First post here, I figure I'd weigh in on a heavy topic.
Truth is, dealers pondering how to be more transparent need to ask themselves if they really want to be more transparent. I don't believe most do. Most want to
appear transparent, but not be. And there's justification for that, of course. But at the end of the day if you're asking this question but still have sales people running between their customers and the desk, you need to consider the possibility that you don't want to be more transparent, you just want to give your customer the impression that you are.
Stores that that actually want to provide transparency to their customers are called "one price stores"....but then again, at these stores there's always holding on the trade....and back end, too...and aftermarket....so maybe that's a poor metric in some regard.
Dealer profit is NOT a concern to the consumer. To the majority of consumers, in their mind, your true cost is zero. They do not care that you're making or losing money on a car. They're not interested in providing a "reasonable" margin. (how "reasonable" is defined generally differs between the two parties anyway) They're concerned that they can or can't buy the same car for less elsewhere.
But
genuinely intelligent dealers will understand that "top line" or "front end" is soooo 1990's nowadays. Sure, you can still hit a home run on the occasional baby seal that walks into the showroom...but that customer is disappearing rapidly, like it or not. They know that "top line" is merely a means to an end. I'm not just talking about taking a $2k loser on the top line price and hope the sales person can pinch from the trade, the F&I guy/gal can make $2k on the back, or the aftermarket crew can pick up some of it.
The smart ones know making money happens when you buy the
real merchandise, that cars with reasonable scarcity and low market day supply are available and where to get them (not the auction, ladies and gentlemen).They know that there's profit in R.O.'s.The smart ones develop an auction lane in their own showrooms where they're the only bidder, and the cars they buy are bought "right", sent into service where they have a $700+ RO, half of which is profit, and then retailed within 27 days at 95% price to market...wash, rinse, repeat.
I think if you're
priced right vs. the market on a desirable car the customer wants, you can turn the screen and show the customer the R&R or APD screen and say "I'm making $2800 front end gross on you.", and they'll still buy it...(this is where buying it right, auction lane in your showroom, etc, come into play)
You can price a car at 105% price to market on a 90-day old unit, turn the screen to the customer and say "I'm losing $700!!!!" and they won't care, they're not buying it.
If you're trying to convince the customers in your market to buy from you because of how little money you're making/how much you're losing, you have a laziness problem. Today, profit takes work, disciplined adherence to process, and willingness to hurt the feelings of managers salespeople who fight the process....