Price Gouging

[Chloe_21]

I ordered a Denali with the premium package and diesel on Saturday. I suddenly don’t feel so bad with my 79,200 price. Now let’s just hope It actually gets built.

You won’t get it for 21, most likely a 22; there is no advanced technology package available. I was just informed of this two days ago after waiting 7 1/2 weeks for my Denali premium package to be picked up.

 

[Chloe_21]

This has been interesting. It seems some people here are confusing General Motors and the dealerships. The dealers are independent, only affiliated with GM through a franchise agreement. Dealers, like other franchised businesses, buy a vehicle from GM at a certain fixed price. They can then charge whatever they choose for a sale price.

We, the consumer can then vote with our dollars. But GM has no control over the sale price of vehicles except for a MAP price. And GM makes no extra money on higher “market pricing”. They would actually have to raise the price to the dealer.

Kind of wish there was a way to go to GM themselves and buy the vehicle from them. Or order one. that would solve a lot of problems because they’re the ones that do the pricing programs they’re going to honor themselves. =P

 

[garymyman]

Biden getting into office and China wanting to push the EV market. Therefor high gas prices and china(my opinion

I don't come to this board to read political conspiracy theories. Especially ones that don't make any sense. The chip shortage is affecting computers, video game systems, and a host of other products that have nothing to do with automobiles.

 

[Quark]

I don't come to this board to read political conspiracy theories.

So skip it.

 

[Wwes]

Not if the factories continue to constrain supply.

Let’s say an automaker can sell 10 SUV’s at full boat sticker (never mind the dealers adding on extra costs) or 15 at a average 10% discount. Never mind bigger incentives for some of these models in the past. Of the 15, they are only getting paid for 13.5 of them. At 70k a pop that’s 157k in discounts. It’s costing them. The question is which would you chose.

700,000 in revenue for 10 at full price with 2/3 the material and labor costs?

Or 945,000 in revenue for 15 discounted ones? With full material and labor costs?

I think the automakers are by far realizing the first scenario is more profitable and will adjust production accordingly.

Just my .02 of a dollar.

There used to be a theory that dealers give away new cars at invoice and make their money on the trades and service. I think that they have figured out they can actually make money on the cars themselves.


Sent from my iPhone using Tapatalk

The automakers book revenue at the time the vehicle is in delivery to a dealership at a contacted fixed price. It would be stupid for them to slow down production to maximize revenue, when their maximization of revenue when running full out.

It's the dealerships that are maximizing revenue right now (aka selling at MSRP/+)

This is a (very) temporary blip in the market.

 

[Rdr854]

Good point about when the OEMs book revenue. One other piece of the equation is the charge that has to be booked for manufacturer incentives to customers and dealers and the impact that has on profitability vs reducing production so that incentives become unnecessary.

Another point is that the heavy discounts that we have become accustomed to over the years have served to heavily devalue vehicles out of the starting gate. My Suburban with a $60K MSRP sold for $46K plus tags, taxes and dealer processing. In today’s environment, the best price will be $60K minimum plus tags,taxes and dealer processing - although less popular vehicles still have some dealer and manufacturer discounts (albeit, much less aggressive than in past years).

 

[SSGUNNER]

Yup, came across that in my search for a new ride. I’ve seen anywhere from 5k, 10k, 15k even up to 20k mark ups. IMHO, don’t blame the dealer, blame the idiots who actually pay those crazy mark ups!!
This past year with COVID, the chip shortage and everything else going on in the world, it’s not just the auto industry. I have a full time job and do real estate part time and the same thing is happening with home buyers. I’ve seen folks dishing out 130k out of pocket to seal the deal on an offer.
By the way, ended my search last week on a 2021 Tahoe RST!!! Loving it.

 

[SSGUNNER]

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[Chloe_21]

Yup, came across that in my search for a new ride. I’ve seen anywhere from 5k, 10k, 15k even up to 20k mark ups. IMHO, don’t blame the dealer, blame the idiots who actually pay those crazy mark ups!!
This past year with COVID, the chip shortage and everything else going on in the world, it’s not just the auto industry. I have a full time job and do real estate part time and the same thing is happening with home buyers. I’ve seen folks dishing out 130k out of pocket to seal the deal on an offer.
By the way, ended my search last week on a 2021 Tahoe RST!!! Loving it.

What I think is weird is how they talked about the unemployment rates, how people were going to lose our homes and apartments and everything. But all of a sudden they have all this money to buy these brand new high-end vehicles? it makes no sense. Even the housing market is crazy; it’s hard to find homes.

 

[Quark]

What I think is weird is how they talked about the unemployment rates, how people were going to lose our homes and apartments and everything. But all of a sudden they have all this money to buy these brand new high-end vehicles? it makes no sense. Even the housing market is crazy; it’s hard to find homes.

They had to make it look worse than it was to get the last guy out and the old new guy in.