By on May 3, 2011

How many Civics could a Honda make, if a Honda could make Civics? Here’s a hint: “half as many” would be too optimistic a guess. Honda has warned its dealers to expect “severe shortages” in supply of the new 2012 model, and virtually every other Honda model will have the same availability issues until later this year. Toyota’s in the same boat.

What does this mean for TTACers who want to buy a Japanese-brand car?

The news isn’t good. While most people agree that production will be back and running between December and October, the next six to eight months will be nightmares for dealers looking to keep their lots full. Your local Honda and Toyota dealers (and, to a lesser extent, Nissan dealers) are already selling inventory faster than they can replace it.

Even if you don’t want a 2012 Civic or Corolla, if you drive any late-model Japanese car, you may be affected. Suppliers are being asked to preserve a delicate balance between making new parts for new cars and replacement parts for older models. Count on some of them to get that balance wrong, and with the prospect of a guaranteed sale for any current-model part, most suppliers will err on the side of screwing the existing owner.

It’s a well-known fact that very few dealers make money overall on new-car sales, but with capacity constraints staring them in the face, look for the “Additional Dealer Profit” stickers to come back with a vengeance. The last time we had this kind of supply-and-demand situation was in the days of the Voluntary Restraint Agreement thirty years ago. Back then, it wasn’t uncommon to see an $8000 Accord with $2500 of ADP on the window. Today, that Accord is $24,000 and the ADP could reach to $5K or beyond. Many people will simply hold their noses and pay it.

If you’re looking for a new Japanese-brand car, the best thing to do might simply be to wait the situation out. This time next year, supply and pricing will be back to normal levels. The next-best thing would probably be to buy today before every dealer in the United States starts treating automatic-transmission Civic LX models like the Hope Diamond.

We’ve come a long way from 1980. Honda and Toyota are no longer manadatory choices for everyone interested in a reliable, durable vehicle — but they are still default choices for enough people to make the next six months very tricky for anybody interested in owning a new Camry or Odyssey. Those folks have some tough choices ahead of them… and they probably have some pretty ugly stickers to look at, too.

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112 Comments on “This Is An Additional Dealer Markup Sticker. You’ll Be Seeing More Of It Soon...”


  • avatar
    Steven02

    I bet the adjustment stickers will be there and that they will be paid by some people. It is too bad though. That extra money paid won’t help resale of the car. It is money down the drain.

  • avatar

    will the used Japanese car market values elevate even more?

  • avatar
    stevelovescars

    Dealers here in California have seemingly all been putting ADP stickers in their windows for as long as I can remember, even in times when inventories were at record levels. That doesn’t mean that they ever get this money, but it was a poor attempt to start negotiations at a higher level. The thinking goes that if you could give the customer the ADP off they think they were getting something back but were still paying sticker.

    The reality of the situation is that this almost never happened and negotiations were still starting from invoice and going up (or down in many circumstances) from there.

    If you now have a Honda Civic marked up so that the price is competing with other cars offering better performance, more options, more prestige, or whatever it may be, the dealers will have a hard time getting people to pay this.

    If the domestic dealers are smart, they will take their ADP stickers off of their cars and talk about how great their new products are and how straightforward THEY are to do business with vs. those import dealers who are trying to squeeze extra profit out of buyers. This won’t happen, of course, since these dealers are usually parts of the same larger organization, but I do think that cars like from Ford, Chevy, Kia, Hyundai and others will only benefit from these shortages but the dealers have to be ready.

  • avatar

    used car market values are already at all-time highs.

    i’m not sure how bad this will be, my GF’s mom just bought the new 2012 TL, and she paid just a hair over invoice.

    it’s hard to say how bad the situation is… we know it is bad, but the dealers would have you think it’s worse than it may be. furthermore, it seems that only TTAC is covering this looming parts shortage.

  • avatar
    Marko

    Who decides on these markups? The dealers themselves, or do the manufacturers send memos out to dealers?

    • 0 avatar
      faygo

      ADM is purely the dealer’s thing.

      the manufacturers hate it for two reasons :
      1) customers get annoyed and complain to the manufacturer, who can’t control the pricing the dealer provides (remember, it’s a Manufacturer’s _Suggested_ Retail Price)
      2) if customers pay it, it means the OE manufacturer left money on the table which they could have included in their price to the dealer.

      I believe in some cases manufacturers can punish dealers for egregious ADMs, but probably only on the margins of the allocation process as state laws are universally tilted against the manufacturers.

    • 0 avatar
      doctor olds

      Dealers are independent businesses that are free to set their own prices. In fact, manufacturers are constrained by state and federal law and must not take any action toward dealers that restrains trade. When I took a field sales staff assignment with Oldsmobile many years ago, I was shocked at the 3 inch stack of information I had to read to make sure I did not violate law. The laws are strongly biased to protect the “little” dealer from the “big, bad” manufacturers. In fact, even relaively low level employees such as District Managers can be personally CRIMINALLY liable if they do anything with respect to a dealer that is in restraint of trade.

      The U.S. does require the MSRP sticker so customers know the price they “suggest”. I was surprised in Australia to find that they do not publish prices or put stickers on new cars. Customers have to rely on the salesman to tell them what the price is.

  • avatar
    ajla

    Today, that Accord is $24,000 and the ADP could reach to $5K or beyond. Many people will simply hold their noses and pay it.

    That is insane.

    • 0 avatar
      jj99

      I would bet you can land a new Accord in the very low 20K range.

    • 0 avatar
      gslippy

      I don’t think they’ll pay it; they’ll just go down the road to the Hyundai dealer.

      Dealer markup is an arrogant and risky game to play, especially when you’re selling commodity vehicles. They could try it on a GT-R for instance, but not an Altima.

