: invoice 20,656, retail 21,460 - a 3.7% gross profit.
: invoice 25,116, retail 25,840 - a 2.8% gross profit.
: invoice 20,766, retail 21,700 - a 4.3% gross profit.
: invoice 30,157, retail 30,895 - a 2.4% gross profit.
And who pays the sticker price? Only the guy who thinks Taco Bell is a Mexican phone company.
Add the facts that (1) there's an average of just a 6% to 8% gross profit built into new-car sticker prices today, and (2) every dealership has an overhead expense of 10% to 15% of its revenue, and you'd have to be a solid, gold-plated fool to believe the invoice price is any new car's real cost.
Yet there's a great big new-car information industry that's built on your
continuing to believe something that hasn't been true for two decades,
gets further from the truth every year and makes no business sense!
That obvious fact is a very "inconvenient truth"
for those companies.
NEWS FLASH: CLEARLY EMBARRASSED BY THE INEPTITUDE REVEALED IN ITS ASTONISHING FAILURE TO RECOGNIZE THE ONGOING 20-YEAR RECONSTRUCTION OF NEW-CAR PRICING, CONSUMER REPORTS HAS DISCONTINUED ITS LEGENDARY "NEW CAR PRICE SERVICE," A KEY REVENUE SOURCE FOR ALMOST DECADES! WILL WONDERS NEVER CEASE?
COULD THERE BE ANY MORE CONVINCING EVIDENCE THAT THE DEALER INVOICE PRICE HAS NOTHING TO DO WITH ANY NEW VEHICLE'S COST THAN OUR CONSUMER ICON'S DECISION TO STOP SELLING THAT PRICING AND BASING ITS ROCK-BOTTOM PRICE RECOMMENDATION ON THAT BOGUS COST NUMBER?
"I never did give anybody hell.
"I just told the truth, and they thought it was hell.
- Harry Truman
If you're looking for that hidden truth that invalidates all the conventional wisdom about the smart way to shop for a new car today, this is the only place you'll find it.
The inside story of the discovery of that game-changing fact is told in our book, "Letting The Cat Out Of The Bag: How The Auto Industry 'Redesigned' The Dealer invoice Price When The Internet Arrived," available in paperback and Kindle format at Amazon. To read the back cover copy, Preface, Table of Contents and the first four chapters, click here. If you'd like a personalized, author-signed copy ($14.95 including 1st class postage), you can add that to your order for the Fighting Chance information package.
HERE'S BRAGG'S TAKE ON THOSE CONSUMER AUTO PRICING SITES
Those sites are: (a) pitching the range of what other clueless shoppers have paid as the "holy grail" of new-car transaction prices, (b) using customer rebates (which everyone gets) and a comparison of their prices to the full sticker price (which almost no one pays) to inflate their hyped claims of "savings" realized from using their services, and (c) sending you on a milk run to a small number of dealers in their "networks," who relish the thought of selling you a car at that "holy grail" price and reward those "conduit sites" handsomely with the advertising and/or "finder's fee" dollars that are built into it.
Example: For each sale made, TrueCar dealers pay TrueCar $299. Even Consumer Reports sends its "Build & Buy" site visitors to TrueCar dealers, but somehow "forgets" to tell us that $299 comes out of our pockets. Apparently the organization that claims to be our fountain of truth and transparency doesn't want the truth to get in the way of its financial agenda. Because CR admits in the fine print on its site that True Car sends Consumers Union "a fee" for each sale made. My guess: about half of that $299. (That's what I'd pay for slam-dunk sales at prices that have CR's "seal of approval.")
I noted to Consumer Reports' meeting representative that the financial relationship with TrueCar seemed in conflict with the "No Commercial Use Policy" stated then on CR's website, which "helps ensure we avoid even the appearance of endorsing a particular product or service for financial gain." His response was, "Oh, now he's throwing those words at me!" (Guilty, as charged. I am not easily intimidated. I don't make this stuff up. A court reporter transcribed every word said in that USA TODAY meeting.) And now CR has removed those underlined words from its website. Can you spell h-y-p-o-c-r-i-s-y?
In that meeting, I challenged their "pay what others paid" recommendations with "You're treating consumers like they're idiots. Why would anyone pay close to an average price, when, by definition, it means that about half the people got a better price, maybe a much better price?" The Kelley Blue Book representative's reply was, "Overwhelmingly, our market research shows that consumers ultimately don't want the best price. They just want a fair price," which he said "means that when I tell my neighbor what I paid for the car, I won't be embarrassed." TrueCar's Executive VP echoed that claim, saying, "We have data to support exactly what he said." No one disagreed.
Do those statements accurately describe your objective when you're buying a new car? Are you sitting there thinking, "I sure hope I get a price that's in the ballpark of what others are paying?"
