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Thread: Puzzled About a Low Price on a New Car

  1. #1
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    Puzzled About a Low Price on a New Car

    I went shopping for a new car today. One dealer advertised on the Internet a price for several cars that almost seemed too good to be true -- about $2,000 under Edmunds "Invoice". The dealer also had other cars that weren't selling, or at least weren't advertised, at a similarly low price. This is a very high volume dealer. There is no mfr to dealer "marketing support" in effect now. I saw two of the cars that I might be interested in. They looked every bit like brand new cars with the white plastic protective covering on, and they both had about 20 miles on the odometer.

    A few questions:

    1) Do high volume dealers get incentives and "marketing support" that isn't known publicly that could explain this big discount?

    2) Besides the holdback dealers get, does the Edmunds Invoice price accurately portray dealer cost?

    3) Are there cars made available to dealers that for one reason or another have a lower dealer cost than others?

    4) Should I be concerned? Is this too good to be true?

    Any other thoughts?

  2. #2
    Ridin Dirty dom's Avatar
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    20 miles on the clock, 2k below regular prices, and with a warranty too?

    As Cramer from Mad Money would say "buy buy buy."

    Are you sure they aren't going to nail you on paperwork and processing costs?

    There was no story behind the cars like frame damage when shipping etc..?

    What kind of cars are we talking about, and what were the prices?

    I don't know anything about the four listed questions you asked, but have you used other resources as a point of reference beside Edmunds?

    "Tutto nello Stato, niente al di fuori dello Stato, nulla contro lo Stato "
    -Mussolini
    All within the state, nothing outside the state, nothing against the state.

  3. #3
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    Quote Originally Posted by dom View Post
    2k below regular prices
    Not $2k below regular prices, over $2k below invoice.

    Are you sure they aren't going to nail you on paperwork and processing costs?
    Asked them about that. Only $192 for paperwork, and a hundred something for "etching". I'm going to make my offer without those two.

    There was no story behind the cars like frame damage when shipping etc..?
    How would I find out about something like that? Dealer ain't going to tell me. Car looks brand new, right off the ship.

    What kind of cars are we talking about, and what were the prices?
    VW Passat. $29k MSRP sticker. About $26.8k Edmunds "Invoice". Dealer is selling it for $24.6k.

  4. #4
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by REM View Post
    I went shopping for a new car today. One dealer advertised on the Internet a price for several cars that almost seemed too good to be true -- about $2,000 under Edmunds "Invoice". The dealer also had other cars that weren't selling, or at least weren't advertised, at a similarly low price. This is a very high volume dealer. There is no mfr to dealer "marketing support" in effect now. I saw two of the cars that I might be interested in. They looked every bit like brand new cars with the white plastic protective covering on, and they both had about 20 miles on the odometer.

    A few questions:

    1) Do high volume dealers get incentives and "marketing support" that isn't known publicly that could explain this big discount?

    2) Besides the holdback dealers get, does the Edmunds Invoice price accurately portray dealer cost?

    3) Are there cars made available to dealers that for one reason or another have a lower dealer cost than others?

    4) Should I be concerned? Is this too good to be true?

    Any other thoughts?
    The bottom line is sales are still way off and most automakers (and dealers) are pretty eager to deal.

    And since these are new (no miles, fully warranted) cars we're talking about, I would not worry about why the price is low - just seize the moment and buy the thing if the deal is good.

    Keep in mind you don't have to go back to that dealer for service, if you prefer not to.

    All that really matters is the deal itself. If it's good, jump on it!

  5. #5
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    It's possible these particular cars have been on their lot for a long time and they just want to move them. Were they 2008 models?

    One other possibility - the vehicles might have been damaged & repaired before being sold. Perhaps they were in a hailstorm? (You don't get a paint warranty in that case.) Ask if it's a regular title.

    But otherwise, buy it.

    Chip H.

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    Quote Originally Posted by Eric View Post
    The bottom line is sales are still way off and most automakers (and dealers) are pretty eager to deal.

    And since these are new (no miles, fully warranted) cars we're talking about, I would not worry about why the price is low - just seize the moment and buy the thing if the deal is good.

    Keep in mind you don't have to go back to that dealer for service, if you prefer not to.

    All that really matters is the deal itself. If it's good, jump on it!
    Eric,

    That was my thinking too. It's not like a used car with a suspiciously low price.

    But OTOH, I've bought a bunch of cars over the course of my life and NEVER saw one for $2,000+ under Invoice (taking into acct mktg support). Even if the dealer "bought it" last month while there was a $1,500 Mktg Support in effect, it's still almost too cheap.

    Are you aware of any non-public mktg support that the mfrs arrange with high volume dealers that might explain the very low price?

    Is there some possibility that this vehicle was previously damaged in shipment and repaired and then sent out again as a "new" vehicle, at a cheaper price to the dealer? Do those things happen? Or, if a vehicle is damaged in shipment, do they fix it and use it as an Exec Demo?

    I just don't know the car business that well. I'd love to hear from someone who might have worked as a Gen Mgr at a dealer.

  7. #7
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by REM View Post
    Eric,

    That was my thinking too. It's not like a used car with a suspiciously low price.

    But OTOH, I've bought a bunch of cars over the course of my life and NEVER saw one for $2,000+ under Invoice (taking into acct mktg support). Even if the dealer "bought it" last month while there was a $1,500 Mktg Support in effect, it's still almost too cheap.

