LOS ANGELES - Vivian Juter drove sport-utilities when she navigated barely passable roads in Botswana. Now living in the urban jungle of Venice, Calif., Juter wanted a legitimate sport-utility for getting to the local mountains, but also one that wouldn't hurt her wallet.
She was drawn to the Xterra, Nissan's hot new compact sport-utility.
Good features, supposedly good price. It was trendy, too. She set out to buy one.
But when the 33-year-old Internet consultant went to Miller Nissan in Van Nuys, she found a $4,995 dealer add-on sticker boldly plastered right next to the regular price label, pushing the asking price to just under $30,000.
That, she knew, was a far cry from the base price of well under $20,000 that Nissan publicized at the vehicle's launch.
'The salesman told me, `These are really hot. They're really in demand,'' Juter recalled in a recent interview. 'The sales manager said there was no way they were going to get rid of the markup. I was out of there.'
Next dealer, same story. So, in a move that analysts say should be a warning to Nissan management about the long-range consequences of price gouging, Juter turned her back on Nissan altogether and bought a loaded 1999 Isuzu Rodeo.
Juter's price with incentives: $23,500. It was less than invoice, and far less than she would have paid for the more modestly equipped Xterra.
Price premiums on hot new models are not all that uncommon, but they are typically attached to exotic, limited-volume vehicles.
SOME DON'T MIND
Unlike Juter, many customers are willing to pay the markup.
'We've sold 51 Xterras in 10 weeks,' said Paul Benson, Miller Nissan's general sales manager 'We only have five in stock and 10 due in January. It's been a long time since anything has been this popular at a Nissan store.' Even dealer trades are fetching $1,000 over sticker, he noted.
Even supposed bargain hunters on the Internet are of little help. A check through Autobytel, CarPoint, CarPrices.com, cars.com and Autoweb could find no dealer willing to sell an Xterra for less than sticker price in Southern California.
Lou Troy, dealer principal of Fergus Nissan in Skokie, Ill., insists the markup is justified.
'We've been getting nothing for Nissans for so long that it's about time we got something back,' he said. 'Customers aren't really complaining about the price. They know Xterras are hard to find.'
Indeed, with only a 10- to 12-day supply, every unit is precious. Nissan is increasing Xterra production at its Smyrna, Tenn., plant to nearly 85,000 units for the next fiscal year. But at the current sales pace - 8,100 units in November - even that may not be enough to meet demand.
RISKING ILL WILL
Industry consultant Wes Brown of NexTrend in Thousand Oaks, Calif., warns that dealers who mark up the sticker price risk alienating the young customers the Nissan brand so desperately needs.
'With so many other things that can go wrong in the retail process,' Brown said, 'the last thing you want to do is anger potential customers before they even sit down at the dealership.
'They'll walk, and they won't come back. There are too many other brands at that price point and image level that consumers are willing to go to.'
Nissan Division general manager Jed Connelly said he was not aware of many dealers jacking up the asking price but would be upset if they were.
'I have always been an advocate of not marking up,' he said. 'There's plenty of gross built in. There's also finance income, extended service contracts and trade-in allowances.'
Connelly said he would not be surprised, however, if dealers were posting addendum stickers as negotiating tools to get consumers to pay sticker price. But transaction prices are another matter.
Assuming a sale at full sticker price, the dealer's gross profit on Xterra ranges from $1,231 for a base two-wheel-drive, four-cylinder XE with manual transmission to $2,074 gross for a top-level SE four-wheel-drive V-6 with automatic, according to Kelley Blue Book. That's before the 3 percent holdback. Connelly said the margins are in line with other Nissan products.
Connelly understands the implications of dealer addendum stickers turning off customers, especially those making their first visit to a Nissan store.
Said Connelly: 'I'm hoping the dealers won't be shortsighted. We have waited five years to have a hot car. I don't want them to kill the goose that lays the golden egg.'