P.T. Barnum Was Right!

It seems local automotive dealers are all running the same promotion: Dealer Invoice Pricing. “You pay what we pay!” according to the banner in the window of the shop I passed yesterday. Radio and television ads trumpet the same message.

A few years back the big news was that, during a slow time in the industry, you could get a vehicle for $99 more than the invoice price. Then it was “employee pricing” – you paid what a company employee would pay.

Everybody likes a good deal. This latest is a very effective marketing gimmick – but gimmick is all it is. I suspect anyone who pays “dealer invoice” during these sales is paying too much.

When a manufacturer sells a car to the dealer and the dealer sells it to the consumer for the same price there is no opportunity for dealer profit. That means the dealer will be bankrupt in short order – staff need to be paid and there are other expenses in running a car dealership.

The conclusion I come to is that this is misleading at best, and could possibly even be considered fraudulent. The dealer may have an invoice from the manufacturer and be willing to sell you a vehicle for that price, but if they are to stay in business that invoice price has been inflated somehow to build in a dealer profit.

I have nothing against any business making a reasonable profit. I do dislike attempts to mislead me. The promotion works though, people are buying cars, thinking they are getting a deal.

Nineteenth century American showman P.T. Barnum never really said “There is a sucker born every minute,” but the words remain true no matter who said them first.

Advertisements

2 comments

  1. Interesting timing on this one, as I began the shopping process this week in earnest. The dealer told me he sells everything for $500 over cost, but I looked at the facility, counted the number of staff, and realized this is fairly impossible. The problem now was I couldn’t really trust anything he said beyond this point, which was sad because I so wanted to be able to absorb his knowledge about things automotive.

    Anyway, he said he would get a car of the type we discussed and drive it by my workplace later that afternoon for a test drive. Never showed. Never called. Hasn’t attempted contact since, even though he’s got my business card.

    1. It always baffles me how so many salespeople fail to follow through, and not just in the automotive field, Winning a customer once can lead to referrals and repeat business, and usually isn’t all that hard. We bought our current vehicle partly because the dealer told us to take it for a long test drive, 100 kilometres, with no strings attached. He wanted to make sure we tested it under normal driving conditions..

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: