• Stop being a LURKER - join our dealer community and get involved. Sign up and start a conversation.
Dominion DMS

Is this still a good way to make money?

Jump to latest Follow Reply
yagoparamo

yagoparamo

Boss
Dec 30, 2009
1,883
480
First Name
Yago
#1
Is this still a good way to make money?

This is a $30,860 Accord with a $39,564 final price tag after options. That is an extra $8,000 or around a 25% increase in the final cost.

Most of the charges are optional equipment that the customer will be getting with the exception of the NW Adjusted MV for $999.

I don't want to get into whether this is right or wrong. My question is:

Is this still a good way to make money? Forcing products into the car or will customer nowadays just say they want a unit without them?

Larger Image http://pgiauto.com/news/wp-content/uploads/2013/06/20130531_130155_resized.jpg

20130531_130155_resized.jpg
 
#2
I don't think so. The first thing that popped into my mind when seeing this was a previous thread:

Are $1495 Door Edge Guards the Path to Prosperity?


http://forum.dealerrefresh.com/f43/1495-door-edge-guards-path-prosperity-2564.html

It would be interesting to see the reviews of the Honda dealer in question. In the case of the Hyundai dealer mentioned in the thread above, people crushed them on the review sites because of this practice. And rightfully so.
 
  • Like
Reactions: 2 people
#3
Yago,

I would say, as in most things in business, it depends. In this case it seems this is mostly factory options that are driving up the prices. As you said the customer does get something for the dollars they spend. How much of a value this is truly the question. The market will ultimately reward or punish the manufacturer or dealer if the cost does not line up with the value. The only caveat to this is when demand for the product far outstrips the supply. When the car is "hot" the public will pay more for these extras because the intrinsic value of the car (low supply/high demand) offsets the cost of the extra options. It has been my experience that dealers can play in this space by either going the "FULLY EQUIPPED" route or by being the value leader and stocking only "BASE" models. Depending on the market demand one or the other will be more successful (assuming equal competency in all other business transaction factors ie CSI). This kind of thing will not go away in the near future as far as I can tell.

Richard Hutsko
 
#4
Bill Simmons said:
I don't think so. The first thing that popped into my mind when seeing this was a previous thread:

Are $1495 Door Edge Guards the Path to Prosperity?


http://forum.dealerrefresh.com/f43/1495-door-edge-guards-path-prosperity-2564.html

It would be interesting to see the reviews of the Honda dealer in question. In the case of the Hyundai dealer mentioned in the thread above, people crushed them on the review sites because of this practice. And rightfully so.
Click to expand...


I want to keep this dealer anonymous but I understand your point.


Richard Hutsko said:
Yago,

I would say, as in most things in business, it depends. In this case it seems this is mostly factory options that are driving up the prices. As you said the customer does get something for the dollars they spend. How much of a value this is truly the question. The market will ultimately reward or punish the manufacturer or dealer if the cost does not line up with the value. The only caveat to this is when demand for the product far outstrips the supply. When the car is "hot" the public will pay more for these extras because the intrinsic value of the car (low supply/high demand) offsets the cost of the extra options. It has been my experience that dealers can play in this space by either going the "FULLY EQUIPPED" route or by being the value leader and stocking only "BASE" models. Depending on the market demand one or the other will be more successful (assuming equal competency in all other business transaction factors ie CSI). This kind of thing will not go away in the near future as far as I can tell.

Richard Hutsko
Click to expand...

So is this a strategy of selling less cars and making gross on each sale VS selling a lot of Honda's for little profit?
 
#5
We are required to display factory window stickers on all new. Every manufacturer will list a MSRP price on all factory installed installed options, but that's not the final price. It's up to the dealer how they price and market themselves. We price new over invoice, not off MSRP. That $39,564 is only a suggested price, dealership and market will determine actual final price.
 
#6
csabatka1 said:
We are required to display factory window stickers on all new. Every manufacturer will list a MSRP price on all factory installed installed options, but that's not the final price. It's up to the dealer how they price and market themselves. We price new over invoice, not off MSRP. That $39,564 is only a suggested price, dealership and market will determine actual final price.
Click to expand...

I don't think you looked at the sticker to the right.
 
#8
What makes this even more criminal is that if you ordered all of these options from the factory, it'd still be WAY cheaper than what this dealer is installing. Here's the breakdown

Accessory: Dealer $Price - Honda $Price

Wheels: $2,599 - $1,596
All Season Mats: $176 - $143
Door Sill Illumination: $453 - $290
Decor Package: $149 - N/A
Interior Illumination: $239 - $125
Cargo Tray: $171 - $139
Body Side Molding: $1890 - $220
Splash Guards: $167 - $104
Front/Rear/Side Under Spoiler: $1890 - $1,373
Wheel Locks: $87 - $55
Moon Roof Visor: $184 - $129
Bumper Applique: $117 - $71
Sport Grille: $530 - $399
Wing: $638 - $399

And the $999 "Market Adjustment"...seriously? Around these parts the starting negotiation point for a 2013 Accord EX-L V6 is $500 above invoice, if that.

Frustrating to see dealers still employing these tactics out there. Would love to see what they have it listed for online. Imagine the shock & awe one would experience if it was on their web-site for MSRP only to find the $10K addendum on the window when you arrived. Why would a customer even stick around at that point in time?
 
#9
I work at a Honda dealer. We add 3 accessories to the Honda Accord that cost a total of $314 - mud guards-wheel locks & accent stripes.

Most Honda dealers have their own pricing for the add on's and it's common. I've seen muds for $299 - Accent Stripes / Appearance package for $495 , wheel locks for $199 etc....


I've never seen a bump sticker like the one pictured. If I was on their lot looking at that sticker, it would make very sceptical of that dealer.

Most Honda dealers are selling at or very close to net net. The only way to try and make money, is holding back on the trade. Very uncommon to add thousands of dollars of accessories to any Honda customer.
 
#10
danoneil said:
I work at a Honda dealer. We add 3 accessories to the Honda Accord that cost a total of $314 - mud guards-wheel locks & accent stripes.

Most Honda dealers have their own pricing for the add on's and it's common. I've seen muds for $299 - Accent Stripes / Appearance package for $495 , wheel locks for $199 etc....


I've never seen a bump sticker like the one pictured. If I was on their lot looking at that sticker, it would make very sceptical of that dealer.

Most Honda dealers are selling at or very close to net net. The only way to try and make money, is holding back on the trade. Very uncommon to add thousands of dollars of accessories to any Honda customer.
Click to expand...

Dan,

So there is a place for some options properly priced?
 
Top Bottom
Back
Jump to latest Follow Reply
Jump to latest Follow Reply
Menu