To read the full USA TODAY "Don't Trust That Invoice Price" write-up on that meeting (in which I was dubbed a "peppery contrarian"), click here. All those executives left the meeting with that exhibit, every one of them smart enough to realize what it meant, but praying that you'd never see it. I was not their favorite participant. I asked the Consumer Reports person, "Who's been running your New Car Price Service for the past 20 years, Rip Van Winkle?" He was not amused.
After the post-meeting lunch, I said to him, "Give me name of that person and I'll update him or her on the two-decade inversion of the invoice-retail price relationship." He gave me a dismissive smirk and left the building, like Elvis, without a word. Was there a message there?
As you surely can tell, I am not easily intimidated by senior executives of big companies that dominate their industry. I believe somebody needs to hold powerful institutions accountable for the dichotomy between their talk and their actions, between their claims of competence and their long record of incompetence, and especially for their easy willingness to abandon their long-term mission statement and commitment to avoid conflicts of interest for financial gain.
I'll remain the "peppery contrarian," the one who's only on your side, until all the organizations that should be telling you the truth about the second most expensive purchase you make start doing exactly that. But when you get all that revenue from car companies and dealers, I guess your motto has to be "Silence Is Golden," with Golden's six letters being $$$$$$.
"The truth is incontrovertible. Malice may attack it.
Ignorance may deride it, but in the end, there it is.
- Winston Churchill
THIS TRANSACTION REPORT IS AN EYE-OPENER
"Using your method, I got a great deal on a 2014 Kia Optima EX with Premium and Technology packages. The total invoice price (including the regional advertising fee) was $28,521. My price was $27,535, $986 below the invoice. And that was BEFORE subtracting Kia's $2,000 rebate!."
"I checked TrueCar.com, and their best estimated price was $27,521, which at first seemed impressive. But when I read further, I learned that their price INCLUDED that $2,000 rebate! MY PRICE BEAT THEIRS BY $1,986! So in reality TrueCar is worthless to anyone who wants the best price."
B.C., Wade, NC. (Here's a cornucopia of great testimonials).
Question: So whom should you trust for reliable information and negotiating advice? The one source that's telling you the whole truth and takes no money from the auto industry? Or all the others, who send you on a milk run to a small number of their network dealers with pre-sold prices that aren't great and hide the truth from you to protect their revenue stream from those dealers, revenue that comes from your pocket?
THESE ARE THE FACTS ABOUT HOW THE NEW-CAR BUSINESS WORKS TODAY
It's 2015, not 1994, and that world isn't flat anymore, it's round.
(But apparently no other auto-info site wants you to know that.)
When you walk into a car store to haggle, you have ZERO leverage in that transaction and leave with a deal well short of the best price available in your market. But thousands of solid, gold-plated fools do that every day, believing the myth that the invoice price they find on the Internet is a real cost number. Read my lips again: The only leverage you have when you buy any commodity, including a new car, comes from having several sellers compete for your business.
And given how "The Truth" about the dealer invoice price in that exhibit has totally changed the automaker-dealer financial relationship, the 'best price' on your car will change from dealer to dealer and month to month.
That's because dealers are typically working on sales targets that are based on TOTAL vehicles sold. 90% of the bucks spent on "dealer cash" are allocated to these programs, NOT to sales of specific vehicles. Many of them are based on long-term multi-month sales targets, where the rewards can be million-dollar+ bonus checks that make "holdback" look like bus fare. Others are monthly "stair-step" promotions, in which per-vehicle bonuses increase as dealers reach higher individualized volume thresholds. Tens of thousands of bonus dollars can be hanging on a store's ability to close enough deals at month-end to get to the next plateau. (Holdback is heading for extinction. Audi, BMW and Land Rover haven't had it in years. Lexus and Lincoln deep-sixed it in 2012. Mercedes followed suit in 2013 and Infiniti did in early 2014. I believe Jaguar, Mini and Scion also have no holdback.) Why is no one else telling you this? Are they ignorant or just hiding the truth from you?
So whether these secret programs are based on monthly or multi-month targets, reaching month-end goals is crucially important to dealers. That keeps steady sales pressure on, month after month. Dealers who are trailing their monthly targets will sell for much less, and that will be different dealers each month.
If your objective is to get that best price, you're unlikely to get from the dealer networks of any of the companies named above. There isn't a single one of them who'd debate this subject with me in a national media forum. (CNN would love to host that one.) They're all scared to death that every consumer would learn the facts that obsolete all their info and negotiating advice.
If what I've said so far doesn't convince you that all their advice is bone-stupid, you're probably not a Fighting Chance candidate. But if you understand how that previously-hidden truth invalidates all the ridiculous, "start with the invoice price and subtract the holdback to get the dealer's true cost" advice, read on for more solid reasons to use us.
WHAT CAN FIGHTING CHANCE DO FOR YOU THAT ALL THE OTHERS CAN'T
1. You'll have in us the only independent, unbiased source of truthful information and powerful negotiating advice on the Internet. We serve our master (you). Those other auto info sites, including Consumer Reports, serve theirs (not you).
