How much over dealer cost should I offer for a 2001 NSX?

[drliu]

I'm negotiating on a new NSX currently. Thanks largely to many of you, I've pieced together the dealer's cost on the car and options I would like. How much over dealer cost is reasonable to offer? I know for Joe Average cars (like my Civic), we ended up offering (and paying) $80 over dealer cost, though I suspect this situation is different

Any advice, with an explanation for the basis of your suggestion?

Thanks!

 

[nsxtasy]

Based on what I've heard, most dealers expect to make at least $3-4K on the sale of an NSX. If I wanted a great deal, I would hope to end up paying $2K over the cost of the car.

I'm not sure whether or not the holdback is usually deducted when calculating dealer cost for this purpose.

 

[tabasco]

Originally posted by drliu:

...I've pieced together the dealer's cost on the car...

drliu,

May I ask how you did this? What is the dealer's cost? I bought a new 2000 a month ago (it had the $5,000 incentive) and got it for $71,600 without options and taxes. Add $1,500 for CD, Keyless, Bra and Cover. I would think if you could get a 2001 for $76-78 would be pretty good.

I am interested in what you end up with.

Thanks

------------------
'00 Candy Apple Blue / Black

 

[nsxtasy]

All the figures on dealer cost (including how to calculate the holdback) are available on several websites including Edmunds at http://www.edmunds.com/new/acura/index.html

According to that site, dealer cost on a 2001 NSX-T with six-speed is:

$77,532 base dealer cost
+ 745 transportation charge
- 1,762 holdback
-------
$76,515 net dealer cost (excluding incentives)

You can do the same thing to calculate dealer cost on an NSX coupe, etc.

[This message has been edited by nsxtasy (edited 11 June 2001).]

 

[drliu]

How did you get the holdback figure, and does that all go to the dealer?

Thanks!

 

[nsxtasy]

Holdback is shown on the Edmunds website, and is 2 percent of base MSRP (2 percent of $88,100). It all goes to the dealer. However, I'm not sure whether it's usually used in figuring $x over dealer cost. The dealers (surprise, surprise) will probably omit it if you actually talk with them about their cost.

 

[Nsxotic]

Holdback is rarely used to negotiate a car deal. On cars like I sell (other than NSX), we play in it here and there.....but it's not really fair to get that deep in the dealer's pocket for a high-line. We need to make some profit. After holdback, there's nothing else other than the occasional factory kickback for reaching a certain # of cars for the month. And this is only offered rarely and on selected models. Stay away from holdback and give them 1500-2000 over invoice and you should have a deal. If you don't, then call my store and we'll sell it to you for that number.

------------------
Todd Arnold

http://www.geocities.com/nsxcessive/index.html

 

[nsxtasy]

Stay away from holdback and give them 1500-2000 over invoice and you should have a deal. If you don't, then call my store and we'll sell it to you for that number.

drliu, as I noted above, these numbers sound like a very good deal. Feel free to call on Todd if the dealers in your area don't want to go near that price. Enclosed shipping runs another maybe $900 (that about right, Todd?). It's really not a big deal to buy a new car from a distant dealership like Todd's, so feel free to take advantage of his offer.

 

[sjs]

I don't know specifically about Acura, but I have been around various foreign and domestic dealerships for decades. A friend owned several franchises and (in a prior life) I worked at several others as wrench, parts dept and salesman at various times. I can tell you that very few people at any of those shops really knew exactly what a car truly cost in the end. Your case of cost +$80 on a Honda is proof enough. No way can they make money that way, even considering a decent capture rate by F&I. Again, I'm not sure about Acura, but at the moment the volume incentives are very large and common at BMW shops. I'm told that it is precisely because so much info is now available on the web etc.

I don't begrudge them a profit, I'm just saying that even if you have a friend at the dealership or visit those web sites, don't believe for a minute that you know the true bottom line. They have too many ways to hide it.

Bottom line, an extra grand or so on a new NSX should not be a major issue. If it is, you may be in over your head.

Good luck, and enjoy!


[This message has been edited by sjs (edited 11 June 2001).]

