This Is An Additional Dealer Markup Sticker. You'll Be Seeing More Of It Soon
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.
More by Jack Baruth
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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.
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)