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From: [email protected] (CarolinaFan@uiuc)
Subject: Re: Saturn's Pricing Policy
[email protected] (Hok-Chung Tsang) writes:
>In article , fredd@shuksan (Fred Dickey) writes:
>|> CarolinaFan@uiuc ([email protected]) wrote:
>|> :
>|> : The biggest problem some people seem to be having is that Saturn
>|> : Dealers make ~$2K on a car. I think most will agree with me that the car is
>|> : comparably priced with its competitors, that is, they aren't overpriced
>|> : compared to most cars in their class. I don't understand the point of
>|> : arguing over whether the dealer makes the $2K or not?
>|>
>|> I have never understood what the big deal over dealer profits is either.
>|> The only thing that I can figure out is that people believe that if
>|> they minimize the dealer profit they will minimize their total out-of-pocket
>|> expenses for the car. While this may be true in some cases, I do not
>|> believe that it is generally true. I bought a Saturn SL in January of '92.
>|> AT THAT TIME, based on studying car prices, I decided that there was
>|> no comparable car that was priced as cheaply as the Saturn. Sure, maybe I
>|> could have talked the price for some other car to the Saturn price, but
>|> my out-of-pocket expenses wouldn't have been any different. What's important
>|> to me is how much money I have left after I buy the car. REDUCING DEALER PROFIT
>|> IS NOT THE SAME THING AS SAVING MONEY! Show me how reducing dealer profit
>|> saves me money, and I'll believe that it's important. My experience has
>|> been that reducing dealer profit does not necessarily save me money.
>|>
>|> Fred
>Say, you bought your Saturn at $13k, with a dealer profit of $2k.
>If the dealer profit is $1000, then you would only be paying $12k for
>the same car. So isn't that saving money?
Yes. But the point is that prices are competetive. Saturn may
well be selling a car intended on giving the dealer a $2000 profit, but
since a comperable Honda with $500 profit is more expensive, it may be well
worth it to buy the Saturn.
>Moreover, if Saturn really does reduce the dealer profit margin by $1000,
>then their cars will be even better deals. Say, if the price of a Saturn was
>already $1000 below market average for the class of cars, then after they
>reduce the dealer profit, it would be $2000 below market average. It will:
>1) Attract even more people to buy Saturns because it would SAVE THEM MONEY.
>
>2) Force the competitors to lower their prices to survive.
>Now, not only will Saturn owners benefit from a lower dealer profit, even
>the buyers for other cars will pay less.
Not necessarily. It seems to me that Saturn salesdroids, who don't
make a commision, whereas their counterparts at other dealerships generally
do, make more $$ per hour or whatever. This means that Saturn doesn't give up
the profit to their employees through commision, which IS taken out of per-
car profits. They just pass it along to less pressureing salesmen/women.
>Isn't that saving money?
Maybe. Maybe not. Depends on accounting practices. I'd rather pay
more for dealer service that doesn't cut corners to contain costs...
>$0.02,
>doug.
$2/100
CKA
'87 (Carolina) Blue Honda Civic DX
--
Chintan Amin The University of Illinois/Urbana Champaign mail: [email protected]
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