  • avatar
    jj99

    Recently, a Toyota dealer tried to make me an offer on my 09 Highlander with the 4 cylinder after a scheduled oil change. The 4 cylinder Highlander is high demand because of the gas price. And, the Honda dealer I purchased a 2010 Pilot from called the house asking if we wanted to sell the Pilot.

    In both cases, the offers were high to the point where I nearly drove the 2 vehicles for free. However, I declined since little is available to purchase at the Toyota and Honda for a decent price new. While the GM and Ford dealers are dumping vehicles for cheap, I am not willing to switch to Detroit products in order to pocket some cash. I was burned badly by my last Detroit products, including a basket case 2008 Ford.

    I almost purchased an additional vehicle, a 2011 Accord SE for 19600, but decided to wait for the 2012 Camry, even if I pay a higher price later.

    • 0 avatar
      jjster6

      A test drive is free at Ford, GM, or Chrysler. I used to hate the Detroit 3, but desparation has made them change their ways.

    • 0 avatar
      CJinSD

      During the 2008 gas price bubble, used Honda Civics were priced higher than I bought mine for new in 2007. I wasn’t tempted to sell though, as I was happy with my purchase and it wasn’t like I could get a new one for as little as I paid for the one I had.

      Is there a big change coming with the 2012 MY Camry? I rented a 2011 Camry and it seemed to be practically a full facelift over recent models. The 2011 was a remarkably good car, and completely changed my mind about the Camry. I have heard really good things from people who’ve driven recent Accords though. The mileage of the 2011 Camry wasn’t that exciting, but a friend drove from Phoenix to San Diego in a 2010 or 2011 Accord LX on less than half a tank of gas.

  • avatar
    ronin

    Wouldn’t expect salespeople to have any different refrain: Buy now or be priced out forever!

    • 0 avatar
      NotFast

      I remember hearing that from the main stream media at the height of the R/E explosion. Now you can pretty much pick up 2 houses for the price of one.

  • avatar
    stryker1

    So, might this be a windfall for someone driving a low-to-mid mile japanese car who is looking to get into a ford? I wonder if this shortage is going to drive up the cost of used japanese cars as well.

  • avatar
    stryker1

    also, from the picture, WTF is “Touch of class”? Is this a photoshop?

    • 0 avatar
      segfault

      Probably one of those “lifetime” waxes.

    • 0 avatar
      mcs

      I don’t know what it is, but I definitely don’t have it – at least that’s what people tell me.

    • 0 avatar
      DuManchu

      I’m guessing it’s like the “Pro Pack” that was sold at the stealership I worked as a detailer.

      Basically 3M rubberized undercoating, some Scotchgard on the fabrics, leather conditioner on leather, and Meguiars #20 Polymer Sealant on the paint. I think the dealer I worked for charged in excess of $2K for the package. It took me all of an hour (two if it was a used vehicle) to “Pro Pack” a car.

  • avatar
    carguy

    If anybody actually pays these ridiculous charges then it serves them right.

    Looks like a perfect time for Honda and Toyota buyers to find out how good the current Sonata, Malibu, Fusion, Focus, Cruze and Elantra are.

    • 0 avatar

      Poor Galant, nobody loves you.

      • 0 avatar

        I love the Galant, sir. I own two of them, they’re both paid off, and they’ve both been supremely reliable, short of run-ins with mindless, consumer cattle.

        I’ve even been considering a newer Galant, with an eye on building my own TMR380 like some have done down under.

    • 0 avatar
      golden2husky

      …….Looks like a perfect time for Honda and Toyota buyers to find out how good the current Sonata, Malibu, Fusion, Focus, Cruze and Elantra are……..

      True that. Back in the day your choices for sure-fire reliability were limited and the profiteers in the stealerships milked the cash cow with reckless abandon. Now, there are plenty of makes with excellent, reliable cars and many even have the stupid red dots the uninitiated buyers swear by. The only problem is that most manufacturers source globally and they, too will be caught short of parts…

  • avatar
    jkross22

    Reminds me of the window stickers that appeared on the G8 GXP’s when they first arrived. Between silly markups like this and service departments trying to sell fuel injection cleaning services, dealers are doing themselves no favors if they’re interested in retaining customers. Seriously, who is going to pay anything close to this?

  • avatar

    Was it only two months ago we bought a new Honda Fit for $2000 under invoice ? We even told them to remove all the dealer installed options as we didn’t want to pay for them, so they threw them in for free. I guess that was during the opposite swing of the supply/demand curve.

  • avatar
    doug-g

    The automotive landscape has changed. I have slavishly purchased (and/or leased) Honda cars since 1994. The lease on my current Civic Hybrid has one more year to go and I am slowly getting into “new car mode”. This time, however, rather that going directly to the honda configurator, I have been spending a good deal of time looking at the Hyundai and Kia websites. The old “they’ll pay what we ask” days are gone; other car companies are catching up.

    • 0 avatar
      cackalacka

      Yep. Had been driving Japanese all my life, and Hondas since ’95.

      When I went to the two Honda dealers in my area, both sets of salesmen were absolute slackjawed, gum-chewing jerks. I like the Fit (save for it’s interior) but the rest of their Toyota-derivative line of appliances left me wanting. These salesmen were thinking it was the mid-eighties, and that we were in a showroom filled with innovative models. Unless you think the Crosstour is innovative…

      I digress, it’s nice being able to shop in a world with TTAC, Edmunds, TrueDelta, hell, the whole interwebs. Much easier to make an informed decision. Hell, given the conversation I had at the first dealer, I’m pretty sure I was more informed about his inventory than the Double-Mint schlub.

