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You are in the Prices Paid - Buying & Leasing Experiences
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Mazda CX-7, SUV
#652 of 813 Re: good deal on leftover '08? [supershawn]
Dec 10, 2008 (9:04 am)
Thanks very much Shawn for explaining this process (in detail)!! One last follow-up... When dealer support is cut & the dealer 'buys' the vehicles, do they buy specific units? Or do they buy a certain # of units overall (ie 10 '08 CX-7's, etc)?
I ask this b/c when I bought a couple months ago, the incentive was flat $7K off any 08 CX-7. I called my salesguy a few days ago to check current incentives on remaining 08's, and all he provided was low financing rates and lease promos. Perhaps the ones they have left were not purchased?
Regardless, thanks agin for all the info Shawn!
So, where did the 2k go on the 2008's? Mazda isn't offering support on the 2008's any more- at least not what they were. If the dealer didn't act on it, he owes what he owes. MAC might do a 0% or lease deal
#653 of 813 Re: good deal on leftover '08? [derrickson]
Dec 10, 2008 (9:28 am)
Yeah, Shawn, thx for the info -- i actually understood most of it
I'm curious -- once the dealer has 'bought' the car, and there are no more incentives or money coming from mazda, it seems like he'd be even more motivated to move it since every day is another day of carrying costs out of his pocket and there's no hope of getting any support from mazda. What happens when he gets to the point where he realizes he's not going to get enough cash for the vehicle to cover what he's got in it? Does he take the car to wholesale auction or something, or does he redouble efforts to sell it, even below his cost, just to get rid of it?
BTW, after I made my "$7k off msrp" offer to the dealer yesterday, i've had no email response at all. c'est la vie, i suppose...
Dec 10, 2008 (6:57 pm)
But what about the 2009's dealer cash, if any? All the 2008's are gone around here.
#655 of 813 Re: good deal on leftover '08? [derrickson]
Dec 11, 2008 (3:59 pm)
The local MAZDA dealer only has 3 08' and 4 09' CX-7's in current stock. I didn't check or ask, but with only 7 vehicles in stock, they are probably sticking to MSRP pricing.
#656 of 813 Re: good deal on leftover '08? [jeffb1]
Dec 11, 2008 (6:21 pm)
My best "guess", and that's all I can give on this one, is that many dealers simply could not "buy" the cars off the floorplan. Sales are bad. And they have been bad. To "buy" a car off floorplan means the dealer had to pay that $18-22k out of pocket. Some dealers simply couldn't do it. If they couldn't pay it, they lost the incentives. They have the cars at invoice plus whatever interest they've floorplanned over their life on the lot. Getting that extra 2-3K is going to take a DeLorean, some plutonium, and enough roadway to hit 88mph
Things are bad, guys. They were bad a few years ago when I was more involved in my families dealerships. I can only imagine what's going to go down over the next few months. We already say Chrysler try to be saved by Daimler-Benz, only to have them say "I give up" in like two years. GM is ready to ditch Hummer, Saturn, Saab, and Pontiac in order to get bail-out cash (but keep Buick, whose average owner is 102- sorry, but c'mon. It's bad enough they killed Olds just as they had a decent product). I can only wonder what would have happened if the big three had (and I know this is a sore spot for an GM die-hard's here) taken an approach like Ferdinand Piech did with VW/Audi/Etc. Instead of building cars that competed against each other, they could have shared more technology and stopped duplication. Seriously, if GMC and GM Trucks weren't what they are, I don't think the F-150 would have been the best selling truck all these years.
A little more rambling on the way it works (worked)....While the cars are on "floorplan" (floorplan, again, is basically where one [hopefully only one, but that's another story] bank, be it a local bank, MAC, FMC, GMAC, ETC, "owns" all the dealers cars on the lot. There are different benefits with different banks, there's some forgiving in tough times, etc), the dealer is paying a type of prorated interest based on the invoice of the car. For example, when the car comes off the line and gets loaded to be delivered, the bank holding the floorplan is notified and sent a copy of the invoice. The invoice cost is added to the floorplan amount the dealer is paying on. When a vehicle gets sold, he reports it as sold and the bank holding the floorplan expects a check for that invoice amount. So, basically, the dealer really doesn't "buy" the cars that sit on the lot. they are financed (sometimes even used inventory can be floorplanned). The longer the car sits on the lot, the more floorplanning for that vehicle costs, and the less of that incentive money (like the initial 3% I mentioned) the dealer is going to get.
