How can car and truck makers offer discounts amounting to thousands of dollars? Could it be that these vehicles are normally priced for greed rather than actual cost of production and a reasonable amt. of profit?
Nothing is free, including those alleged 'discounts'... I recently purchased a new car - specially built for me - and took delivery Wednesday. I wrote a check for the majority of it, but financed the balance for 90+ days to "qualify" for a rebate. My guess is that the financiers are betting that once people get used to making a monthly payment that they will continue with the life of the loan. Finance charges for approximately 105 days at 2.89%, and for about $6000 will amount to a whole lot of not much, and at the end of that time, they will deduct $2000 from what I owe them. Sweet deal. An expensive car, but that was what I wanted, and I didn't want anyone trying to convince me of any deals. Just said what I wanted, and expected to pay for it....
must be b/c a lot of gullible people actually think they're getting a big reduction.
I was in the auto business for almost a decade. Yes, they price high, and you feel like you get a good deal when you get 1-2K off (or whatever).
exactly right too make them look good and sell more.
My guess is that it's the same in the US as it is in the UK, vehicles are priced at what the market can afford based around marketing so that certain lines are deemed desirable. So the car companies make a balance between getting as much as they can without losing sales, once this top line is established they have a margin for discount with no loss to them.
More than just cars and trucks, I try to shop at places that treat their employees well and maintain lower margins. People love Costco for a reason, they've got the lowest margins in their industry while paying people 20 bucks an hour. Walmart on the other hand ...
For the record, always negotiate the price of your car. Dealers expect it and mark up accordingly. You know they're not above dirty tricks, so play the same game. Call multiple dealerships, play them off each other. Know what you want and what it's worth.
The dealers get an immediate profit, then at the end of the year the manufacturer gives out another percentage for vehicles sold.
I've worked in clothing manufacturing, in wholesale, and in retail.
The mark-up for most items is exorbitant.
If anything is sold in a mall, the mark-up is even higher.
The price of EVERYTHING is jacked-up to increase profit-margins.
All corporations should have to release the actual cost of making the items
that they sell.
I often say the same thing about EVERY product that goes on "sale". If a product can be sold at the sale price and a profit is still made, why not sale it at that price to start with?
@Rustee A new car should be good for at least several years so why do I need to protect myself from a product defect. I they plan to sell cars as a loss leader they are crazy. .I sol products some with no tangible goods insurance , Texaco commercial oil/grease and large steam turbines over 45 years. I am very aware what goes tnto a sale and let me asure you they do not sell at a loss.Even items they advertise at cost has a profit margin if small.Vehicles cannot have thousands of $ removed from price and hope other things will give them a profit to run muti million dollar operations.
@Marine - I did not use cars as an example of a loss-leader, but that situation is used in a retail situation, such as an item at a grocery store. My example also has nothing to do with insurance or warranties. These are all different subjects! But, again, yes, some businesses offer special pricing on particular products to entice customers into their store. What little they might lose on that one item, they make up by making other sales to that customer. And, again, a car company (manufacturer or seller) might offer a 'rebate' or whatever they term it, to entice customers. They don't like people such as myself who will not pay more than the bare minimum of the loan terms. Most Americans buying a big ticket item finance most of it - they rather dislike customers such as myself: those who prefer to pay cash. But they are hoping that I will continue to finance that part of my car purchase, and then they can realize a profit from the interest charged.
Have you purchased a vehicle and wondered if you really paid a true price for the vehicle?In addition for a new car why do you need to purchase insurance to cover repair costs that should never occur on a new vehicle? Somehow I cannot believe that someway I am being ripped off!
I was offered all sorts of addendum warranties on my new car - which has a 3 year/36000 mile bumper to bumper warranty. I would rather put that money into a savings account and take good care of my car, and hope I don't wish I had purchased the extra coverage. I never buy those extended warranties, I feel that they really are a rip-off...
Sale prices are usually offered to bring customers into the place of business. There are some items that are offered at a non-profitable sales price (loss-leader), with the hopes that when the customer buys that product s/he will also buy products which have a profit. If you buy hamburger for $1.00 per pound, but buy nothing else at that store, the store will have lost money on you as a customer. Yet if you buy the hamburger, and the rest of your groceries and perhaps your pharmacy needs as well, the store makes its profit.