  • avatar
    findude

    I went in to look at the 5th generation Mustang when it first came out and they tried to sell me one with an $8,000 ADP on it. I laughed so hard I almost choked, and then I took a gander at the Ford GT on the other side of the showroom with at $100,000 “market adjustment” on it. Haven’t been to that dealer since.

    Part of me actually agrees with this practice–the true value of anything is what a willing seller and willing buyer agree it is worth. If Honda dealers can push Accords our the door with 5k markups, good for them.

    I’ve all but given up buying a car in the next 15-18 months.

    • 0 avatar
      jj99

      The Ford GT was a decent product. I could see that selling for much more than sticker, but 100K is excessive.

      Sometimes I look at those on the web. Every so often I think of picking up one of those for a toy. They are running in the low to mid 100s for a 05.

    • 0 avatar
      thornmark

      That is a hoot, the Ford GT was one of Ford’s latest flops. Not so bad as the Taurus/500 or the Flex, but a car few with the means desired. Like the last iteration of the TBird, some who bought the hype overpaid severely and due to low demand the GT never made its production or sales goals. Unsold GT’s were dismantled and sold for parts.

      • 0 avatar
        MikeAR

        In what way was it a flop? Is it sufficient to assume that it was a flop just because you don’t like Ford? Or maybe because it didn’t sell as well as the F150? If you just don’t like Ford admit it and move on, don’t jump on any excuse to criticize them. Make it a valid criticism at least.

      • 0 avatar
        Educator(of teachers)Dan

        Right. The Five Hundred/Taurus/Flex are meant to sell in Panther platform numbers, not in “old glory days of the Taurus in 1985 numbers.” Heck the Camry doesn’t even likely sell in those sorts of numbers. And although Taurus/Flex/MKwhatever sales are a bit slow, haven’t they been gathering steam over the years? And except for the latest Taurus it seems like Ford really hasn’t spent much money on advertising.

      • 0 avatar
        jj99

        Wow. Dismantled and sold for parts? On the east coast, they were nearly unavailable, unless you wanted to pay a huge premium over sticker. I tried to purchase a yellow one, but that was unavailable at anything near sticker.

      • 0 avatar
        srogers

        I must be a fool then.

        If I was suddenly financially “empowered” the Ford GT would be one of the first cars that I’d be shopping for. It takes no imagination to buy a Ferrari or Lambo.

      • 0 avatar
        NulloModo

        The GT was in no way shape or form a flop. It was planned to be very limited production from the get go. Plenty of the cars were sold at $100,000 markups, and even towards the end of the run, $10,000 over sticker was considered a good deal.

        Original MSRP was $139K, later raised to $149K. Recent Barrett Jackson auctions show Ford GTs going for $160K-$169K, still above original new MSRP. There aren’t many cars that sell used five years after production ended for more than they did brand new.

      • 0 avatar
        faygo

        @thornmark “That is a hoot, the Ford GT was one of Ford’s latest flops. Not so bad as the Taurus/500 or the Flex, but a car few with the means desired. Like the last iteration of the TBird, some who bought the hype overpaid severely and due to low demand the GT never made its production or sales goals. Unsold GT’s were dismantled and sold for parts”

        ^this is complete and utter BS^

        production ended on the GT only because the car did not meet updated regulations and there was not enough support/investment $ available to fund the necessary updates to the car. a specific additional run of units for Canada was done after production for US had ended due to demand there. I challenge you to find a single fact to support your bolded assertion of GTs being broken down for parts. it just didn’t happen. in fact, several pre-prototype GTs which were not street legal nor title-able were sold at auction for more than new cars by SVT a few years ago.

        supply eventually caught up with demand and cars which dealers hoped to sell at big markups were sold at sticker, but they were never discounted (over $10,000 in pure pricing was taken in the second year of production) and have retained their value far, far, far better than similarly priced (but lesser performing) Ferrari 360/430 and Lambo Gallardo of similar vintage.

      • 0 avatar
        hifi

        thornmark,

        Where are you getting this stuff? Unlike the last T-Bird, the Ford GT was absolutely not a flop. GT’s have always been incredibly scarce and, unless greedy dealers were playing pricing markup games, every one sold. None were dismantled, so I don’t know where you got that. From day one, it was planned as a low volume, zero profit, limited distribution niche car. The plan was NOT to offer it forever at a loss and allowing it to grow stale, like the NSX. The GT is still hugely desirable, and low mileage vehicles still sell regularly at over 100% of their original sticker.

      • 0 avatar
        golden2husky

        Thornmark, link please for the “dismantle” theory…the GT was a great halo car…hardly a flop.

      • 0 avatar
        Wheeljack

        They just had Chris Theodore on Autoline after hours. According to his account, they built 4200 GTs because that’s what the company promised the customers and collectors they would build so as not to dilute the value of the units made. Theodore said he wanted to keep building them and they had people clamoring for more, but they decided to stick to the promise they had made.

      • 0 avatar

        FordGTPrices.com has been gone for a long time, but a final scrape of it can be seen in the google cache here:

        http://webcache.googleusercontent.com/search?q=cache%3Afordgtprices.com

      • 0 avatar

        That makes me cry. I saw a black over black in Provincetown a few years back…darth vader’s private limo…if I could pick a stock I’d have one :)

      • 0 avatar
        faygo

        @ Wheeljack :

        Theodore’s comments are correct (he was heavily involved in the program) but the regulatory changes necessary meant that even if we wanted to build more, we couldn’t.

        his uni-chassis concept car recently shown at SAE conference _was_ made from a dis-assembled GT, but one which was non-saleable due to being a early prototype.