2. In the package's "centerpiece," How The Phone+Email Attack Can Get You The Best Deal, Saving You Time, Money and Aggravation, you'll learn exactly what to do and say each step of the way as you conduct a competitive bidding process from your home or office, without walking into a single car store. You'll enlist 6 to 10 dealers that you choose to make price proposals, and you'll go with the winner. We even tell you the best day(s) of the month to start the process.
Given how the industry has squirreled away substantial dealer profit dollars in the invoice price to fund the myriad of truly-secret, "below-the-line" incentives, it's not unusual to have a $1,000 to $2,000+ difference between the high and low bidders on even a mid-priced vehicle. And this month's high bidder may be next month's low bidder, depending on where a dealership stands vs. its hidden targets. (Check our long list of testimonials here. Note there how far off the mark those auto info websites "target prices" can be!) This is why it's nuts to aim for any "target price." That puts a floor under your price, when some dealer might sell for less, maybe a lot less.
3. As a confidence builder, YOU'LL HAVE US AS YOUR COACHES as you go through the process. Got a question? Call us. Want to run the numbers before you sign a lease? Call us. There's no such thing as a "silly question" here. Talking to you is our favorite part of the job. We've been at this for over 20 years, and much of our knowledge has come from our customers' feedback.
4. You'll receive our signature "Big Picture" analysis of how the brand(s) and the specific vehicle(s) you're interested in have been doing in the market. re sales up or down so far this year? Does the average dealer sell 2 per month or 22? This piece also reveals the current "holdback" information for brands that use it (several don't). Here's a sample "Big Picture" analysis (not a current file).
5. You will, of course, get the complete current sticker/MSRP and dealer invoice pricing data for the vehicle(s) you're considering, covering all trim levels and equipment packages. Here's a current list of model pricing available. And a sample vehicle pricing file (not a current one) in pdf format.
6. You'll also receive the latest issue of CarDeals, a bi-weekly report of current national rebates/cash incentive offers and cut-rate financing programs. Here's a sample CarDeals report (not a current edition).
(Our unique $39.95 package includes all the information you need to negotiate the best price on for any one vehicle. Additional vehicles are $15 each. You may place an order here on a secure, encrypted order form at any time.)
YOU'LL ALSO GET ALL THESE OTHER INSIGHTFUL CAR BUYING TIPS
"How To Avoid The Big Leasing Rip-Off."
"Things To Consider About Placing a Factory Order."
What I've Learned About "Below-The-Line" Dealer Cash Programs, Facts No One Else Is Telling You.
"Dealing With A Trade-In."
"Should You Buy A Demo? At What Price?"
"The Crucial Financial Importance Of A Dealership's Customer Satisfaction Rating."
"Smart Ways To Buy An Extended Warranty."
"Have You Chosen A Crashworthy Vehicle?"
"Can You Get The Vehicle Configuration You Want?"
"Should You Buy Last Year's Model?"
CHECK OUT THE QUALITY OF THESE PIECES?
As examples of the information pieces we create, read "Leasing A New Car? Here's Everything You Need To Know" the clearest explanation you'll find of what leasing's all about, and "Test Driving 101" to learn how to handle that process without getting into a price negotiation.
SPECIAL MESSAGE TO PREVIOUS CUSTOMERS
The Fighting Chance package is always changing to reflect new knowledge and the best ways to deal with the changing realities in the retail car business. Sometimes the changes are dramatic. For example, the method for getting competitive bids differs substantially from the arms-length "fax attack" process we recommended just a few years ago. At other times the changes are small, but represent worthwhile improvements. The suggested wording in the note you'll send dealers is fine-tuned often. The package you'd receive today will typically include several insightful changes compared to the one you ordered years ago.
THE COST OF THIS UNIQUE PACKAGE?
$39.95 (Includes all the information you need on any one vehicle.)
Additional vehicles: $15.00 each. (More than half of our customers add one or more additional vehicles as "fall-back" alternatives. This could become a small, but wise $15.00 decision if you find it difficult to deal on your first choice.)
Considering the substantial cost of the new vehicle you're about to buy or lease, isn't this a relatively small price to pay for the comprehensive Fighting Chance information package?
To place an order on our secure, encrypted order form, click on the "Ordering" link at the top of the page.
If you'd prefer to place a phone order, or if you have questions that aren't answered on our web site, you may call our order desk at 1-800-288-1134 between 9:15AM and 4:00PM Pacific time, Monday through Friday. (We don't work on weekends.)
Click here for current list of model pricing available.
Important Note: This is a service for NEW VEHICLES ONLY. We have no information on used vehicles. Also, we have NO CANADIAN PRICING DATA. (For Canadian pricing, visit carcostcanada.com)
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