Shaking up the pricing model


As long as dealers are independent from other dealers and manufacturers are independent from other manufacturers, dealer pricing will continue to take all different forms. I have yet to meet a manufacturer that praises a high CSI dealer over a high volume dealer. Automotive News doesn't have a top dealer ranking based on anything but sales. Manufacturers use stair step incentives that force dealers to give away cars to hit the next level so they can compete with his same brand competitor who is giving away cars to hit the next level to compete with him. Anytime a manufacturer's sales are at risk, they throw away their pricing model. If Toyota is willing to do it, then who can afford not to?

And dealers of the same brand in a given market have different business models. Some seek to maximize profits on each transaction without regard to how it may affect retention. Others sell cars at little or no profit just to say they are the biggest.

Trade ins are often like snow flakes. Cars of the same general description often have dramatically different values. Credit issues are also common. As is the ability to provide structure to a deal. Dealers who fight for the highest trade in value and the best possible approval put the customer and themselves in a better position.

Successful dealers know how to satisfy customers, work the car, the trade, the structure and the finance approval. They sell service and parts in away that builds profits and loyalty. The system is Darwinian. There is no pricing system that will ever exist that will obviate the need to have these abilities.