As times started getting tough (and this goes back to the 90's), the goal was to keep new inventory on the lot as short as possible to keep floorplan costs down, etc, that's why you started seeing all the "1$ over invoice deals". You really are/were paying $1 over what the dealer paid- invoice, but, he got some back in incentives after it was sold. The faster the inventory moved, the more of that incentive money he got. Consumers were getting smart, the internet made getting invoice price (as well as dealer incentives) easier, so many dealers just threw up their hands and sold new inventory for basically cost.
Now, some of us live in states that allow those ridiculous "doc fees". Most dealers here in NC charge about $499. These are 100% BS. The costs of the DMV processing is minimal at best, this is a way to recoup some of the money when selling at cost. I'm not a jerk, but I usually ask the dealer to admit the fee is bogus as a mater of principle. I say I know he needs to make a profit, but just be honest about it. Not every state allows this (I know my families dealerships are forbidden from doc fees- except actual cost which is documented on the buyers order AND sales contract, guaranteed trade-in values, and a bunch of the other marketing shenanigans).
Anyway, it just became easier to sell the car for invoice (well, a $1 over), get the incentive money, and try to steal the trade. The "program car", aka "off-lease", in all reality "Previous Avis/National/Enterprise rental bought at a dealer auction" and educated consumer "killed" the new car market.
Sadly, this is not just the big three. If you look at sales internationally, they are dying as well. BMW just reported it's biggest sales drop ever.
Even the racing series are losing out...look at all the manufacturers that are dropping...Honda is out of F1 (been there since the 60's), Audi's out of LeMan's.....
Ok, hopefully I answered your question (and then some ).
#657 of 813 Re: good deal on leftover '08? [supershawn]
Dec 14, 2008 (11:10 am)
You seem to know much more about how the auto business works than the average consumer. Here is my story..... I bought a new '07 CX-7 GT in October 2006. At that point in time, the salesperson simply pointed to the MSRP sticker, which was $30,655.00 and stated, "this is the price." I replied that another dealer in town was offering $2000.00 off msrp and this dealer matched that price in 2 seconds. So, I paid $28,655.00 plus taxes and fees. The dealer had about 90 Cx-7's in stock at the time. He now has less than 10 on the lot! Has the invoice price to the dealer changed since October 2006?
#658 of 813 Re: good deal on leftover '08? [fonefixer]
Dec 14, 2008 (6:52 pm)
[In case you are new here, I ramble, skip down some for the actual answer to his question if you don't want to read the latest chapter in my book ] Well, first of all, let me insert my usual disclaimer....I am not "officially" in the car business at this time. My family has quite a few dealerships and I grew up in and around the car business, I worked summers there before I could drive- washing cars on the lot, moving cars on the lot whenever I could get a chance to get behind the wheel, and then selling cars when I was old enough to get my sales license (requirement for that state). Much to my fathers chagrin, I went off to college instead of staying the "the business". My goal was to work summers/breaks (although that's not a good model for a sales job), but after a really hard first year at college and a profitable summer selling cars (things were good at one time), I took a leave of absence from the university and became a "car wh*re" (sorry, but that's what they call it). Do I know everything? Absolutely not- and I don't think anyone does, there is always something to learn. But I did learn a lot about the car business (and even more about life) over that time period. Lot's of experiences gained...not all a big deal (at least not to everyone), but I learned from them and that's what's important to me. And, if you lived in (or visited) the Delmarva Peninsula (Delaware, Eastern Shore Maryland, Upper VA, etc) during the late 80's through the mid 90's, there's a good chance you saw me on their TV commercials (hmmm...why was it that I moved so far away again? ). They pretty much have the monopoly on commercials during all the seeing local news programs (some of you are seeing light bulbs I am sure....ribbit). But I did get to see almost every aspect of the car business...what vehicles to put where on the lot and how to rotate them, keeping the batteries charged (nothing more embarrassing than having to jump start a car for the test drive) and making sure than manuals