MSRPs falling...BUT

[trinacriabob]

I obviously like news like this. Some analysts feel it will bode well for GM. They also say that it will be the dealers that will "take it on the chin."

I immediately went to a couple of GM web sites to see how certain cars were priced and then to GM card to see if the allowances changed (downward). I did see, however, that some incentives have been lowered. Well, but that was expected.

Do you think that the mark-ups will proportionately be the same? Do you think this will mess with the dealers? DO YOU THINK GM WILL SELL MORE CARS OR THAT THE OTHERS WILL FOLLOW SUIT?

[thegriffon]

In the current environment dealer margins have been razor thin anyway as they offer their own discounts to bring transaction prices close to invoice. The new pricing is designed to reflect this and give consumers a better idea of what they'll actually be paying in the real world. Of course dealers will have less flexibility, but they accept it as not cutting their real (instead of potential) margins. For GM the focus really needs to be on "honesty in pricing" and "less haggling", and not "our cars are cheaper", which would only make things worse. Since there have been a lot of complaints about MSRPs not reflecting the true price consumers will pay (which was the whole idea in the first place), GM's move to "Real Pricing" could really pay off if they market it correctly.

[cmattson]

if they market it correctly

If history is any indicator, this idea is doomed.

[CARBIZ]

But part of the problem is that there are too many dealers fighting over diminishing market share. The problem is particularly acute in this area. Dealers that used to sell 200 cars a month now barely do 1/3 of that. Sometimes, desperation breeds desperate tactics, like "destoying the price," and low-balling - tactics that benefit no one in the long run. Lower MSRPs will hopefully curtail those behaviors, but the worst dealers won't be deterred.

Also, the customer themselves can be partially responsible when nasty tactics are played out. Here are two of my favorites:

1) The customer goes to several dealers to see what they can't buy the vehicle for. (They make up a ridiculous number so the dealer throws them out, then they go to the next one and up it a little.)

2) The customer huffs: "My buddy bought (fill in the blank) car for Xthosuands less than that!"

Two is my favorite. People have short memories. People love to brag and embellish stories, and with time the embellishment becomes reality. My favorite way of dealing with those people is to offer them $1,000 cash if they can bring in the bill of sale from their buddy and show me that he/she paid what they claim they paid. I've never had to pay out yet.

[trinacriabob]

But part of the problem is that there are too many dealers fighting over diminishing market share. 

Is there? I have seen a lot of dealer "consolidation" in the GM family within the last 5 to 10 years.