Pricing your used car - retail price vs internet price and amount of discount

[tomwhitejr]

I'm not putting THAT on any of my cubicles in the near future... I WANT to make the deal with the guy that wants the best price, and there is NO WAY IN HELL I'm ever going to be OK with that guy going "down the street" to buy a car from someone else...

How about focusing on Lifetime Value of a Customer for a second... You do have a Service Department, right?

My Mantra is and always has been, "If the Deal is worked right... ROLL the car!"

Just sayin'

 

[MullerToyota]

I'm not putting THAT on any of my cubicles in the near future... I WANT to make the deal with the guy that wants the best price, and there is NO WAY IN HELL I'm ever going to be OK with that guy going "down the street" to buy a car from someone else...

How about focusing on Lifetime Value of a Customer for a second... You do have a Service Department, right?
My Mantra is and always has been, "If the Deal is worked right... ROLL the car!"

Just sayin'

Maybe the word "suckers" wasn't the right one. But, I am more than happy to let you work on the guys shopping for unrealistic prices. Last I checked, our closing ratio on those guys vs. the amount of time we put into them just doesn't make sense. Add to that the fact that in order to even make a deal, you are probably going to lose money, so where is the advantage? Service customer? You think that a guy looking for a stupid deal on a used car (maybe not the same make as your dealership) is going to use you for service?

This is what makes me laugh. You all worry about the price. Forget the price. Worry about the appointment. Let the desk worry about the price and selling the car.

I love how we keep trying to reinvent the car business to make it a happier and easier place to buy a car. That is all fairy-tales. If you don't give people objections, then there is nothing to overcome to ask for the sale. If it is too easy - then it won't work. People need to feel like they have won and the only way to feel a win is to overcome adversity.

You don't have to be a jerk to sell a car, but the basics of finding the car, getting a commitment and making a deal has never changed.

I think we forget about this and keep looking for some magical answer to selling cars. Sure, lowering your price might help a little, but it is not going to be better than having a well trained staff that can overcome easy objections like price. Look at our dealerrater. On average, we get 5/5 on everything except price.

 

[MullerToyota]

Wow... there's a gem to frame for the cubicle wall...

Is this your store? <<VERY adult language advisory!!>>

What happens when you run out of baby seals?

Not sure if you checked the subject, but this is about used cars. There aren't any invoices for used cars last I checked.

Sure, the word "suckers" probably wasn't the best. Glad you decided to focus on that word instead of replying to the actual substance of the post.

 

[john.quinn]

Not sure if you checked the subject, but this is about used cars. There aren't any invoices for used cars last I checked.

Sure, the word "suckers" probably wasn't the best. Glad you decided to focus on that word instead of replying to the actual substance of the post.

HAHAHA, ease-up there my fried Clay! The video is a gag -- just meant for a laugh (love this movie!!).

I do think, however, that I have been reacting and commenting on the substance of your posts. Honestly, it's tough to go beyond "Wow" based on my last 15 years of experience in a dealership.

Now please, please, please don't take offense to this, but I thought to myself, "I wonder if he's in New Jersey." And I in no way mean this to be critical of any of the wonderful people who live and work in New Jersey, but there are certain parts of the country where "Love Thy Neighbor" has more, shall we say, "impact," than in other parts. Again, this is not a knock on New Jersey -- I'm simply saying that I would probably expect to be treated differently at a dealership in New Jersey than I might in, say, Iowa. It's simply a noted cultural difference. Like you say, the people there think you're doing a great job -- lots of positive reviews -- you are meeting customer expectations.

I doubt (I hope!) not every dealership in New Jersey takes as hard a line as you are describing, but that's one thing I LOVE about this forum: the yin and the yang! I love hearing this stuff! The diversity of talent and knowledge on these pages is amazing.

So my friend Clay -- you go right on saying it like it is in your world! Theres' a lesson to be learned in everything. Thanks!!

 

[MullerToyota]

HAHAHA, ease-up there my fried Clay! The video is a gag -- just meant for a laugh (love this movie!!).

Ok, I've calmed down. Just feel like I am getting attacked and ridiculed for something that works very well for us. In fact, we just make $8,000 on the front end of a used 2010 Camry this morning, so I guess there are still some baby seals out there.

But, yes, I work in New Jersey. Two of our three direct competing Toyota dealers offer ridiculously low prices that we simply cannot compete with on a daily basis. Therefore, we choose not to.

Of course, they lean on their disclaimers and have a generally poor reputation.

This is where we differentiate ourselves from our competition. It means we can't make deals with people shopping the lowest price. I'm not sure if Suzuki in Wichita has to deal with competitors 15 miles away in each direction that will take $1,000 losers to make a deal, but that is what I deal with daily.

I'm not sure how often you have to fight about price over our CPO car that is perfect vs. their car which is $5,000 less, not certified and has a tiny disclaimer stating that the price is for finance deals and includes $2,000 down cash or trade - but I do.

The only think I can do is teach my salespeople how to say "no". The only chance I have of getting someone into my dealership is to NOT give away all the information. Because, once I give up everything I can do - I have lost. They have no reason to visit us and I have given them a ticket to shop us out of making a sale.