and floor mats haven't been stolen (bigger problem than you think- sales guys take them for used cars to avoid paying the charge back), I've been in sales, I've ordered stock, signed for $1.7 million worth of cars at an auction (when "program cars" first came out- a BIG ego trip for a 17 yr old kid) because my father was too busy scouting and buying, and walked a bank bag with a million in cash and checks in it to the bank (again, at that age, its an ego trip). I've done F&I (finance office, getting approvals, selling warranties, etc), appraised cars, and "repossessed" both employee demonstrators and cars we "signed" for. And lots more- it was an eventful time period. There was plenty of good- (for the race fans) I have pictures of Cale Yarborough holding me as a baby, I had breakfast with Dale and Richard Childress in their bus and played with this red headed kid named "Jr" while our dad's talked about the car business (Dale had dealerships too), and I drove the pace car for the pre-race parade laps at Harry Gant's last race at Dover Downs. I handed him the keys to the pace car afterwards, he made a speech to the crowd, and then gave the keys to Elmo Langley for the rest of the days duties. I had a Porsche (boy dad "loved' that- he was American only when it came to cars, except of course the Pininfarina body on his Allante, that was "different") and a motorcycle at 18. There were some neat times. But, I also worked a minimum of 12 hours a day, 6 days a week (Blue Laws, no sales on Sundays), straight commission (hero to zero, no sales, no check), and the "love" from the other salesmen because my father owned the place. But I would never trade that time back- like I said, I learned a lot about life....from the stories told by the revolving door of salesmen in and out, the credit reports from people from all walks of life, the pros and cons of "pre-judging' people when they walked in the door, etc....I learned a lot and I would not be where I am today without some of those lessons...the good and the bad. And I bet you couldn't guess what my career ended up being if you had a hundred tries
[The actual answer, although it may ramble some too- sorry, long day]
Invoice. Invoice, again, is the "net" price of the car. It's the actual base price, plus options (factory installed), minus any package discounts (the key to buying and selling right there- knowing how to order and buy the right packages- I've seen "work trucks" with a bolt action six shooter and just air over vinyl price out within 2k of a fully loaded 1500 series truck), plus the destination charge (set price for that region/state). That is the "invoice" price, and it has a corresponding MSRP. you can get invoice right her on Edmund's or on man of the other car sites (but what else do you need with a site like this?). There may be other charges: A dealer made "add-on" sticker, aka a "bump sticker" (not legal in all states and you do NOT have to accept it, just say you don't want those options- if they give you a hard time, its probably not a place you want to do business with any way), Federal/State fees such as a "Gas Guzzler" tax, etc- but these are not considered part of the "invoice" price.
Invoice typically goes up by a few percent every year. If there is a major change to the body style or standard options, it may go up considerably. At the same time, poor sales the previous year, a good recoup on the tooling costs, etc, can actually make the invoice go down a few dollars (this is usually kept quiet as long as possible for obvious reasons...).
The 2008 Mazda CX7 Sport FWD had an MSRP of $23,750.00, invoice of $22,225.00, and a destination charge of $635.00 (note most MSRP listings have destination charge included, so you may see a little variance).
The 2009 Mazda CX7 Sport FWD has and MSRP of $23,900.00, invoice of $22,365.00, and a destination charge of $670.00.
(Note, the invoice price did not change from 2007 to 2008).
So, what do you get for your ~$140 increase on the 2009 Sport? Some more available options (not standard)on the Sport model, illuminated vanity mirrors, real leather on the steering wheel instead of vinyl (don't tell PETA), stated (not verified) loss of remote start and parking assist options, and you get an aux/mp3 input and mp3 playing capability. Oh, and a leather/"metal look" gear shift knob instead of plastic (man- if I had only known that a few months ago! )
The biggest difference is that, and this may change in this market, you are not going to see the 7k off incentives some of us got a few months ago for 8-10 months- if they come.
Now, as far as the rest of your post.....and this is free advice that is worth what you paid......
