Are dealerships going out of business?

[RedStallion]

What's happening from Ford dealership perspective.

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[JohnFoxeSheets]

What's happening from Ford dealership perspective.

I enjoyed this video and found it informative. But my I suggest you change the title of your post? The video makes clear that they're not going out of business and that their business is already well aligned with Ford's plans...

 

[jrstinkfish]

His rationale for ADM is ridiculous. "If you're selling your house, and you're getting offers for more than Zillow thinks it's worth, then why wouldn't you take the highest offer?" His analogy has the customer offering more for the car rather than the customer paying more for the car because the dealer is demanding for more than MSRP. No one is offering more money, they're grudgingly paying more due to the dealer's asking price. Not mention Zillow didn't build the house and set a retail price for it.

Also: "We never add ADM ... on customer ordered cars .." Hope some poor soul doesn't ignore that second part when they think they've found a non-ADM Ford dealer.

Other than that, good video.

 

[Texas-E]

I think the title to the post is just fine, LOL. It matches the dealer's own Youtube title pretty closely, don't you think?

As far as the ADM part of the video, he used a bad example, but the point is there. If the market will bear a higher price, I understand why a dealer would try to sell it for that higher price. I think people are stupid for paying it, but that is their problem.

It sounds like his dealership is already on the online order path. I can see quite a few dealers fighting the shift to online sales to the bitter end. Their ability to layer on an extra $1200 for nitrogen in the tires, window tint, and door edge paint protection will be much more difficult when purchasing online. They want the consumer in the finance manager's office, and if the deal is made and paid for online, even Mr. Town and Country Ford isn't going to like that.

 

[PilotMark]

When I bought my Scion FRS, I went back to the same dealership I bought our Prius at. Back to the same sales person. That dealership wanted $2,000 over MSRP. I asked if they remembered I was a repeat customer and if they asked for more than MSRP they were telling me to go find another dealer. they said yes. they had one on the lot and it was $2000 over MSRP. I said I'd order a car and wait, they said still $2000 over msrp. I went to a competing dealer and got $1,000 below MSRP. And I've never gone back to the dealer that tried to over charge me. But someone did buy that car at +$2000 over. Not a smart consumer. But if someone will pay it willingly the dealer or home seller will ask for as much as they can before the buyers say no.

Buying an MME or any car now is different but the dealer I purchased with said they did not charge over MSRP. And while I had to wait 2 1/2 weeks for my FRS it will be about 9 months for the MME.

You need to be an educated consumer or you'll always pay to much for too little.

 

[fmtexmme]

His rationale for ADM is ridiculous. "If you're selling your house, and you're getting offers for more than Zillow thinks it's worth, then why wouldn't you take the highest offer?" His analogy has the customer offering more for the car rather than the customer paying more for the car because the dealer is demanding for more than MSRP. No one is offering more money, they're grudgingly paying more due to the dealer's asking price. Not mention Zillow didn't build the house and set a retail price for it.

Also: "We never add ADM ... on customer ordered cars .." Hope some poor soul doesn't ignore that second part when they think they've found a non-ADM Ford dealer.

Other than that, good video.

So what do you think about homeowners who list their houses for more than the Zillow estimates? Isn't that basically the same thing as adding ADM? There is a house down the street from me where the homeowner was asking $50K over the Zillow estimate.

Don't get me wrong, I don't like ADM, but looking at it from the dealers perspective, I can understand it. The part I hate most is when dealers lie. The dealer I bought from told me over the phone they weren't adding ADM. When I went there the next day, they tried adding a $5K mark up. I refused to pay it and they eventually removed it completely after trying to get me to pay a reduced ADM.

 

[Mach1E]

So what do you think about homeowners who list their houses for more than the Zillow estimates? Isn't that basically the same thing as adding ADM? There is a house down the street from me where the homeowner was asking $50K over the Zillow estimate.

Don't get me wrong, I don't like ADM, but looking at it from the dealers perspective, I can understand it. The part I hate most is when dealers lie. The dealer I bought from told me over the phone they weren't adding ADM. When I went there the next day, they tried adding a $5K mark up. I refused to pay it and they eventually removed it completely after trying to get me to pay a reduced ADM.

