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You are in the Prices Paid - Buying & Leasing Experiences
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Subaru Forester, Wagon, SUV
#3162 of 3619 What does the dealer really pay
Feb 13, 2011 (8:10 am)
What does the car cost the dealer?
Just purchased a 2011 Subaru Forester
all else standard. I wrote a check for 23001.47 cents. Talk about a pain. What is with this auto game. I can buy 1 million in gold contracts with just a few mouse clicks but buying a car is a game I will never understand. No wonder I keep my cars till they are dead. I hate buying a car.
Invoice, hold back, "Fees" "dealer prep" "dealer documentation fees" what a load. We all read the same thing. Supposedly a reasonable profit for the dealer is 300.00 dollars. So if the dealer pays 21000 for the car on a credit line of 5 percent then it costs 87.50 a month for each car in the inventory. With a profit of 300 dollars I am to believe the sales people can earn a living and they can pay the electric and heat bill. What gives here?
How much does the deal make on a sale of 23000.00. I am all for profit in the free world but, why the big secrete. I know one thing I couldn't make a profit selling 100 of something at 21000 if I only got to keep 300.00. It's easier to buy and sell something at a pawn shop. The pawn shop does try to add the Pawn mystery fee.
"I will sell you the car for 21000.00". Then I get papers in front of me that say 23511.49 cents. I understand I pay sales tax and registration, no issue there. But,,,,,,,, non-itimized "fees", "dealer documentation fees". What BS. Save everyone the time and just say "profit" and add it at the time of the quote and save everyone the time. After 2 weeks of emails I finally said I don't want to know anything about invoices, doc fees or anything else. I will pay 23001.47 on one check end of story and the rest of this transaction will be by email and postal mail. The only time I will set foot on the dealer lot is to drive away the car. I don't want to even see them. I would rather hang out with rats.
Now, how much did they earn. I surely hope it was more then 300 dollars.
#3163 of 3619 True Market Value Below Invoice?
Feb 13, 2011 (4:59 pm)
I notice that the Edmunds TMV for the 2011 Forester Limited is below invoice. Are the dealerships really selling cars for just 2% over cost (basically, the dealer holdback)? Or, is this where fees such as documentation fees and dealer prep fees come in? Does TMV reflect the negotiated MSRP/Invoice price or the pre-tax sign on the dotted line price?
Basically, I am trying to get a better idea of how to use the TMV in price negotiations. Are there basically two types of fees:
1) Invoiced fees from the manufacturer, some of which are paid back to the dealer (holdback and floorplan interest) and some of which are not (destination fee and advertising fees).
2) Post-settled-price fees added on by the dealer, such as the documentation fees. Do dealer prep fees also fall into this category?
Does TMV only reflect the average price that consumers are paying including category 1 fees, but not category 2?
In other words, if a dealership sells a Subaru Forester at Edmunds true market value (which is a bit below invoice in this case), is their only profit from the dealer holdback, or is the TMV not factoring in additional cost that is basically profit to the dealer, such as documentation fees and dealer prep fees?
Any feedback you can offer would be much appreciated in my up-coming Forester negotiations!
#3164 of 3619 Re: True Market Value Below Invoice? [tenntradition]
by kyfdx@Edmunds HOST
Feb 14, 2011 (4:10 am)
Straight from the TMV horse's mouth....
The invoice price does not include any fees that may be charged by the manufacturer to dealers in a particular area of the country, such as local advertising fees, dealer association fees, or docking and storage fees. Edmunds.com does not track or provide such local fees.
If a local fee appears on the invoice, it is an actual cost that the dealer paid to the manufacturer when buying the vehicle. In other cases dealers may choose to write in their own ad fees on the consumer sales contract. However, in either case these local fees are a part of the dealer's cost of doing business.
Many consumers attempt to determine the dealer's "actual cost" for a vehicle and then "allow" for the dealer to make some profit. However, the invoice price is almost always higher than the amount the dealer actually ends up paying to the manufacturer. This results from a variety of discounts offered to the dealer that do not appear on the invoice. The two most common discounts are "dealer holdback" and "dealer cash incentives" - both of which are available on Edmunds.com - but there are often others that are not generally known and that are based on other factors (for example, the dealer's sales volume for a particular month).
Accordingly, determining the dealer's actual net cost is difficult even for seasoned automotive insiders. This is why we developed the Edmunds.com True Market Value® (TMV®) pricing system, which is our determination of what other consumers are actually paying for the vehicle. The TMV® accounts for the effect of all of the manufacturer's extra charges as well as the dealer's hidden subsidies, and we believe it is the most important price to know when negotiating your purchase.
#3165 of 3619 Re: True Market Value Below Invoice? [kyfdx]
Feb 14, 2011 (7:33 am)
Some way to do business.
A dealer does this every day. I do it once in 10 - 15 years. My last Subaru was 17 years old with 270,000 miles. I would still be running it but I live in a mountain location where there is salt on the road for 8 months of the year. First snow in Sept. last in May. While the motor was running fine there wasn't much left on the rest of the car.
I will only do all this dealing when I have no other choice.
I just dropped 23000 on a new Forester. I have no idea if I lost my ass or did okay.
How could I know with this way of doing business. At 57 years old I have purchased all kinds of things in my life. Only autos seem to be handled is such a strange manner.