So, maybe it is my location that makes us the way we are, but our dealership can't win on price. Instead, we win on value and reputation. We win on repeat business and an excellent service department. We win on having the best trained floor and internet sales staff. We win on having a desk manager that can hold gross and make money. We win because we have 20 Toyota President's Awards and close at 40% store-wide.

Every day is a struggle, and I look at dealers selling on price in my area as too weak to be able to fight it out every phone call and overcome every objection just to set an appointment.

But, I have no doubt that if we are in this competitive of a market - we could make a killing in less competitive markets. That is why the process is more important than price. Because, if I know that I can't win on price, but I am still successful and have higher than average closing rates, then I know what we are doing works.

 

[john.quinn]

Ok, I've calmed down. Just feel like I am getting attacked and ridiculed

Cool. Certainly not attacked or ridiculed. I'd classify mine, and perhaps some of the "regulars" reactions similar to that when you walk outside not expecting it to be 3 degrees and that first inhale takes your breath away. It's a "shock" factor.

We don't regularly see your kind 'round here, pardner! haha...

Maybe you have a point. I can go to Outback and get a pretty good Angus Filet for $24. That same Angus Filet at Ruths Chris is $43, but I don't complain, 'cuz I get a whole lot more "ambiance" at Ruth's. If you are truly the Ruth's of NJ Toyota dealers, then good for you!!

 

[tomwhitejr]

Clay, with all due respect, your popping off with tales of $8,000 front ends on 2010 Camrys is absolutely over the top. What percentage of your customers are repeat or referrals? I don't believe there is anyplace in this business for people who enjoy ripping their customers' heads off. With regards to Suzuki of Wichita, our single point store outselld Honda, Nissan, Mazda, Hyundai, Chevrolet, Dodge, Chrysler, Jeep, Kia, and Subaru. We compete with all the big boys selling a damaged brand and kick their ass. Seems like the roll the car model works pretty well. The days of hiding information from customers are over. Its a new world - even in New Jersey...

Just Sayin'

 

[MullerToyota]

Clay, with all due respect, your popping off with tales of $8,000 front ends on 2010 Camrys is absolutely over the top. What percentage of your customers are repeat or referrals? I don't believe there is anyplace in this business for people who enjoy ripping their customers' heads off. With regards to Suzuki of Wichita, our single point store outselld Honda, Nissan, Mazda, Hyundai, Chevrolet, Dodge, Chrysler, Jeep, Kia, and Subaru. We compete with all the big boys selling a damaged brand and kick their ass. Seems like the roll the car model works pretty well. The days of hiding information from customers are over. Its a new world - even in New Jersey...

Just Sayin'

I wouldn't have mentioned it except that it really just happened and goes to prove a point. It isn't about price. It is about perception.

I see I am not welcome. It's cool. I don't really feel the need to fit in. I just thought I would try and bring in a perspective of why marketing hugely discounted used cars isn't as important as other areas - especially in regards to the internet department and making appointments - which is our only job.

We aren't a big store in the middle of the big of a big city. We are a tiny store in the most rural area of New Jersey stealing customers from other, bigger, competitors. If we didn't do it well - we wouldn't exist.

So, yes, I guess all you guys are very progressive and smart. Much smarter than our dealership. Surely there is only one way to sell cars and whoring them out is the answer. Well, if that is the answer - then this business is already dead and sites like TrueCar have already won. Because, you all buy into that model already.

I really hope the next time I decide to read these forums, I don't see anyone crying about TrueCar and lost profits, because you asked for it. Roll the car... great idea! So much for value anymore...

 

[jimbell]

Personally, we don't show discounts for used cars. Everything on the internet is the best price - or why would it be up there?

At least, that is what we tell everyone. We market our used cars at a $4,500 gross profit or $1,000 over KBB for the first 30 days (whichever is higher). After that, we price them slightly below market value. After that, we price them significantly below market value and often write them down using wholesale profit.


I am going to venture to guess along with Ed that you are missing clicks just by your pricing strategy. I will assure you that you will have more showroom traffic if you truly do price your vehicles competitively. What is your VDPs on cars.com and autotrader? If you are below 2% on AT and below 3% on cars, you are missing business.

 

[billnj]

$8000 front ends on a commodity car like a 2010 Camry? I suppose that's like the Silver dime I got in change a few months ago, it happens... Of course, people also win the lottery.

I'm in the middle right now of orchestrating a huge redirection and rethink of where my company is going with used car operations, and I'm already seeing results. "Discount" is arbitrary, with RARE exceptions people frequently know darn well what they can buy a car for.

We're changing our pricing right out of the box, and being agressive upfront. And ya know what? it's working. Traffic is up, overall gross is up, units are up, turn is up. It's just the beginning but its' already working. We wrote a deal today on a Challenger SRT8, right off the bat the customer started in on price, just like everyone is conditioned to do. The salesman went and did the right thing, "Sir, you know that this is the cheapest SRT8 within 50 miles, there's 2 others closer to you but they are both thousands more online, right? Well we don't want to waste your time and play games, and we know that the price is what brought you in."

Sold. Spot. 7 days in stock, good front end gross, and working the deal the right way ended price objections.

Had I put that car online for $3k more, we'd be like all those guys out there who start worrying in 45 days and wondering how a low mile SRT8 Challenger was an aged unit.