-Never buy at the first dealer, especially if you haven't researched (see #2). It will be there later, no matter how many "deals he has working on it". And if it's not, I assure you he'll find you it's twin pretty quickly.
-Don't walk into a de
#659 of 813 90 cx-7's vs. 7 in stock.....
Dec 16, 2008 (9:23 am)
So does the Mazda dealer's actual inventory determine whether they charge MSRP or give 7,000 off MSRP ? The dealer I bought my cx-7 had 90 in stock in 10/2006 and currently has only 7 in stock.
#660 of 813 Re: 90 cx-7's vs. 7 in stock..... [fonefixer]
Dec 16, 2008 (11:56 pm)
Sorry if I confused you. Invoice price on a particular vehicle (say for example we are talking about one particular 2008 Mazda CX7, vin #JM3ER293480101103) actually never changes. Say our example CX7 came in Aug 2007 as a 2008 model. The dealer floorplans the invoice for that vehicle (lets say $22300). If that vehicle was still sitting on his lot today (yikes), 16 months later, surrounded by 2009's, the invoice price is still $22300. However, rebates, incentives, dealer cash, advertising assistance (once reported sold) come back to the dealer (or the floorplannning bank, depending). Invoice is and always was $22,300, that was his "net" cost with MSRP being just that, what the Manufacturer Suggested as the Selling Price (based as much on marketing as it is on cost of the vehicle in all honesty). Which is more attractive to the "average" buyer, vehicle A with an inflated sticker of $50k but is on "sale" for $15k off, or if that vehicle MSRP was $36k and was on "sale" for 1k off. Same money, but the first situation sure looks like a better deal. Either way, you paid 35k for that (fictitious and totally unrelated) vehicle.
So, invoice never changes. The dealer "pays" (finances) invoice when it comes off the assembly line, and he technically still owes invoice when it sells, whether that be the day the delivery truck arrives (I've seen people follow a delivery truck in for almost 100 miles because they spotted a vehicle they wanted), or 150 days later when there may be $5k in incentives. While you get those incentives the day you buy, he doesn't get them until the vehicle is reported sold.
The dealer near you could be in several different situations. He may have the 2008's leftover, but was smart enough to "buy" them on the final day on incentives, giving himself that extra $7k-$9k to play with (but the invoice is still the same- don't get too hung up on invoice...that's what the dealer paid and is on his copy of the window sticker most likely in a safe in the sales office. You can buy at invoice and honestly say you bought at "cost", but if there were a few $k in rebates and incentives, you left money on the table - and in his pocket). I am not sur ehow things are in your area, but around Charlotte, there are several "Big 3" (unfortunately soon to be "Small to Middle 1 or 2") that sell all their new inventory at $1 over invoice from the day the hit the lot (usually excluding Corvette, Viper, special editions, etc....usual fine print). How do they stay in business at $1 a sale? Well, they obviously wouldn't. They usually have that made up $499 "doc fee" (there's a little profit), and then they get the advertising hold back when it's reported sold (around 3% until close to the new model year, then jumps to 5% or so). Then, hopefully, you have a trade and/or finance. Even if you trade in a beater they can expect to pick up $500 or so from a wholesaler. If its clean, they can try to low balll you a bit and make the money on the sale of yours instead. And then there is financing....F & I as it was called when I was there (finance and insurance). If there are any deals I "regret" (as in guilt) from my car days, they average 5:1 in the F&I office compared to the sales floor.
Hope that helps.
#661 of 813 Cx-7 dealer cost.....
Dec 19, 2008 (1:11 pm)
Sounds like the average customer can never find out what the Mazda factory pays the dealer in rebates, incentives, dealer cash and advertising incentives when a vehicle is sold. You have finally explained the "1 dollar over invoice" game in a way that makes perfect sense. When I was buying the Cx-7 in October,2006 for $2300.00 off MSRP, one of the dealer managers offered to have the Mazda "rep" call me and verbally confirm to me the "invoice" pricing for the car, which she assured me would match what was on Edmonds at the time. The Mazda "invoice" price probably is correct, or close to correct, it is the "secret" and confidential deals between the dealer and the factory that the customer will not know about. I'm sure Mazda and the dealers have a revolving relationship that changes sometimes on a daily basis.