April

milk. Although it has no bearing on whether you buy the milk or not. So being price transparent does nothing when buying milk, and that's how I think it should be with higher end cars. Otherwise anything and everything else that has a price on it where the stores will not negotiate, could be called price fixing. Note I'm not saying the cars should cost more, just fair pricing for everyone.

As for ABS training and Lexus training, the difference is that Lexus dealers were given absurdly high incentives and margins when they began. Toyota sells many more cars here than VW, and at higher profits, so they made sure they launched the brand carefully - a luxury Audi has not had after 60 Minutes. $10K US per car was not unusual. Any dealer, Lexus or not, would have a lot of resources and attract the best people if you pay them 20% of $10K per sale. And they did attract the best - each one directly approved by the factory via a taped interview. (Audi has tried for years, with incentives, lower pricing than the competition, and the ABS program and it still just gets mooches) Of course customers didn't care. They got a car they thought was great, everybody was super nice to them, and now Lexus can charge much higher relative prices than when they started out, so they turn a healthy profit. A Lexus trained person would sink and die in an Audi store. We had several try it in SoCal, and they were incredibly polished, but we didn't have the reasources and they couldn't make the commissions to make them happy. Same goes for Mercedes salespeople. Audi customers are invariably stuck on price before everything else, and it hurts the brand. The further they can get from that customer, the better.

That's why people like Alex are such gems. However, the temptation to move to greener pastures such as Porsche, is all but irresistable. I've known many salespeople who love Audi, but are tired of scraping by thanks to low margins. Who can blame them? They can go another brand whose customers are willing to pay a greater margin, and get a chance to make a decent living. I had friends in the BMW store down the street, and they made far more money than I, with far less effort and hours than I, and believe me, the temptation to throw away brand loyalties was very high. If I had stayed selling cars, I would have moved into selling Maserati and Ferrari.

Of course I wouldn't be having this conversation with you

hemants

I hear what you are saying about Audi and their brand image etc. etc. Anything Audi can do to be more like Lexus other than numbing the driving experience is a GREAT idea.

But as a consumer, I much prefer to know the apa price and pre-negotiated markup with one phone call, and then give the chance to my dealer of choice to match or get close. Two phone calls, I'm done.

If I haven't done much more than a single test drive, I don't believe dealer A has earned any more than $100 of my money on top of Dealer B who deals with a broker. I might throw in another $200 on top of that for expected future service. (I'm talking about an A4 level car here, for higher end cars the scale go's up but the principle is the same).

April

The pre-negotiated price is the MSRP. Very simple.

hemants

MSRP is not the pre-negotiated apa price, not even close.

It's not a prenegotiated price, it's a prenegotiated markup from invoice.

Different paradigm.

April

depts profitable. The gravy train is over.

hemants

Back end was too profitable because they overserviced?

In any case, I agree that price competition hurts dealerships and if NO dealerships can remain healthy that ultimately hurts Audi.

I just don't think it's the consumer's responsibility to fix it by paying more than they have to! :-)

April

the sales dept. They weren't over-charging, simply that the dealer could afford to give away cars because they knew the customer was coming back for service. Now that inclusive service is going away, the service dept is going to see a drop in customers as some people use independents, which means revenues will drop, they may need to lower rates to compete as well, which means the sales dept HAS to make money. Since demand and inventory volume cannot soar, that means no more wh@ring out cars to brokers or other such arrangements. Every deal will count more than it ever did.

I see some tough times for dealers during the transition, but overall it will improve the brand image. It will also mean that Audi won't be the bargain hunter's darling much longer. Sure, there will be lean times as the mooches go off buy Saabs or Volvos instead, but that's a good thing in the long run. It's not like the product is any worse the BMW or Mercedes, so it all comes down to perceived image.

hemants

Lexus and Mercedes have the lock on the word "luxury"

Audi is like BMW lite in that it's customers are seeking driving enjoyment - but that segment on the whole is younger and more price savvy.

BMW attracts the price conscious with high residuals and therefore low lease rates - even though BMW cars are often more expensive when comparably equipped, Audi residuals are much lower making lease rates much more.

I think that Audi has work to do both in terms of brand image as well as customer service.

In a sense we're talking about repositioning itself from a business perspective. It will gain customers but also lose some.

ie. Audi is Germany's Acura at the moment, whereas it wants to be Germany's Lexus.

Quality and reliability will help a lot - now that Mercedes is bleeding, the time is right.