  • avatar
    Omnifan

    The dealers will make the mark-up legal by calling them “document fees,” which in my home state are perfectly legal. There’ll be a fee for the salesperson greeting you at the door, another for shaking your hand, yet another for letting you breathe their air. Pretty soon, doc fees will equal $2000.

    • 0 avatar
      bikegoesbaa

      Why would they need to do that?

      As far as I know, there is no law that prevents dealerships from simply marking up above MSRP and calling it “extra money because we can”.

      I don’t see anything wrong with this – if they can find enough buyers willing to pay the markup to make it worth their while then good for them. Nobody has to buy a new car, much less one of any particular make or model.

      If buyers aren’t willing to pay the extra markup, then the markup will go away.

      • 0 avatar
        ajla

        Charging $900 for foglights and $300 for pinstripes are just lame dealer markup tactics. However, these things, just like general “market adjustment” have to show up on the window sticker. If you want to pay it, go ahead.

        ____________
        OTOH, “document fees” often don’t show up until you see a purchase order. Dealers are sure to give it an official sounding name, put it somewhere between the registration cost and manufacturer’s destination charge, and tell you that it is legally nonnegotiable.

        This isn’t people paying more because they are willing, it is people being tricked into thinking a profit center is a legal requirement.

        I wish dealers had to call their various fees “extra money because we can”

      • 0 avatar
        NulloModo

        Ajla, RE: Document Fees –

        In certain states (FL included) there is some truth to the legal argument. Basically, if a dealer charges a doc fee, that dealer has to charge the same doc fee for all customers. However, if a dealer chooses, they can charge no doc fee for all customers. The law basically states that the charge of the doc fee can’t be discriminatory – everyone pays the same, or no one pays it. Ford sets a maximum doc fee amount that can be charged for employee/family plan customers, but in those states where the law states dealers have to charge the same amount to everyone, Ford pays the difference between what they allow the dealer to charge and what the dealer has to charge.

        This isn’t to say that it isn’t possible to negotiate on the fee – if there is any mark up left and it means making the deal sometimes the dealer will be willing to reduce the selling price by all or some portion of the doc fee, but on the final paperwork the doc fee is still listed, the bottom line price just changes by the reduced amount of the selling price.

      • 0 avatar
        ajla

        @Nullo:

        In certain states (FL included) there is some truth to the legal argument. Basically, if a dealer charges a doc fee, that dealer has to charge the same doc fee for all customers.

        I know. I’ve mentioned that before. I rail against dealer fees a lot on TTAC though, and I don’t want to be too much of a broken record.
        _____
        This isn’t to say that it isn’t possible to negotiate on the fee…

        You’re right. However, for a customer to use this negotiation tactic in the first place, they need to understand that the Doc. fee is a profit center and the amount is set by the dealer. It is not a legally needed fee.

        Like I said earlier, I wish dealers had to call it “extra money for us because we can”. Or, at least include it on the window sticker with the nitrogen-filled tires and pinstripes.

      • 0 avatar
        NulloModo

        Ajla –

        By FL law the following has to be listed on the paperwork in regard to the dealer fee:

        “This charge represents costs and profit to the dealer for items such as inspecting, cleaning, and adjusting vehicles, and preparing documents related to the sale.”

        I know that my dealership has it listed as such, and we also list the dealer fee on the window of each car. In my experience the other large dealers in this area do as well. There are likely some smaller operations that don’t have oversight and legal departments and who might not follow all of the regulations in place, but at least in my area most of the dealerships seem to have moved beyond the surprise fees in the finance office.

      • 0 avatar
        ajla

        @Nullo:

        Well, the dealers just a few miles north of you are not nearly as open to fee disclosure. I’ve been to dealers from Naples to Ocala, and I don’t recall ever seeing any mention about a dealer fee before seeing a buyer order.

        I do remember the $1500 dealer fees from a Delray Beach area Mazda dealer though. Maybe I just have terrible luck?

        I would prefer if the FL legal blurb was more like the one used in Arkansas, which I believe outright states “this is not a government fee”.

      • 0 avatar
        golden2husky

        Why a slimy “doc” fee anyway? Why can’t the dealer simply sell the car at a price that has enough profit in it? I hate slimy tactics; give me the truth. It’s like baggage fees on air travel. It kills me to pay it. Roll the damn fee into the ticket and that is the price, period. Nobody is being fooled by having to pay junk fees after the negotiation. In fact, that just creates ill will. If the dealer needs an extra $400 to make the deal work, the price should not be cut below the minimum the dealer needs to make the sale worthwhile.

  • avatar
    doctor olds

    I don’t think the market will let them command high prices. There are too many competitive or superior offerings from non-Japanese makers. In fact, smaller players like Honda will likely continue to suffer even after earthquake related supply problems ease. Honda does not have the global scale of the big players. GM and Ford provide better fuel economy at lower prices, not to mention the Koreans.

    • 0 avatar
      Russycle

      It will be interesting to see how this pans out, but I expect Ford and GM’s decision to roll out upgraded small cars will really pay off when buyers see the stickers at the Japanese dealers. Chrysler’s 200 should get a nice boost too.

  • avatar

    I think some of you are thinking too objectively. When my GF’s mom was shopping for a new car, she would not budge on it being Japanese. Had to be Infiniti, Lexus, or Acura. I told her about how nice the Hyundai Genesis is. “Nope, I don’t want a Korean car.”

    Then I told her about GM and Ford’s quality offerings, possibly a Buick Regal or a Ford Taurus. “I don’t think cars built in America are good quality.”

    I informed her that the Acura TL and many other Japanese offerings are in fact made in America. “They’re designed by Japanese.”

    I could not convince her to shop around some of the competitive offerings for non-Japanese automakers. That was that, and that’s the reason people will still buy Hondas and Toyotas and Nissans at inflated prices.