Let me talk to the manager
I'm not making any money on this car
We paid xxxx, here look at the invoice
We don't know anything about holdback
We have seen it all.
My last 3 Subarus all went over 200,000 miles. My Toyota truck is a 1994 with 227,000 miles. If any dealers are out there is listening I can say I would buy a few more new cars and trucks if the game didn't suck. I hope to run this new Forester for 250000 and a minimum of 15 years. I hate dealing with car dealers that much.
Feb 14, 2011 (11:22 am)
I completely understand & sympathize with your frustrations. The car business is so extemely unique. It is difficult to estimate exactly how much a dealer pays for a certain vehicle & how much profit they make on that vehicle. To be perfectly honest, it shouldn't matter to you. Guides like edmunds, truecar, & kbb are guides so YOU the consumer can determine what YOU think is a fair price to pay for a certain vehicle & not how much profit they make.
I'm not trying to sound insensitive, but if you are driving a car for 15 - 17 years & putting over 250,000 miles on a vehicle, does it really matter if you paid $500, $1000, even $2000 "too much?"
Now one option is to not go back to a dealer who "plays games" like you say. Now I don't know where you live, maybe there is only 1 Subaru dealer within X miles & they know it & can get X amount for their cars because of the mountainous region you are in. Maybe it would be worth your time & money to travel to a region where Subaru dealers actually have to compete for business, like New England, New York, or New Jersey.
If you had a dealer willing to work with you, how often would you trade up for a new one? Do you pay cash or finance your vehicles?
BTW, you put some really impressive amounts of miles on your cars. What's your secret to getting them to run so long.
#3167 of 3619 Re: True Market Value Below Invoice? [mountaindog]
Feb 14, 2011 (12:53 pm)
I recommend you visit a no-haggle dealer next time. Usually the car salesman are salaried and earn bonuses based on your satisfaction.
That way you get people truly focused on finding you the exact car you want, and working hard to make you happy, not to make a buck.
Since I switched to that type of buying, the buying experience has improved tremendously. And frankly that is more important to me vs. getting $100 more off the bottom line.
The sales man I go to is someone I consider a friend, when I go test drive cars there he just tosses me the keys and says "have fun". It's nice to have a friendly relationship like that with a dealer.
#3168 of 3619 Re: Mountaindog [nyccarguy]
Feb 15, 2011 (6:01 pm)
No, it's not insensitive at all. I want the dealer to profit. I just down know if I am paying 1000 too much or not, that's the whole point. How do we know other then to pay the average price everyone else has paid. I got my Foreter at Mark Miller Subaru. Basic 2.5x with alloy wheels, roof rails and the automatic. My wife does not like the 5 speed in stop and go city driving and she will be driving this car. The price out the door was 22985.00. Is that a good price,,,,,, I have no idea. I was not willing to spend more then 23000.
I live in Utah. My home is it 8000 feet. We get 25 or more feet of snow each winter from Sept to June. The salt is what takes the cars out. I am very easy on cars and engines. I use Mobile 1 oil since it flows better when it's cold. I only run manual transmissions in my cars because they are simple and just don't give out. I have also never replaced a clutch. Never over rev an engine. Our 2007 Impreza is not even close to the toughness of my 1984 and 1994s of which we had a pair. My 1994 was the best car I have ever owned. Every Subaru I have owen out performs everything in snow. I have a hill side home with a 23 percent grade driveway and the Subarus go up the driveway covered with snow just like it's July. With snow on the driveway my Toyota truck in 4WD low only makes it half way and slides back down with all 4 wheels spinning. Going up the hills to my home I pass jeeps which can't pull the snow covered grades (mostly because they have the wrong tires). I will say the 2007 engine runs very well and has more power. One reason to not get new ones is that the salt on our roads for 7 months a years just eats them.
#3169 of 3619 Re: Mountaindog [mountaindog]
Feb 15, 2011 (7:11 pm)
Subaru should pay you to do some marketing for them & film their cars driving around your neck of the woods.
#3170 of 3619 Re: What does the dealer really pay [mountaindog]
Feb 16, 2011 (6:37 am)
There is no credability in the car market today. After purchasing two 3 year old off lease cars i vowed never to buy new again, but i did. New 2011 forester touring before they arrived at dealers. 1300 under invoice. The automakers over the years have already built into the price the game of invoice pricing. Cars are mass produced on assembly lines. Give or take a few thousand dollars it costs basically the same to build a $18,000 car or a $40,000 car. Its all about marketing. We the consumer and i accept this game by buying these new cars for way to much money. This is not about profit, remember mass produced on a assembly line. Just my opinion
Feb 21, 2011 (7:31 am)
Well, Saturday I picked up a new Forester.
The total price was 22985.00. Did I get a good deal? I have no idea. I still have no clue what the profit was on this car.
22985 -(1200 sales tax + 80 DMV + 5 tire disposal)
22985 - 1285 = 21700
So 21700 went to the dealer. Now here it the question.
What profit did the dealer earn? On the way out door the Salesman insulted me one more time. "We only made 90 dollars on this car." Right, and I'm Teddy Roosevelt.
So, was the profit:
I would like to know because if it was only 90 dollars they won't be around when I need parts.
What ever the price, profit is fine with me. But,,,,,,,,,,, why the BS "we only made 90 dollars". Was that comment really necessary? If any dealers are here you should know that if you have used lines like that we don't think much of you.