    Are you aware of any non-public mktg support that the mfrs arrange with high volume dealers that might explain the very low price?

    Is there some possibility that this vehicle was previously damaged in shipment and repaired and then sent out again as a "new" vehicle, at a cheaper price to the dealer? Do those things happen? Or, if a vehicle is damaged in shipment, do they fix it and use it as an Exec Demo?

    I just don't know the car business that well. I'd love to hear from someone who might have worked as a Gen Mgr at a dealer.

    As Chip says, if the car was damaged it is a legal requirement that they disclose this if you ask. So definitely ask. And it's a good idea to do a close inspection for signs of repair, etc.

    But given the legal consequences (to the dealer) of this - of not disclosing significant prior damage/repairs - I really doubt this is going on.

    The more likely cause is the fact that the dealer is freaking out about inventory that's piling up, especially since we're not far off the "new year" introductions. In a matter of 8 weeks or so, 2010 will be "last year's" stuff - and thus, heavy discounts will be needed to move them.

    The dealer you're looking at now is probably thinking about this prospect - especially if sales are slow right now... which I'm betting they are...

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    Quote Originally Posted by Eric View Post
    As Chip says, if the car was damaged it is a legal requirement that they disclose this if you ask. So definitely ask. And it's a good idea to do a close inspection for signs of repair, etc.

    But given the legal consequences (to the dealer) of this - of not disclosing significant prior damage/repairs - I really doubt this is going on.

    The more likely cause is the fact that the dealer is freaking out about inventory that's piling up, especially since we're not far off the "new year" introductions. In a matter of 8 weeks or so, 2010 will be "last year's" stuff - and thus, heavy discounts will be needed to move them.

    The dealer you're looking at now is probably thinking about this prospect - especially if sales are slow right now... which I'm betting they are...
    Good advice on asking about prior damage/repair.

    No new models coming in in October. A brand new Passat is coming out early to mid next year as a 2012 model. No 2011's coming in this Fall.

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    Quote Originally Posted by chiph View Post
    It's possible these particular cars have been on their lot for a long time and they just want to move them. Were they 2008 models?

    One other possibility - the vehicles might have been damaged & repaired before being sold. Perhaps they were in a hailstorm? (You don't get a paint warranty in that case.) Ask if it's a regular title.

    But otherwise, buy it.
    These are 2010 models. I saw the car, I saw the window sticker.

    Please explain further what you mean by a "regular title" vs something else.

  10. #10
    Vulture of The Western World Eric's Avatar
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    Quote Originally Posted by REM View Post
    Good advice on asking about prior damage/repair.

    No new models coming in in October. A brand new Passat is coming out early to mid next year as a 2012 model. No 2011's coming in this Fall.
    Ah VW!

    Ok - then the likely explanation is just that he's got inventory stacking up and is getting desperate. The dealer's monthly "floor cost" isn't enormous, but if it starts to get into several months' worth... then a $2k price cut can definitely make financial sense. In addition to the interest payments, it's also necessary to keep these cars on the lot cleaned up, batteries charged and all that. Again, individually it's not that big deal, but if the guy has scores of cars just sitting around for months on end, it absolutely can be....

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    Quote Originally Posted by REM View Post
    These are 2010 models. I saw the car, I saw the window sticker.

    Please explain further what you mean by a "regular title" vs something else.
    In some states, a hail-damaged vehicle would have to be sold with a salvage title. Which means that any resale value is nil.

    If you typically drive a vehicle until the wheels fall off, resale value may not mean much to you. But a salvage title will mean that you might not be able to buy collision insurance for it.

    Another possibility is if the vehicle was water-damaged. The VW dealer in Raleigh (on Wake Forest Rd) sits next to a creek, and during hurricanes & tropical storms his lot floods. Look under the front seats at the steel supports - they should have no rust on them.

    Chip H.

  12. #12
    Senior Member Mase's Avatar
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    When I was selling Nissans I had access to the "invoice" on each new car. I've seen Edmunds number that had no relationship to reality.

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    Quote Originally Posted by Mase View Post
    When I was selling Nissans I had access to the "invoice" on each new car. I've seen Edmunds number that had no relationship to reality.
    What were the differences, and what was the difference in dollar amount/percentage? How long ago was that? Is it still true today?

    I often suspected that the Edmunds "Invoice" number wasn't true to reality. Too many dealers selling near or below that number. I know they make money on service (which they don't always get), but they couldn't be running the sales dept at breakeven or loss.


    [Didn't know you were on this Forum, Mase!]

  14. #14
    Senior Member Mase's Avatar
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    Quote Originally Posted by REM View Post
    What were the differences, and what was the difference in dollar amount/percentage? How long ago was that? Is it still true today?

    I often suspected that the Edmunds "Invoice" number wasn't true to reality. Too many dealers selling near or below that number. I know they make money on service (which they don't always get), but they couldn't be running the sales dept at breakeven or loss.


    [Didn't know you were on this Forum, Mase!]
    Well that was 5 years ago; not sure how true is could be now. Edmunds number were both too high and too low.

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    Not that it would be negative - but is it a leftover from 2009?

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    Quote Originally Posted by dBrong View Post
    Not that it would be negative - but is it a leftover from 2009?
    No. It's a 2010 model.

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