What works best for new cars: MSRP or Internet Price?

[Steve Sams]

I spend most of my down time checking out dealership sites from here to Timbuktu. I see some dealerships put every new car at MSRP and some show internet discounts. I have had talks with a few peers and the opinions I have gotten are all over the map.

 

[yagoparamo]

Both?

Look at this example, Seattle New Ford Dealer : Inventory Search

So to answer your question, what would happen if you have the inventory half and half (half of them full price and half with all the disclaimer price crap?).

Which one would customers call?

 

[ddavis]

Just price the ones you want to sell.

 

[Jeff Kershner]

Just price the ones you want to sell.

Good answer. That's what I said to the GM of one of my dealers a few weeks ago. I received a "look" of confusion until he caught on.

 

[ddavis]

I've been pricing my cars and improving my marketing for over five years. I've worked for two large groups. When I left the first group, my department was one of the top stores. At the second, my department was the top store, beating stores (franchises) that we shouldn't have.

About a year and a half ago, I noticed a change in the digital marketing at another group. This is a large group, that people were writing off three years ago. They started doing many of the same things that I felt was important to the success, of my department. You can see the same changes at all of their stores. I don't think that someone was copying me, but there is definately a like minded person in their organization.

This is a public company and I have been looking at their press releases and financials because I wanted to see the effect of this marketing style, over a large group of stores. I printed one of their bar charts that shows "New Car Playbook Rollout" with an arrow that shows when they started. There is a box that says, "New Vehicle Playbook rollout is driving industry-beating performance". Another chart shows "All-Time Record" for sales and gross. All this for Q2, 2011 and their success continues.

Over the years, I have had my doubts and plenty of doubters and critics. Now, I can see that what I have been doing works over a larger number of stores. Nobody will ever convince me otherwise.

 

[john.quinn]

Honestly, you guys are gonna have a hard time convincing me that Sale Pricing all of your new on-line inventory makes a positive difference in the net-net-net bottom line of your stores.

New Cars are not Used cars. I know of a couple stores in our area -- direct competitors -- who price each unit with an internet price. We eat their lunch -- not even close. I've experimented with pricing each unit at a couple of our brands -- no help whatsoever.

Now, given, we are NEPA, and we have the fortunate position of being able to "dictate" market practices. But I've yet to see a good, sound argument for sale pricing all New Car inventory, including, "just price the ones you want to sell," when given a clear picture of the overall "Big Picture."

But unlike ddavis above, I'm always open to suggestion

 

[ddavis]

Honestly, you guys are gonna have a hard time convincing me that Sale Pricing all of your new on-line inventory makes a positive difference in the net-net-net bottom line of your stores.

New Cars are not Used cars. I know of a couple stores in our area -- direct competitors -- who price each unit with an internet price. We eat their lunch -- not even close. I've experimented with pricing each unit at a couple of our brands -- no help whatsoever.

Now, given, we are NEPA, and we have the fortunate position of being able to "dictate" market practices. But I've yet to see a good, sound argument for sale pricing all New Car inventory, including, "just price the ones you want to sell," when given a clear picture of the overall "Big Picture."

But unlike ddavis above, I'm always open to suggestion

This is a group of over 100 stores that was losing money and now they are posting record sales and profits.

John, Changing all the prices on new cars could be a disaster. In "the big picture" there is a lot more to it. When this group refers to their "New Car Playbook Rollout" does that sound like just changing prices?

 

[ed.brooks]

This is a group of over 100 stores that was losing money and now they are posting record sales and profits.

John, Changing all the prices on new cars could be a disaster. In "the big picture" there is a lot more to it. When this group refers to their "New Car Playbook Rollout" does that sound like just changing prices?

I'm pretty sure I know the group you're talking about. Not that many years ago they would demand that customers on the phone send them an email so the Internet Department could get credit. That's right, they would take a customer off the phone and move them backwards - as a policy.

So yes, they've changed much more than just adding pricing to cars.

 

[ddavis]

I'm pretty sure I know the group you're talking about. Not that many years ago they would demand that customers on the phone send them an email so the Internet Department could get credit. That's right, they would take a customer off the phone and move them backwards - as a policy.

So yes, they've changed much more than just adding pricing to cars.

Ed, I would be surprised, if you didn't know. I don't think that they had any corporate-wide stategy back then. I have friends at some of their stores and none of them will discuss it.

 

[john.quinn]

John, Changing all the prices on new cars could be a disaster. In "the big picture" there is a lot more to it. When this group refers to their "New Car Playbook Rollout" does that sound like just changing prices?

I would assume there's quite a bit to turning-around a big group of stores -- most importantly, the culture.

But since the title of the thread is What works best for new cars: MSRP or Internet Price?, I thought we were talking about this specific aspect of culture change. Silly me, I guess