 

[Nsxotic]

Don't take this the wrong way sjs, but you are very wrong. Dealers do sell cars for a net,net,net $80 profit and even lose money to sell a single car. Very often. There is no secret to cost..... it is invoice minus holdback minus the forementioned (rare) factory kick. That IS triple net cost. Nothing else hidden! An NSX has invoice minus holdback only. That is what the dealer pays, period. No other funny money. Backend dollars is another story, of course. There is profit in extended warranties, GAP coverage, maintenance plans, Credit life and disability insurance, etching, road hazard plans and of course in rate. These are all benefits to different customers(except rate

) and are completely optional. Don't think for a second that a dealer always makes money on every car. Overall, of course the store will try to maintain an average gross per unit. (front and back).. Oh, almost forgot... there is a dealer fee at least.... `$248 - $798 ish. per dealer. We delivered a car today that was a <$2142> loser... add $348 holback to that is <$1794> plus $398.5 dealer fee =<1395.5> plus $1000 kickback from Hyundai IF we deliver 125 new Hyundais this month (might) = still a $395.5 triple net loser even if we hit the mark. Why do it? Hey, maybe it's the 125th car and we get $1000 x 125 retro... if not... oops, lost $1395.5. Happens every day, everywhere. Did sell them a warranty, GAP, etch and made a point in rate so probably ended up $500 ahead on that one but that doesn't always happen..... take care and good luck.

p.s. the reason that people think that dealers have so much profit and hidden money is simple insecurity in an environment that they don't understand and don't trust. Simply because over the years with the car business tricks of the 70's and 80's, we were taught to not trust. It's a very simple thing now. Hell, costs are on the internet. Offer them a profit for your convenience and go home in a car. So simple we refuse to believe it. Instead, everyone wants to panic and negotiate like they deserve it. Nicely negotiate and come to an agreement, don't act as if the dealer SHOULD discount for you. By the way, most regular cars only have $400 - $1500 of markup plus holdback these days, not the 3k, 4k + markups of yesteryear, so don't think you're getting raped when they only knock off $1,100 on a Camry.... just a little general info and advice. Good luck.

------------------
Todd Arnold

http://www.geocities.com/nsxcessive/index.html

 

[nsxtasy]

My understanding (Todd can verify) is that dealers make most of their profits from service and from used car sales, not from new car sales.

I bought an Integra GS-R for around $18,000 in 1994. Since then, I've spent around the same amount on service for my various cars at the same dealer. Wanna bet where they made most of their money on me?

 

[steveny]

I disagree, I am a firm believer that the reason people feel like they are not being dealt with fairly, at a car dealership, is because all of the information is not on the table. The information is not offered unless it is forced at any dealer I have ever been to. I have always been a strong believer that one should not make money from information that they are withholding from someone who is less knowledgable. Nsxotic, no offense, but do you think if you told your next customer, every way that you make money on a car, that they wouldn't be offended or feel that they were being ripped off? Try this next time and see if you sell a car. I am sure that 90% of your clientel don't even know about interest rate mark ups, factory kick backs for selling multiple units, etc. I know for a fact, that dealers make a lot more than they devuldge, seeing as how, I have a friend who owns a GM dealership and another who owns a Porsche/Audi dealership. Luckily, when I buy a new truck, every year, I do get my vehicles at absolute cost. Once again, not trying to start an argument, just trying to state the facts, as I know them.

 

[1HOT NSX]

What a deal Tabasco! $71,600 for a new 2000? Even with the 5K rebate - that's a steal! It's about 89K sticker with destination charges, there is about a 10.5K dealer profit built in and a 3% hold back. I'm not sure whether the 3% is applied to the sticker or the cost but . . . a dealer told me {"I'm looking at $3,456 in incentives on a 2000" (before the 5K rebate was offered)} it looks like you paid a couple of hundred over cost after deducting the hold back from the deal. Are the dealers that desperate?

 

[sjs]

No offense taken Todd, but please take my skepticism in the same spirit. You may know how it currently works at Hyundai, and you may be telling it straight, but even your numbers back up some of what I said. If I accept your numbers, there is more money in a Hyundai from kick-back than in the sticker, which I think proves the point. The incentive thresholds are generally achievable, or the dealers go broke, and nobody wins. And of course, not all manufacturers work with the same margins and incentives. Oh, and I forgot, another reason for all the off-sticker money is that they don't need to share it with the sales person.

Although you didn't mention it yet, I also realize how much is made in used cars, parts and service, making up for low margins on the new cars. But new car sales make money despite considerable overhead and the appearance of low margins, and most of it is off-sticker. That's all I'm really saying.