    • 0 avatar
      Educator(of teachers)Dan

      Should have told her about all the GMs that were designed in Germany by Opel.

      • 0 avatar
        GarbageMotorsCo.

        Or Daewoo in Korea, built in the lands of Chimichangas, General Gao and Canadian meat pies.

        There is no American companies anymore imo. Zero.

    • 0 avatar

      “I don’t think cars built in America are good quality.”

      And how would she know?

      • 0 avatar
        Wheeljack

        She probably doesn’t – like most import snobs. She knew of someone with a cousin who had a coworker with a friend that had a transmission fail on their American car with 140,000 miles on it, nevermind the fact that they never changed the trans fluid or performed any other maintenance save for oil changes…

      • 0 avatar
        GarbageMotorsCo.

        Maybe she owned a Chevy truck like I did (twice). Those POS are enough to turn anybody off.

    • 0 avatar
      Sam P

      I know a few people who buy Japanese cars habitually who won’t look at a Korean car – an aversion which is nothing more than myopic stupidity in my view. Hyundai’s reliability has been on par with the better Japanese brands since the mid 2000’s, and Kia has come a long way from the utterly horrid cars it sold a decade ago. Plus, Hyundai sells a reasonably priced RWD coupe for the price of a bland FWD Japanese sedan that handles well and looks good.

    • 0 avatar
      mnm4ever

      My own darling wife is the same way. Absolutely refused to even consider a Korean car… too concerned about the snob appeal. And thats pretty much the main reason why Toyota and Honda can keep selling cars that are boring and dont bring much value to the table.

      BTW, my dad has only owned Chevy trucks and all of them have lasted well into the high 100k miles without any problems. And he beats them up bigtime.

      • 0 avatar
        nrd515

        My 1982 Blazer, 1988 Blazer, and 2000 Sierra were anything but junk. The two older ones were nearly perfect, and the GMC was nearly so until I got into a huge wreck in it. It was never right again, and soon it was gone. A friend uses GM trucks in his business, and the last ones 2007’s, have been amazingly good. He’s currently shopping for 4 new ones.

    • 0 avatar
      CJinSD

      That does sound like the reason. Some people, like your mom, are smart enough to learn from experience. Some prefer marketing and propaganda.

  • avatar
    340-4

    Well, in the case of the new Civic, I think shoppers will simply pick a better car elsewhere. The Honda Factor only goes so far.

    Most people will shift over to some Domestic make. Sounds like a great marketing opportunity for someone… maybe a bit schadenfreude, as Lisa Simpson would say, but still.

  • avatar
    red5

    I think the days of blind Honda (and Japanese cars in general) loyalty are coming to an end much like the glory days of the American Big Three. The new stuff coming out of Korea looks great while Honda styling is getting weird. I think any smart buyer would see a Market Adjustment and move on. Yes, there will be those that fork over money for the perception of reliability and fuel savings, but I see huge mark-ups driving many “loyal” customers across the street to something they wouldn’t have thought about before.

    • 0 avatar
      Educator(of teachers)Dan

      Right. Dealer mark up will get people to walk into Hyundai/Kia/GM/Ford/Chrysler showrooms. The marque that capitalizes the most on this will go along way toward giving itself a leg up for the future.

      • 0 avatar
        CJinSD

        The most egregious dealer gouging I’ve seen in recent years was at a Ford dealer. I stopped to look at the newly arrived Transit-Connects. It turned out that Ford limited drivetrain options to the point that they excluded me from the customer list, but the ones they had were marred by ADM stickers. So were the pathetic new Tauruses(Tauri?) parked nearby. As were the Mustangs. I walked over to the then-new SVT Raptor with the soon-to-be obsolete 5.4 and SWB. It had all the ADM the others did plus an eight thousand dollar hit for ‘adjusted market value.’ For a stupid truck that came with a 3 month promise of buyer’s remorse when the engine needed to move that shopping mall tank would be released. The inferior brands will only be able to capitalize on this situation if they can convince their dealers to think about two years from now instead of paychecks in two weeks. Good luck. Only 35% of people in sales at any dealer have any intention of being there in 2 years.

      • 0 avatar
        mike978

        CJ – you and ThornMark are just so transparent in your dislike of Ford (and maybe domestics in general) and your love of Honda (as seen in the Honda Civic review by Mike Karesh. Base your views on facts please.

        Why is the Taurus pathetic? Any worse than the Avalon?

      • 0 avatar
        CJinSD

        mike978,

        The new Taurus is pathetic because it is big and clumsy on the outside with a tiny greenhouse and it is cramped and dark on the inside while being as heavy as any V8 powered RWD or AWD competitor. The Avalon is usefully space efficient and has good visibility. It is roomy, comfortable, and offers excellent performance by the stopwatch or the gas bill. Even if Ford built cars as well as Toyota does, there would be no reason to buy a Taurus other then if one wanted to advertise that they can’t tell what constitutes good design. Buying a big sedan with a low roofline is as smart as holding your beer upside down. The 500 was a much smarter design and the drivetrain improvements that came with the name change to Taurus made it downright decent. Then Ford had to go after the morons with their rolling bunker restyle.

  • avatar
    bunkie

    Panic, the salesperson’s best friend.

  • avatar
    Joss

    Summer Asian popular brand price spike with (hopefully) Ford and Hyundai/Kia offering some leeway.

  • avatar

    Wow, that is a doozy of ADM example at the top of this post. I’ve seen a few in person (one being my on dad’s bare-bones 1983 Tercel 2-dr, of all things) and I share that sentiment of: it’ll sell at what the market will bear, if people are crazy enough to pay it. Not for me, I don’t have to be the first one on the block. No, I won’t pay $2-5-10-20k extra for a gotta-have first Miata, Chevy SSR, Prowler (seriously?), new-gen Camaro, etc. Some will, though.

