what kind of deals below or above invoice are you guys getting?
12-10-2008, 02:59 PM
#21
May I suggest you read the book, Blown to Bits -- "Car dealers are sitting ducks."
And it is getting harder and harder to make a living with as many dealers as their are.
Overall we need a major reduction in the number of dealers -- I mean, c'mon, Cincinnati has two stand alone Audi dealers, 2 BMW dealers, 2 Mercedes dealers -- Cincinnati.
I've lived here for decades and the town is big, but it is a town, or small city, if you like. There may be a case for 2 Bimmer dealerships -- but NOT 2 Audi dealerships. So, you have two, rather low volume, dealerships. My guess is on a good month the larger of the two sells about 50 cars and in a super good month perhaps combined they sell 75 or 80.
This ain't no way to make money!
Overall we need a major reduction in the number of dealers -- I mean, c'mon, Cincinnati has two stand alone Audi dealers, 2 BMW dealers, 2 Mercedes dealers -- Cincinnati.
I've lived here for decades and the town is big, but it is a town, or small city, if you like. There may be a case for 2 Bimmer dealerships -- but NOT 2 Audi dealerships. So, you have two, rather low volume, dealerships. My guess is on a good month the larger of the two sells about 50 cars and in a super good month perhaps combined they sell 75 or 80.
This ain't no way to make money!
12-10-2008, 08:01 PM
#22
There's a better way...
So, when everyone dreads the dealerships and prefers buying online, this begs the question, "Why do we have dealers anyway?" We should just to www.audiusa.com, configure what you want, submit the deposit by credit card, and place the order. I have no problem waiting 4 months to have the car built to my specifications. I have to do that anyway since I drive manual and most dealerships stock very few manuals. Better yet, think how much money you'd save!
1) The dealer's holding all that inventory is expensive. Think about the fact that the dealership is paying the bank ~5% for the loan to hold onto all that inventory. A $50K car sitting on the lot for 4 months adds $50K*5%/3 = $833.
2) You're paying more to buy your car, because the dealer needs to keep a cushion so that they can make a deal with the guy who wanted silver but settles for white, because white's on the lot. You're also paying more because at the end of the model year the dealer has to drop prices to move the old inventory. If they pooled their inventory in 1-2 centralized locations nationwide, you wouldn't have this over/under inventory situation.
3) You're paying for multi-tiered advertising: ever see those really cheesy, low-quality, local Audi ads on TV? That's because you local dealer is also advertising in addition to Audi's national campaigns. But, the dealer's ads aren't relevant nationwide, so they get limited local runs which are less efficient than leveraging that investment in ads nationwide. You're paying for that too.
4) You're paying for the dealership itself, the lease, insurance, employees, benefits. Working directly with a website is much, much cheaper.
Lastly, service and sales do not need to be bundled. The fact that they've been bundled historically is not a reason to keep it that way going forward. When my 1998 Audi 2.8Quattro was out of warranty, I took it to a great, high-quality, local (walking distance) independent German car garage. It was great. As soon as my BMW goes off warranty in 2012, I will go back to FatCity (www.fatcity.net) here in Seattle.
People say, "The majority of people aren't yet willing to buy online." Well, I bet if word got out that you got a fantastic price and a really hassle-free experience by shopping on www.bmwusa.com people would come around. Who had heard of Amazon.com ten years ago and look at them now!
So, imagine an experience like Apple's stores: you go in, there's a showroom for you to play with select models. But most purchases, particularly those that require configuration are ordered online and shipped to you. www.DWR.com works the same way. You go to the showroom to buy a $5K couch; you sit on similar couches and then custom order the combination of fabric and options you want.
Why isn't this happening? Politics. The North American Dealers Association (NADA) has strong political clout and is lobbying against online car sales to "protect the consumer." They also have language in their contracts with the manufacturers to prevent the manufacturers from going direct and leaving the dealership with "stranded costs". The first manufacturer to go out and acquire all of its dealerships and go direct could do incredibly well. There's a lot of cost built into the current supply chain. And as all of you know from WalMart, Amazon, Dell, etc. tightening up your supply chain is a huge opportunity. This isn't rocket science anymore; they teach this in first-year business school classes.