As you said, the consumer has already been trained, and they want to feel like they got a deal, hence all the games. Then of course there are all the "factory" incentives like rebates and low interest rates, making it even more difficult to compare across brands.

I'm not pointing fingers, just facing the facts. The consumer is often their own worst enemy. Look at appliances. They blatantly produce multiple models that are virtually (sometimes literally) identical, then sell only certain models to different dealer chains so the consumer can't compare exact models between nearby stores. Dishonest, or the only way to survive in a cut-throat low-margin business? In this case I say both.

I'm not that harsh on auto dealers.

 

[Nsxotic]

Ken, you are right on the money! Steveny, sorry you feel this way..... I offered EXACTLY the only way a dealer makes money on the sale of a single car. I offered this to my fellow NSXers to use in their future. It's amazing that some people still refuse to believe the words of someone that has nothing to gain by sharing it with you. Far too fearful even armed with my generous information, hmm? What is it exactly that you disagree with anyway? By the way, if my sales managers offer that information to a customer trying to buy a car (and they have!) the customer does not believe it's true anyway. They think it's a 'fake' invoice or something as if we would Fabricate a document just in case some customer negotiates hard enough where we need to show them. It's ridiculous. There's no winning when a customer is so dead set that we are clobbering them. Therefore, it's makes good sense not to offer too much info to a customer. And since when have you ever negotiated anything where the seller tells you what he owns it for??? Jeez.

Scene A:
"hey wanna buy my tie?"
"sure, how much"
"50 bucks"
"I'll give you 30"
"Okay"

Scene B:
"hey wanna buy my tie?"
"sure, how much did you pay for it"
"$12"
"I'll give you 15"
"okay"

How often does Scene B happen? Never. Did the seller in Scene A 'withhold' information? Was that a bad thing? Did he not have integrity?

I'm sorry that you didn't appreciate my helpful honesty. I'll try not to be so informative in the future at the risk of some skeptic telling me that I'm a liar. Stick to what you know about and don't disagree with what you don't. That is a flame and it's the first time I got lit up on this board in 2+ yrs. What I say is the truth and clear cut simple. Ask your friends in the biz. Sorry to everyone else for my outburst.

sjs, I have 21 lines of cars including Acura and it all works the same., not just Hyundai. Yes, factory kick is higher than the markup in this case! But, factory kicks are very rare!! And being $1000 is HUGE. Normally only 300-500 per car when it's offered. it's only so high because we just went for 55 new per month to 150 new per month, so in light of such a huge increse the factory shows it's appreciation. Of 21 lines, only 3 MODELS have a kickback for achieving a goal.

------------------
Todd Arnold

http://www.geocities.com/nsxcessive/index.html

[This message has been edited by Nsxotic (edited 11 June 2001).]

 

[1HOT NSX]

I'm sorry Todd,but I just can't believe that dealers are losing money - not even once when they are selling a new car. They might not make much, but they always make some. If not, why stay in business? Sure, maintenance, parts, that "special shield" for your paint, extended insurance, etc. makes a profit, but I don't believe for a second that you actually lose money on any car. Well, maybe one or two, like the Lancia Scorpion I bought in 1977 that could not be "given away" when I bought it (I turbocharged it and enjoyed it very much for five years after I bought it). How many cars have you sold at a loss and what were they?

 

[sjs]

Originally posted by steveny:
I disagree, I am a firm believer that the reason people feel like they are not being dealt with fairly, at a car dealership, is because all of the information is not on the table.

Time for me to switch sides and come to the defense of the auto industry. Mostly I agree whith what you said, but I'm not sure your solution would work. (even at Saturn) Like I said earlier, as consumers we are often our own worst enemy. What was the last thing you bought (other than a car) where you knew what the seller paid for it? Know what a rigid contact lens really costs? About $5 last I heard, but you can't but one for less than $50. What does it really cost to build a house?

Sure, numerous scum bag dealers brought this on themselves years ago, but consumers have continued to press them into the corner with unrealistic expectations.



[This message has been edited by sjs (edited 11 June 2001).]

 

[Nsxotic]

I give up, you guys are unreal!!!!! Yes, we and all dealers lose money on new cars every frickin' day!!!! LOSE MONEY!!!! What do you mean, why stay in business??? Did I say we lose money on every car? You're all welcome for the help. Jeez

Thanks SJS, you hit it on the head that time

------------------
Todd Arnold

http://www.geocities.com/nsxcessive/index.html

[This message has been edited by Nsxotic (edited 11 June 2001).]