    The last time this caught me by surprise was in 1985, at a Mazda dealer. Needing a small 4-dr, I’d researched 323’s and had a plagued Jetta GLI to trade; the showroom model had no sticker, and the salesman began the negotiations with a 323 list price about $2k/25% higher than MSRP. Challenged, he said, “well, there’s a market adjustment these days, so the actual list price is $XXXX”. Not for me, it isn’t. Pass.

    • 0 avatar
      CJinSD

      Sounds like the VW-Mazda dealer in the town I grew up in. When the Miata first came out, I happened to stop by the dealer for something else. There was a Car and Driver cover with the Miata on it taped to the floor of the showroom. I asked why, and the salesmen laughed, “We advertised that we had a Miata on the showroom floor!” When the VW Fox came out, they were advertised for about $5,700. Base price at my dealer? $8,800. I wanted a new GTI. They said, ‘that’s a hard car to come by,’ and offered me the one that had been driven by the dealer’s doper son as a demo. It reeked of cigarettes and was a rattletrap with less than 10K miles. More than a decade later, I was looking for a new car for my girlfriend. They had one Protege 5 on the lot, in a washbay. They wouldn’t let me look at it, supposedly because it was sold. I don’t know what the harm would have been with two adults looking at a car that was being prepped for a customer. We weren’t asking for a test drive or even opening the car’s doors, just reading the window sticker and looking through the windows. We were either driving my BMW or her Volvo at the time, so we didn’t look like derelicts, but the dealer thought we could be made to limit our search to the cars he had in stock to sell by treating us like we were up to something.

      • 0 avatar
        mnm4ever

        thats funny… in 2003 when I got my Protege5, they literally had 30 of them in every color and option combo you could want, they couldnt give them away. I paid $14k out the door for a loaded 5-speed in yellow. I loved that little car!

      • 0 avatar
        CJinSD

        My Protege 5 shopping trip would have happened in late 2002 or early 2003. That dealer always managed to have a limited number of anything interesting. If they haven’t gone out of business, I have no doubt that right now they have nothing in big numbers but Eos Volkswagens and Mazda 6s with V6 engines.

        * a little googling revealed a change of ownership and the addition of Audi to their lines. Interesting. That means they’re the dealer that busted a service writer for a bunch of expensive non-repairs on Audis and for selling off the parts that weren’t used in the work that wasn’t done. Sounds promising for area VW-Mazda customers!

  • avatar
    340-4

    We had a Ford dealership that used to retype the window stickers!

    And then add ‘adjustment!’

    I remember shopping in ’96 for a car and looking at Tauruses and being amazed at how much cheaper they were out of town.

    Our local Buick/Cad/GMC dealer was no better. They even wrote a pathetic letter to the editor of our paper asking people to buy local – they were losing a lot of sales to towns only 90 min. away.

    A good friend’s dad bought a new GMC out of town and drove it there, and showed the owner of the dealership how he saved over $5,000 by going out of town.

    So, yeah, mark ’em up, you mouth breathing sluggards.

    There are other options now.

  • avatar

    First of all, this assumes anyone is going to be buy the 2012 because it is a huge step back in almost every conceivable category. (Which means it will probably still sell like hot cakes).

    Second of all, Honda’s effectively eliminated a stick shift from all but the base and LX models of the vehicle (and Si of course), which, assuming the 2006 Si and 2010 EX-L sedan I bought weren’t utterly two of the worst vehicles I’ve ever owned for wear and tear and reliability), excludes me from ever buying one.

    After two brand new Civics in four years, I can effectively tell you that I probably won’t ever buy another new Honda. Perhaps my experiences are isolated (I’m beginning to doubt it, though), but I can’t justify an investment that large when, in one winter, the blower motor has died twice, the heated seats stopped heating before winter started, the cable reel (or so they say) in the steering column has broken twice, and it has exhibited unacceptable difficulty starting intermittently, even in pristine weather. This is a top of the line, loaded 2010 mind you.

    I was willing to overlook the fact that my 2006 Si was a first model year and subject to increased issues, but after the power steering died twice while driving in winter, the transmission was replaced twice (and never fixed properly) due to the famous third gear issue, the poor drive-by-wire calibration, wear-prone fabric, starting issues, door panel clips breaking, and several other mechanical issues, I’m done.

    I’m happy for those who have had great experiences with Honda, but this article made me chuckle, because I wouldn’t be caught dead paying a dime over a dollar for a 2012 Civic. They turned a very nice looking car into something that makes an abortion look appealing.

    • 0 avatar
      Mr Carpenter

      Mike Obradovich – give Hyundai a try. Or even Subaru. I have one new of each (2009 Sonata, 2010 Legacy) and have found both to be excellent automobiles. I’ve had 2 prior Sonata’s and found them excellent automobiles. Look at True Delta and Consumer Reports – you’ll be shocked at how good both Hyundai and Subaru are. This is my first Subie, probably not my last.

      Your Honda story sounds a lot like my prior GM, Ford and Chrysler stories. I finally threw in the towel and gave up on “Detroit Inc” in 2002 when I got rid of a Chrysler product and bought my first Hyundai. I was actually quite nervous, because I had never owned a South Korean car before. Ironically, the next two Sonatas were built in the United States, as was my “Japanese” Subaru.

  • avatar
    indi500fan

    I recently purchased a Cruze Eco. The first place I hit had ones with a $275 “security system” and $40 “nitrogen tire package”.

