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

[danoneil]

I would like to get some feedback on the customers perception.

My dealership has a MSRP and a flat $500 discount on every used vehicle. Example 08 CRV EX 4WD MSRP $20,995 Internet $500 less $20,495.

Do you think internet customer care about the discounted amount ?


I have an opinion but curious to get some feedback from the DR community.

Thanks

 

[john.quinn]

We show a discount on every vehicle as well. We (having a hard time not saying "we") start at a certain amount off, then go lower from there with market adjustments and aging.

Do I think there's a psychological advantage to showing a discount?

Lemme answer it this way: if you see a car marked down $3000, it makes a big impression, right?

So while $500 may not have the same impact, it still registers "some" impression in the shopper's mind.

 

[ddavis]

I would like to get some feedback on the customers perception.

My dealership has a MSRP and a flat $500 discount on every used vehicle. Example 08 CRV EX 4WD MSRP $20,995 Internet $500 less $20,495.

Do you think internet customer care about the discounted amount ?


I have an opinion but curious to get some feedback from the DR community.

Thanks

There is no MSRP on used vehicles. In many States, you would be prohibited from using that. You can use Kelly Blue Book value, Black Book, or NADA Book Value. Shoppers normally know the value of a vehicle.

 

[joe.pistell]

... Shoppers normally know the value of a vehicle.

DD,

Do they REALLY know the price? I say they don't.

For example do they have Historical Recollection of prices? I don't see it. Wholesale prices at the used car market are WILDLY fluctuating and this gets passed thru to buyers. Has it impacted buyers? Are they saying "Just 3 months ago, that same car was $___!". Nope.
.

• Do they know the 6 trim/pkg levels to the Audi TT?
• Do they know that GM Rental units delete Onstar, Bluetooth, etc?
• Do they know they're comparing a rental vs a non-rental?
• Do they know how to factor in mileage and trims when comparing 2 similar units? (i.e. Chev Impala LS w/11k vs LT w/22k)

.
.
IMO, when shoppers shop, they gather lots of info, but they don't go granular, it gets too confusing AND time consuming. They use the 'net to create a short list of finalists. They use the net to eliminate choices.

This is a graph of their journey:

This comes from an article I wrote 2.5 years ago: Charting The Internet Car Shopper Experience on this topic.

p.s. I am talking about people in general, not the outliers.

 

[danoneil]

Thanks for the article Joe. So does the discount amount make a difference when it comes down to the consumers short list ?

 

[MullerToyota]

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.

However, the message from the internet (or the showroom) is always the same: We market our online used car prices aggressively. However, i am sure we can save you a few hundred dollars to make a deal if you like the car. When can you visit us to test drive and see if you like the vehicle enough to make a deal?

Remember, the goal of the internet isn't to sell cars, it is to sell the appointment.

Now, if the vehicle is marked down considerably, I will certainly use that to my advatnage: Listen folks, this vehicle is listed for $24,999 on the window sticker. As you can see it is marked down to $21,999 online. I already had a couple calls on this vehicle since we marked it down, how soon can you get here to make sure you like it before someone else decided to purchase it?

Basically, an arbitrary $500 discount to me is just that: arbitrary and probably not necessary.

 

[Jeff Kershner]

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.

How's that working for ya?

Every dealer I know and have worked with that takes this approach "think" they're getting the opportunity to make gross the first 30 days. But what I've seen, is quite the opposite. They get that crack every know and then but lets admit this happens less and less. Instead their average days in stock is absurd and gross profit is nowhere near where is should be but all they remember is those few cracks they made.

Surprised Ed hasn't chimed in on this.

 

[ed.brooks]

Surprised Ed hasn't chimed in on this.

I was trying to refrain Jeff

I think Jeff nailed it. By pricing high for the first 30 days you're effectively taking this car out of consideration for most internet customers while hoping for that one customer to wander in that hasn't looked online (so you can hit that elusive homerun).

If you absolutely love the idea of giving yourself the opportunity for a high gross on a fresh unit, I'd suggest a shorter time period than a month - maybe 10 to 14 days, but I'm still not a fan of the idea.

 

[bzweifel]

 

[bzweifel]

Lol I'm glad you enjoyed it Ed. I knew that all of maybe 3 members would "get it" since guest can't see attachments.

I just find it funny that the same people who told me that velocity "reaked of weakness" when i discovered it, are the ones in manager meetings throwing around ideas like "but guys , even before we talk about gross, just selling a used car nets us 1500 as a dealer when you factor in x,y,z... Blake did you know that?"

......welcome to the big leagues rookie!!! Haha fml