1) The dealer's holding all that inventory is expensive. Think about the fact that the dealership is paying the bank ~5% for the loan to hold onto all that inventory. A $50K car sitting on the lot for 4 months adds $50K*5%/3 = $833.
2) You're paying more to buy your car, because the dealer needs to keep a cushion so that they can make a deal with the guy who wanted silver but settles for white, because white's on the lot. You're also paying more because at the end of the model year the dealer has to drop prices to move the old inventory. If they pooled their inventory in 1-2 centralized locations nationwide, you wouldn't have this over/under inventory situation.
3) You're paying for multi-tiered advertising: ever see those really cheesy, low-quality, local Audi ads on TV? That's because you local dealer is also advertising in addition to Audi's national campaigns. But, the dealer's ads aren't relevant nationwide, so they get limited local runs which are less efficient than leveraging that investment in ads nationwide. You're paying for that too.
4) You're paying for the dealership itself, the lease, insurance, employees, benefits. Working directly with a website is much, much cheaper.
Lastly, service and sales do not need to be bundled. The fact that they've been bundled historically is not a reason to keep it that way going forward. When my 1998 Audi 2.8Quattro was out of warranty, I took it to a great, high-quality, local (walking distance) independent German car garage. It was great. As soon as my BMW goes off warranty in 2012, I will go back to FatCity (www.fatcity.net) here in Seattle.
People say, "The majority of people aren't yet willing to buy online." Well, I bet if word got out that you got a fantastic price and a really hassle-free experience by shopping on www.bmwusa.com people would come around. Who had heard of Amazon.com ten years ago and look at them now!
So, imagine an experience like Apple's stores: you go in, there's a showroom for you to play with select models. But most purchases, particularly those that require configuration are ordered online and shipped to you. www.DWR.com works the same way. You go to the showroom to buy a $5K couch; you sit on similar couches and then custom order the combination of fabric and options you want.
Why isn't this happening? Politics. The North American Dealers Association (NADA) has strong political clout and is lobbying against online car sales to "protect the consumer." They also have language in their contracts with the manufacturers to prevent the manufacturers from going direct and leaving the dealership with "stranded costs". The first manufacturer to go out and acquire all of its dealerships and go direct could do incredibly well. There's a lot of cost built into the current supply chain. And as all of you know from WalMart, Amazon, Dell, etc. tightening up your supply chain is a huge opportunity. This isn't rocket science anymore; they teach this in first-year business school classes.
12-11-2008, 05:46 AM
#26
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The problem with that.....
Most people are not going to buy a car without seeing it in person and driving it. I'm not going to buy a car that I haven't checked out to see if the interior fit and finish and sound system meets my standards.
What are you going to do when you order a car only to find the ride quality is horrible. While I hate most dealerships and car shopping I don't see them going away any time soon.
What are you going to do when you order a car only to find the ride quality is horrible. While I hate most dealerships and car shopping I don't see them going away any time soon.
12-11-2008, 07:00 AM
#27
Showrooms don't need to carry inventory. Showrooms should be owned by the manufacturers.
I'm not disagreeing with you, but there's a big difference between having a few cars on the lot to drive and having 100s of cars in inventory depreciating. Think about how Apple manages its stores or how high-end furniture stores work. There's actually very little inventory, just enough to "kick the tires" and take them for a test drive.
The other big difference is that Apple stores are owned by the manufacturer. This helps align incentives and makes for a better customer experience. I've never felt pressured by an Apple retailer to buy something they had in inventory vs. customize my configuration
The other big difference is that Apple stores are owned by the manufacturer. This helps align incentives and makes for a better customer experience. I've never felt pressured by an Apple retailer to buy something they had in inventory vs. customize my configuration