    I was outta there in about 30 seconds.
    My next stop negotiated to invoice price in about 5 minutes.

  • avatar
    Wheeljack

    As far as I’m concerned, anyone who pays an added dealer markup on a pedestrian mass-market car is a sucker and an idiot. I personally dislike the practice, but at least folks who bought a Ferrari or a Ford GT have some hope of all that extra markup not being pissed down a hole.

  • avatar
    sastexan

    We are just starting to shop for a minivan (narrowed down the list thanks to the reviews here). I don’t care if that sticker is there or not – my negotiation will include stating exactly what we want and the price we are willing to pay, and producing a check for that amount. I will carry a stopwatch with a 10 minute countdown timer. When it goes off, I walk out and the sale is lost. I don’t have the patience for their shenanigans.

    • 0 avatar
      JuniorMint

      Are you just going to go ahead and state invoice-10%? That will save your salesperson about 9 minutes and 50 seconds.

    • 0 avatar
      ajla

      Please email Ed with your story after you do this. I would love to read it.

    • 0 avatar
      sastexan

      I’ll probably be close to invoice but fair enough if the dealer has on the lot what I want and doesn’t give me song and dance. And the salesperson actually is helpful – not like the first guy who was assigned to me at the Toyota dealer who had to run back inside three times for keys, copy of my license, plates and wasted over 2 hours of my time. Oh, and I had to figure out how the seats worked – his “Toyota University” only taught him EPA and horsepower figures, not actually how to remove the 3rd row and what trim levels came with which equipment.

      Luckily, DC metro area has a plethora of dealers to choose from. And I’m not afraid to travel a little bit to get the deal / vehicle I want for the price I’m willing to pay.

      • 0 avatar
        NulloModo

        Avail yourself of your local dealership’s internet sales departments. You can usually just go to the manufacturer’s web page, build out the car with the options that you want, and click on an option to request pricing that will forward your contact information to the local dealers.

        Most dealerships realize that anyone requesting internet quotes is also communicating with other dealers in the area, so they provide bottom line prices right away. Plus, you can inquire about the specific model and set of features that you are interested in, and set an appointment to have it pulled up and ready for a test drive, figures already established and agreed upon, so that your time is used efficiently.

        I guarantee you that this will get you better results than pulling out a stopwatch. Remember the golden rule: Don’t be a dick. I’m sure you don’t want bravado and posturing on part of the dealership staff, so don’t start the process of escalation yourself.

        Also, if you do decide to use the internet sales route, remember to ask for whoever provided you your quote when you arrive. Remember that your salesperson is just trying to make an honest living like you, and there is nothing more frustrating for a salesperson that to see someone else reap the fruits of his labor because the customer didn’t ask for him even though he provided the quote and information that brought said customer in.

      • 0 avatar
        sastexan

        @Nullomodo: I should have prefaced my comment with “if the dealer starts playing games with ten trips to the manager, I will pull out my stopwatch.” I don’t plan to be a pain – and I can be the best (or worst) customer, depending on how I’m treated. I’m prescreening vans for my wife, so I can have the saleperson pull out what she wants to look at for comparison purposes so the process goes much faster (and more smoothly). I went to a different Toyota dealer today b/c not many have the Sienna with SE trim – the salesman was great; extraordinarily knowledgeable and helpful. If we go with Sienna, I really want to give him my business (and I’m not the type who will walk over $50 – my time is much more valuable than that – but I have no patience for those who waste my time or money).

        Excellent advice with the internet quotes. Last time I bought a car myself was in 1998.

      • 0 avatar
        Japanese Buick

        @NulloModo, a friend of mine recently purchased a car using this process, and learned of a new trick: dealers not honoring the price they promised over the internet. The one she went to wanted $400 more than the price they promised and wouldn’t budge. When she protested that they had promised that price, they told her “oh, we never sell the cars for that” and implied that only suckers believe the internet prices.

        Yes she did go elsewhere and bought from a dealer that honored their internet price.

        I guess they figure once they get you in there you won’t go elsewhere and they can bait-n-switch you.

  • avatar
    mnm4ever

    My VW dealer has ADM on all the 2011 GTIs of $5k!!! And there has to be 10 of them in stock too, all loaded to the gills Autobahn packages of course. Sticker ends up at like $34k IIRC.

    They can barely move them at MSRP, where do they get off with ADM? I love my GTI, but I would never buy a new one…

  • avatar
    baggins

    The psychology of buyers is fascinating. Why so insulted by ADM, if there are less cars = less supply = price up. I assume that the domestics and Koreans will raise prices as well, perhaps in the form of less incentives.

    I just got an Accord a month ago. 4K off sticker, which matched teh AMEX Zag price quote. Amex Zag is now quoting only 2K off sticker, so prices are movin on up pretty fast.

    • 0 avatar
      mnm4ever

      Because its an artificial increase. When the S2000 came out dealers in Florida were selling them for $20k OVER sticker. Yes, $20k. And people were buying them. At the time I was dating my (now) wife, who lived in West Virginia, and I was with her and her mother who was buying a new Civic. At the Honda dealer there, they had 4 or 5 S2000’s on the lot, and at straight MSRP. Actually, when I asked about it, the salesman said he could probably work a little on that price even, if I was serious.

      In 2 years when they go to sell that overpriced Accord, they are not going to get any more for it just because they paid the dealer ADM to get it. This is when people will cross-shop seriously, and start to see that the other products are pretty good these days.

      • 0 avatar
        M 1

        “Because its an artificial increase.”

        I suppose all the taxes which are built into the price, the union-negotiated perks that are built into the price, the bean-counter finagling to cover the cost of golden parachutes and CAFE compliance, etc etc … those are somehow less artificial?