Yeah, unfortunately it really is the same thing.

Sellers market and high “asking price.”

Now there are some shady dealers who add ADM last minute and surprise customers/change the deal and that’s a WHOLE other issue.

But as far as simply advertising an ADM on cancelled orders? Yup, no different than asking a high price on your house.

In the video he didn’t present the analogy as well though. It should have been talking about a high listing price for a house, not people bidding over asking price. But then again, if the cars sell with an ADM, buyers are kinda bidding in a way.

At the end of the day, it’s all relative. If you can still get top dollar for your trade, and a low interest rate financing……. It’s a total wash in this high inflation world we are in.

 

[BalsaDust]

Dealers will never go out of business, at least not around here. My local Ford dealer, while very helpful and not charging ADM on customer orders, does charge ADM on all dealer stock vehicles. Mach-e's are 2~3k over for selects, 4~5K over for Premiums, and 20~30K over for GT's.
Now some people might think thats crazy (I do) but the dealer sells everything that comes off the truck, usually within a week!
When my car arrived, the dealer offered 15K NOT to buy the car and the morning I went in to pay for it there were six people there ready to buy it with a 25k markup!

Tony

 

[KevinS]

When my car arrived, the dealer offered 15K NOT to buy the car and the morning I went in to pay for it there were six people there ready to buy it with a 25k markup!

That is insane. Are you in the Newark/Wilmington area?

 

[Mach1E]

That is insane. Are you in the Newark/Wilmington area?

It (and inflation right now) isn’t that insane when you consider this one chart:

https://fred.stlouisfed.org/series/CDCABSHNO

Summary? There’s an extra $3 trillion in the bank right now that wasn’t there in 2019.

People have OBSCENE amounts of cash and can afford to pay high prices.

 

[BalsaDust]

That is insane. Are you in the Newark/Wilmington area?

Yep, Newark and my dealer is the better of the three local ones. Sheridan Ford is a true rip off and Bayshore is mostly commercial vehicles.

One plus side for Porter Ford, they have Lightnings available at MSRP! unfortunately they only ordered the top of the line models with all the bells and whistles so they list at 80K and up!

Tony

 

[BalsaDust]

It (and inflation right now) isn’t that insane when you consider this one chart:

https://fred.stlouisfed.org/series/CDCABSHNO

Summary? There’s an extra $3 trillion in the bank right now that wasn’t there in 2019.

People have OBSCENE amounts of cash and can afford to pay high prices.

yep, and in my area (Close to the University) many vehicles are sold to foreign exchange students who's daddy's bank rolled their education. Driving around town its common to see Audi's Porche's, and the occasional Maclaren and Maserati, all driven by college kids.
And the daddy's never haggle pricing, they pay what the dealer wants!

Tony

 

[KevinS]

Yep, Newark and my dealer is the better of the three local ones. Sheridan Ford is a true rip off and Bayshore is mostly commercial vehicles.

One plus side for Porter Ford, they have Lightnings available at MSRP! unfortunately they only ordered the top of the line models with all the bells and whistles so they list at 80K and up!

Tony

I grew up in Newark/Elkton area in the 70s/80's so I still have vivid memories of the Cleveland Avenue car lot row...

The idea of being paid 15k for simply not buying the car boggles my mind. The house analogy is a flawed one because a car is generally a depreciating asset and always has been. We are living in very strange times...

 

[Lord Polymath]

We are living in very strange times...

That sums it up!

 

[jrstinkfish]

So what do you think about homeowners who list their houses for more than the Zillow estimates? Isn't that basically the same thing as adding ADM? There is a house down the street from me where the homeowner was asking $50K over the Zillow estimate.

Zillow didn't manufacture a new house and set the (suggested) retail price. Zillow has zero connection to the home and is just one of many websites providing suggested home values. In the video, the guy compares taking offers above the Zillow value of a home to dealer ADM, and the two are just not the same. Dealers are free to ask for ADM all day, but that doesn't make it justified.

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