Last post on Jul 02, 2007 at 8:45 AM
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#757 of 765 Re: Pricing information [bigt]
Feb 27, 2007 (9:56 am)
The problem is that to many cars in the US are push versus pull production. In other words, they make it and then try to sell it versus making it consumer spec. These are all structural problems that are part of the North American auto market. The market structure is just flawed but we will likely see some changes in the near future. I have got my fingers crossed!
#758 of 765 Re: Pricing information [abraindrainer]
Feb 27, 2007 (12:47 pm)
If auto manufacts pulled the autos will cost more... hence the push.
#759 of 765 Re: Pricing information [jb_turner]
Feb 27, 2007 (3:23 pm)
TURNER, why would you say that? Are there some facts and reasoning behind that statement?
Many things like color difference does not cost any more to produce. Overproduction has often caused price erosion in the form of incentives needed to move inventory. Why guess what to produce and finance the inventory?
I did not say they should encourage more option variations! Do you know that pulling works quite well in Western Europe?
Jun 19, 2007 (5:35 pm)
it certainly looks like my post back on 11 Feb & the ensuing responses shut this board down. That certainly wasn't my intent, but it does show what happens when lean principles & logic are introduced into the car sales business, at least in North America.
The intervening posts were interesting, however. Some understand what I say, some don't want to belive it . . . and time will tell how it all turns out.
#761 of 765 Re: Well . . . [cdnpinhead]
Jul 01, 2007 (1:30 am)
Nothing new under the sun really... "The dealers should be eliminated and we should buy manufacturer direct".
Wishful thinking, but totally unrealistic in practice. Let's take BMW's dealer network.... they have, last I recall, 360 dealers in America. Let's be VERY conservative and say that the average value of a BMW franchise in this country is $5,000,000 for the franchise rights (And that's low... WAY low) alone. Plus an average of $500,000 in fixed assets per franchise, $600,000 average used car inventory (Both extremely low). Let's just call it $6 million.
We're not even counting the real estate. That's $2,000,000,000 right there. I'd say that it's quite possible that, when you include real estate, that BMW's dealer network is worth more than BMW of North America.
Then you have new car inventory.. not all dealers floorplan their cars. Most do, but not all of them, some actually stroke checks for their inventory.
Realistically, I could see my figures triple or quadruple and still be dramatically far below the $2 Billion estimate. Hell, I can think of 10 BMW stores alone that are probably worth nearly a billion combined.
Hell, the US dealer body probably owns about $30,000,000 in diagnostic equipment alone! (Assuming an average of 5 GT1s per store at $17,500 per.. without even including the SSS/Progman setups.. or the $50k+ per dealer the facility upgrades for the upcoming G3 setup will cost..etcetcetc..)
So, now that BMW has taken on THIS investment, what do you think they are going to want to see? A return on it and a fat one. They aren't going to start selling their cars any cheaper. It'll be just like Wal-Mart, the price? Oh, it's right there on the window sir!
No manufacturer is going to invest billions and billions of dollars so you can buy their product for less.
A gross margin of 3-4% on gross sales probably won't make their shareholders real happy...
One manufacturer at one point controlled their retail sales.. Daewoo. And ya know what a Daewoo sold for when they did that? MSRP.
Nice idea, but not even remotely practical.
#762 of 765 Glad you guys are still around
Jul 01, 2007 (9:01 am)
cd, ad, haven't seen you guys on the frontlines. Banished? adbrain makes more sense than any of the "for profit" contributors. Keep up the good info.
#763 of 765 Re: Well . . . [im_brentwood]
Jul 01, 2007 (5:45 pm)
Just 'cause it's done in the U.S. doesn't make it right. In the UK things are pretty much as I describe. The store is there only to take orders & is very basic. They do repairs and test-drives, but don't floor millions of dollars worth of inventory in palaces. Works for me.
If you sincerely believe that we'll still be buying cars through dealerships set up the way they are today in 20 years, I'd love to take that bet. I'm not denying that dealerships have a purpose, but it's not to deliver a car to someone with good credit and no trade who knows exactly which car (including the option codes) he wants.
The upside-down folks, who don't know what they want, with a trade, will be at the mercy of the dealers from now on, as they have been so far.
Include me out.
#764 of 765 Re: Well . . . [cdnpinhead]
Jul 02, 2007 (12:40 am)
Good thing you brought the UK up!
Is that how they do it in the UK? Are you positive?
I dunno, last time I was over there Motorpoint alone must have had 30+ new Focuses at each of their locations... www.motorpoint.co.uk might change your thoughts a bit!
50 Brand new Impreza WRXs in stock, ready to go and at a huge savings!
Dealers in the UK are smaller than here and many cars were traditionally ordered, this is, of course, changing. Also, historically.. new cars over there were just not discounted.
So, the UK has gone from a place where you ALWAYS had to order your car and wait for it, to a place where you can buy one from inventory and get it at a discount.
Bill <--Lived in the UK, was involved in the car biz in the UK.
#765 of 765 Re: Well . . . [cdnpinhead]
Jul 02, 2007 (8:45 am)
Dude,we do it our way over here!