost any Nissan dealership and find 3-5 350z (below MSRP).

If you are really interested in an STi remember, you do not have to be the first person to buy one. Wait a month or two and things should calm down with the dealers. Plus, most people are not willing to pay $32K for a Subaru (personal preference). I love the car because it offers the best bang for the buck. The average person not knowing about the STi will not walk in the dealership and pay $32K for the car that does not have a sunroof, factory INSTALLED radio, leather, automatic trans. option, etc?

There may be 10,000 people wanting to buy the 3,000 STi but that does not mean anything, it still boils down to MONEY or approved for a loan to buy the car.
 

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That is so true. That is what I am hoping for. But here is just an example of what I am dealing with:
I called my one of the dealers I have a deposit with and asked to specify on my order what my options will be on the car. Since when I placed the order they had no option information. I told him I would not take the car if it had options I did not want on it. His answer was that they still have no information on options and that the first cars they are getting are sent to them with no order specifications. So they are stuck with whatever they get. That goes against everything I've seen on this forum. I just said OK and hung up. I don't care because I have three deposits at different dealers. ichever gets the one I want at MSRP is the one that will get my money.
 

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IMNSHO, You guys are all missing the bigger picture...

Why can't I buy a car direct from the manufacturer?

Want a $3000 Dell PC? Go to Dell.com and buy it. Want a $5000 Segway Personal Transporter? Click on Amazon.com and buy one. Want a $230,000 Diamond Air airplane? Go to DiamondAero.com and send them an email with the model details...

The answer of course lies in the relative age of these examples. They are all "new-age", post internet stuff. (Private airplanes may as well be since the decimation of the industry in the U.S. in the late 80's)

Did you know that every state in the US has legislation PROHIBITING a manufacturer from directly selling you a car?

Why hasn't the auto industry evolved? Vested interest.

Imagine going to your local Auto Showroom / Service Center (that handles a bunch of brands) where you can test drive cars, look at cars, find out about cars, get your car fixed, BUT CANNOT BUY ONE. When you find one you like you go online, click, click, click AND it's bought, financed, and on it's way to your house from a regional manufacturers distribution center.

Sound good to you? It does to me...
 

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Although Entertaining...

here in Canada, Toyota is trying to go that way, prices are advertised on line and that is the exact price you get at dealer. No deals but no markups either.
 

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Yeah, but there's more to that than meets the eye also. Each respective dealer gets to set their own price. They print their own "MSRP" stickers. They are not unified across the board.
 

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Discussion Starter #14
Hey All...I got to check out a STi!!!!!!

Yeah, but there's more to that than meets the eye also. Each respective dealer gets to set their own price. They print their own "MSRP" stickers. They are not unified across the board.
Yes murely, but why? Why are the allowed to do this why no other can? Still no one has answered my question. I understand the waiting game that if you wait long enough on anything you can get it at a fair price. But I want to know why dealerships have the right to be greedy and make super-profits on markups? Just trying to save some headache here.
 

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Morons

I believe the word "LIMITED" means 'worths more' to others. Unlike the examples of PS2, Xbox, other cars given above, they can only sell a limited amount of STI.
However, I strongly disagree anything above MSRP, and manufacturers' not having any control over this.
 

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true9baller said:
Yeah, but there's more to that than meets the eye also. Each respective dealer gets to set their own price. They print their own "MSRP" stickers. They are not unified across the board.
Yes murely, but why? Why are the allowed to do this why no other can? Still no one has answered my question. I understand the waiting game that if you wait long enough on anything you can get it at a fair price. But I want to know why dealerships have the right to be greedy and make super-profits on markups? Just trying to save some headache here.
It has to do with integrity. Some dealers have it, some don't. If they charge a lot and someone agrees to pay that price then that person sees no injustice. There is no harm done.
 

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Hey true9baller, It sounds to me like you need to do a little homework on this one, like call some stores and tell them your working on a college project and ask them if they are obligated to sell things at certain prices or if they can sell at whatevr they want, and if they are legally binded to sell items at certain prices then call a dealership and ask why they are not binded. Then try to find out what some of the laws are through the state. If you really want the correct answer to this question you will probably have to research it yourself.
Also, I don't think that stores are required to sell things at specific prices. Ever shop at some smaller stores in smaler towns, everything is way more exspensive.
 

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You gotta live with this sucker for several years

Ummm... I believe this is called "price fixing". It is VERY illegal. :evil:

Anyone can sell anything for anyprice.
Anyone can choose to buy or not buy anything at anyprice.
 
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