        “When the S2000 came out dealers in Florida were selling them for $20k OVER sticker. Yes, $20k. And people were buying them.”

        So what is artificial about setting prices that the market clearly is willing to bear?

      • 0 avatar
        mnm4ever

        Maybe I am not expressing my point properly. If people are dumb enough to pay it, then whatever. My point is, its stupid to pay it. 3-4 years later, when S2000’s were no longer new and of “limited availability”, they were not worth any more just because the guy bought it in FL instead of WV. Those morons bought a $32k car for $50k+, and that car wasn’t worth $50k. But hey, they got to be the first ones to own it! Just idiotic.

        I have the same disdain for the guys who buy a new Shelby GT Mustang that has maybe $3k in Ford Racing performance parts that anyone can buy for any Mustang, and pay $10-15k more for it because it says SHELBY on it. They are praying that in 20 yrs it will be worth $100k, like a 60s Shelby, and it never will, partly thanks to them speculating on the value.

  • avatar
    MarcKyle64

    Will the financial folks carry the note at so much over their MSRP? The last time I bought a car using my credit union for the loan, they wanted a certain amount down and would only finance an amount a bit less (like 90% of the MSRP). I see $6,690 worth of bogus crap added to the sticker. Are they going to ask for a check for, say, $8,000 and finance the rest? Don’t forget the 6% sales taxes and the $3,000 extended warranty. With those factors in mind, that $29650 Honda costs $34,609! Financing $26,600 at 6% interest for 6 years is $440 a month. I can’t see financing being approved on that deal. Whomever buys that sucker had better get some gap insurance. I betcha the Hyundai dealers near that guy are making a killing!

  • avatar

    My favorite “ADP” additional dealer profit sticker was on a Mugen Civic a few years back. 10K on top of the already rough price for a Civic, no matter how fast…. It moved the price up to more substantial cars, like a low end 3 series….

    Still, what the $tealer knows, is that there only need be ONE “gotta havit”, and he does not care if the B&B filter through the showroom making snarky comments. That 10k will cover the slippage for his yacht for the season.

  • avatar
    Ubermensch

    I wish a major manufacturer would move their distribution to the internet and put these clowns out of business. Go to a test drive center with low pressure sales associates, order your car and have it delivered to your driveway. What makes a car so much more special in the buying process than a washing machine or a toaster other than price?

    • 0 avatar
      aristurtle

      You answered your own question. Once price goes above a certain threshold, people like to negotiate it. The threshold amount will vary from person to person and culture to culture, but cars (and houses) are generally above it. Even if the buyer isn’t actually getting a better deal, they like to feel that they had some amount of agency in determining the price they’re paying.

    • 0 avatar
      MikeAR

      Make the sales associate at the test drive center able to negotiate price to a degree. The factory knows what the car will cost and what price they can live with. Another thing I would love to see is bringing back a la carte options instead of packages. But there is no real reason for the franchise dealer system as it is now. In itself, closing the dealer franchises should reduce the price of most cars.

    • 0 avatar
      faygo

      @Ubermensch :

      state laws prevent this sales strategy in almost all states. said laws exist (and are protected by) lobbying money to local politicians who set state legislative agendas. this also limits the number of corporate-owned dealership outlets in some states.

      having said all that, the internet allows you to know the exact price of any vehicle and to find the exact vehicle you want. one can test drive the spec which one is interested in at the local idiot-run dealership and then get it from stock from another dealer or order the exact car & wait for it. if you choose to patronize the local idiots (who make more money on service than on sales in some cases) you can, otherwise you can vote with your feet (and let the local idiots know you are not giving them your business due to their sales practices) and go elsewhere.

    • 0 avatar
      M 1

      Federal law prohibits auto manufacturers from selling directly to the public.

      Many *dealers* do quite a bit of online selling.

  • avatar
    gator marco

    Capitalism is based on a a willing seller and a willing buyer agreeing on a price. If some folks really want to be the first on the block with the latest toy, well, it is their money. Dealers are happy to take their money from them.

  • avatar
    nrd515

    I have to say the dealers around here, well, most of them, are not nearly as into gaming the customer as they used to be. I’ve dealt with the same dealership for my last 3 vehicles, and I have zero complaints. One of the ones that didn’t stop playing games had their franchise yanked by Chrysler, and one the other ones needs to have it done ASAP.

  • avatar
    Dynamic88

    The ADM problem is related to the “invoice” or “near invoice” problem – it’s a variation from the “price” (e.g. MSRP)

    One of the things that makes people distrust dealers is that different people pay different prices for the same car (forget about the trade in for now).

    The attitude of all sellers is they want as much $ as the traffic will bear, but this gets expressed differently with different products. If you and I buy the same TV from the same seller, we pay the same price. The price might be adjusted up or down depending on supply/demand, but at a given moment, we’ll both pay the same.

    With cars, the starting point is MSRP which (almost) everyone knows is an arbitrary number having nothing to do with the real price of the car. Then we have to negotiate the “real” price -which we rarely have to do with any other consumer good- which leaves most people feeling like they’ve been through the wringer. Even if you end up with a good deal, you no longer trust the salesman/sales manger/dealership (if you ever did).

    Some day some car company will figure out how to set MSRP so that there is profit for the dealer and a fair deal for the customer. MSRP will then become the actual price, not a made up silly number to start negotiations from. It’s silly that dealers make little profit on their main product – new cars.

    The glory days of Toyonda being the only game in town for reliable cars is over. ADM will leave a bad taste in customer’s mouths, and they’ll take their business elsewhere – forever. Toyonda dealers should be happy to sell at MSRP – that’s already better than their typical skinny-mini deal. (Sales people should be happy too)

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