 

[blurr]

Tabasco did get a great deal. Just before he left to Florida to buy his car I bought a New 2000-T for $72,700 and thought I had an unbeatable deal.. I Was Wrong!! ;p


------------------
-matt
'00 NSX-T #265

[This message has been edited by blurr (edited 11 June 2001).]

 

[sjs]

Todd, I for one don't mind the occasional flame when it's an impassioned response. The world has gotten WAY to PC for me. Let it fly!

 

[Nsxotic]

One last breath..... Tabasco got a great deal and is a perfect example of a NEAR loss on a new car (although rare on an NSX) I know Rick (Case) who sold him the car. He is a competitor of mine. Invoice minus holdback minus the 5k rebate is what Tabasco paid. Why did Rick sell it? Because it costs thousands per month to floor plan an NSX. Rick floor plans with GMAC. So he saves those costs by getting rid of a car that he might not sell for months to come in light of the current market. He made his dealer fee only (aroung 400 bucks) on a 90k car rather than pay more thousands/month. Amazing, isn't it.

------------------
Todd Arnold

http://www.geocities.com/nsxcessive/index.html

 

[nsxtasy]

Todd lives with this every day. He knows his business.

I occasionally buy cars. I have friends who are salesmen and who own dealerships, so I go by what I hear second hand.

My understanding (again, Todd can confirm or dispute) is that dealers do make money on the new cars they sell. Maybe not every single car, but almost all of them. Maybe not a lot of money on most of them, but enough to keep selling them. Occasionally, they DO make a lot of money selling new vehicles - such as when a vehicle is selling like the proverbial hotcakes; for example, there is a seven-month waiting list at some dealers for the Acura MDX and the dealers can sell them for MSRP and even pack them with dealer-installed extras. Occasionally, they make a lot of money on a single car because someone walks into a dealership, sees the sticker on the window, and says "I'll take it" without shopping around and finding what they're really going for. But on most of the cars they sell, the dealers make a few hundred bucks, maybe a bit more than that because of the holdback and other factory incentives (although 2 percent of a $20K car isn't a huge holdback), but not megabucks. They're also paying the mortgage, and taxes, and the commissions to their sales people, and all the other expenses it takes to run the dealership. There's money to be made, but most of it isn't in the new car sales, it's in the extras and the service and the used cars.

Again, this is what I've heard, and what I THINK is true.

I continue to be surprised at how angry some people are towards car dealers. And for every story anyone has about how the dealer screwed them on something, the dealer has a story about a customer who was trying to screw HIM or put something over on HIM.

In my own relationship with my dealer, I give them the same respect and professionalism I am accustomed to receiving from them. And I can talk to them about where they make their money, and find out stuff that supports the opinions I'm relating here.

I really don't think there's any need for anyone to get upset in this discussion, though...

 

[sjs]

Originally posted by Nsxotic:
... Because it costs thousands per month to floor plan an NSX.

Todd, how about one more breath to show us the math on that? I previously mentioned floor plan as part of the overhead, but surely you are talking about cash flow and where the same $ could be used more profitably. The direct cost of course is not thousands per month. That number assumes that the same $ used to finance other models would result in sales (at a profit). Of course, if you could get more of those hot-selling models you already would. Yes, I know it's a bit more complicated than that, but I'm just trying to show that your statement is the very type that people find deceptive even if it isn't meant to be.

 

[steveny]

The floor plan thing is interesting. I went to the BMW dealership on saturday to test drive the new M3. Well they didnt have one. The salesman said they had a waiting list(with deposit of 5k) of up to 1-2 YEARS. He also added that the car were going for 5-10K over sticker. This seems ridiculous as it would cost them nothing to "floor plan" the car. However this may be the way they make up for the cars they sell at a loss.

 

[sjs]

Originally posted by steveny:
However this may be the way they make up for the cars they sell at a loss.

Not many BMWs sold at a true loss, and even fewer brands with a model commanding way over list. It amounts to a very nice bonus, but if they counted on it they would starve.

BTW, one of the local BMW dealers has a ceiling on the commission paid to the sales people, and it's less than I made in commission on a (fairly loaded) Taurus wagon in 1988! Imagine how much they make on an M3! Of course, they won't get many.