Dealership Markups

[oldshurst442]

This article from RoadandTrack has got me thinking about several aspects of dealership markups.  The article has also got me thinking about several other things.  Internal combustion versus battery electric.   The article is about dealership markups and the Escalade but brings up several interesting ideas that would be nice if we could discuss. 

https://www.roadandtrack.com/news/a39122714/dealers-added-an-average-of-728-to-every-new-cars-msrp-in-2021/

 

[oldshurst442]

The sub title:  "Price mark-ups don't end there: Some models carried several thousand dollars in pure dealer profit" 

I do not know if the tone of the sub title is a positive one or a negative one, but seeing how some forum members at CheersandGears are divided about dealership markups, I wanna prod the idea and provoke conversation again.

The part of the sub title that says "in pure dealer profit".

I dont have ANY issues with any PURE DEALER PROFIT.  Because the article states that the Escalade is THE hottest selling vehicle in 2021 and that trend continues for 2022. 

The KIA K5 is another hot SUV that sells above MSRP which contributes to pure dealership profit. 

However, the article states that there are several vehicles that are languishing on dealership lots right now amidst a chip shortage and dont command markups but discounts...

Quote

Still, there are brands selling their wares at a discount. Mini, BMW, Ram, Lincoln, Volvo and Alfa Romeo are all sitting in the cellar on Edmunds’ list. The average Alfa has a transaction price of $51,223 and an average MSRP of $54,644—a porcine $3421 discount. In fact, Alfa’s average six-percent discount is larger than Cadillac’s average five-percent premium.

 

To sum up though, the article says that  "new vehicle has an MSRP of $44,989 and an ATP of $45,717. That’s about a two-percent premium, and an average of $728 that dealers are adding on every sale in pure profit. Dealers, it’s rumored, like money."

1. $728 on OVERALL average of dealership markups aint all that bad, in my opinion.  

2. Dealers like money it says.  Who doesnt?, I say.     

Maybe some of you guys have a differing opinion on that.  Please discuss, how much money to be made is appropriate for dealerships and why do you think dealership profits need to be capped? 

Especially when some vehicles are discounted right now instead of marked-upped and especially when things get back to normal again and buying cars will be returned to normal in that consumers will be haggling prices downward again.

 

 

[oldshurst442]

Another interesting idea came out of that article:

Quote

It's also ironic that the demand is so massive for the V-8-powered Escalade just before Cadillac starts production of its battery-electric Lyriq in March. 

 

Im always shifting my thoughts on how EV sales are gonna go and grow.  And I believe, currently, that EV growth will go on along as predicted with no set backs.  Until I see an angle again that makes me question that philosophy.

V8 Escalades are very very persuasive vehicles...

I wonder how persuasive the Lyriq will be to get those V8 Escalade owners out of them and into a Lyriq? 

I wonder how persuasive the Lyriq will be to get other owners of other vehicles, BEV or ICEV and into a Lyriq?

The V8 Escalade has no problems with getting owners to buy them.

And when Cadillac says it wants to be a 100% EV brand, I wanna know HOW they will shoot themselves in the foot?

Either they will kill their V8 Escalade and lose all those sales.

Or they will continue to sell their V8 Escalade and go back on their word of them being a 100% EV brand.

Either way

 

[balthazar]

Escalade buyers aren’t going to switch over to the Lyriq- no the same demographic/ size/ look/ image. A BE Escalade would have a theoretical good chance tho.

RE dealers/ profit: I’m of the same opinion as previously: All the consumers who are moaning & wailing over paying over MSRP had better not utter a peep at NOT paying under MSRP. Ofherwise- they might choke on their hypocrisy vomit.

Further, once dealers are (hypothetically) capped on what they can charge, so should private buyers be on selling their vehicles. And houses, while we’re at it. PRICE CONTROL ALL THE THINGS!! ?

[balthazar]

2 hours ago, oldshurst442 said:

an average of $728 that dealers are adding on every sale in pure profit.

So many folk wandering (intellectually) aimlessly around, fully believing everything they interact with should be done at cost. ‘How dare you secure a loan, operate a physical location, co-ordinate my order, receive /prep it, take care of registration/financing… and make an entire $700 on a $50,000 vehicle!! THE NERVE!!!’ ?