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Re: Re: Re: Great review. Question about pricing. (Reply to this comment)
by mkaresh,  in Cars & Motorsports
A 1987 Mercedes 560SL listed for 59,580, and the invoice price was 47,660 (both without destination). I now realize I should have been clearer--the invoice price was 20 percent less than list. Is this a 25 percent margin?
In contrast, a 2003 SL listed for 85,990, and the invoice was 79,971. So even though the list is significantly higher the markup is half as much in absolute terms, exactly one third as much in relative terms.
Lexus like Toyota has some of the largest margins these days. An SC 430 lists for 62,575, and has an invoice of 54,438. Despite a much lower price than the Mercedes, the markup is larger.
Volvo is at the other extreme. An XC90 T6 lists for 40,965 and its invoice is 38,543. Barely a six percent margin.
In contrast, a 1984 Volvo 760 Turbo listed for 22,290 and had an invoice of 17,845, a 25 percent margin. So Volvo dealers have lost 3/4 of their margin.
As you might guess, dealers have been screaming for much of the decade. No one likes to see two-thirds of their margin taken away. One other result is that consumers largely do not realize this has happened, and tend to disbelieve dealers who claim they don't have much to play with.
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Feb 06 '04
11:37 am PST
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Re: Re: Great review. Question about pricing. (Reply to this comment)
by asafono
Thanks for the thorough answer.
Back in the 1980s standard industry margins were 15 percent on mainstream brands, and 20 percent on luxury brands.
So, a 50k luxury car of that era (surely there were some in that price range... Mercedes, Cadillac?) sold for 60k ( 20%) if there was no discounting? Amazing...
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Feb 06 '04
8:03 am PST
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Re: Great review. Question about pricing. (Reply to this comment)
by mkaresh, in Cars & Motorsports
Over the past few years the Big Three have reduced margins on vehicles in an attempt to firm up prices and compensate for their inability to raise MSRPs much. There is now less distance between "invoice" and MSRP than there used to be.
One consequence is that some imported vehicles tend to carry larger margins. This is especially the case with Toyota among mainstream brands. On top of this, Toyota tends to provide dealers with cash bonuses instead of offering large rebates, further increasing the dealer's margin. As a result, you can get a larger discount on a Toyota while leaving the dealer with more profit at the same time.
Examples of margins right now (rounded to nearest 100, before all incentives):
Mazda 6s: 1700
Malibu LT: 1900
Taurus SEL: 2000
Impala LS: 2100
Accord EX V6: 2600
Camry SE V6: 2600
Back in the 1980s standard industry margins were 15 percent on mainstream brands, and 20 percent on luxury brands. As you can see, they are now under 10 percent in many cases.
I should also note that Toyota seems to be pushing for market share lately. Since at least last summer I have noted much heavier discounting on their major models, based on Edmunds TMV.
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Feb 06 '04
6:49 am PST
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Great review. Question about pricing. (Reply to this comment)
by asafono
As always, amazingly thorough and helpful.
Quick question on the pricing, specifically, discounts dealers offer off MSRP. I understand your source for these is Edmunds (MSRP vs. TMV) - correct me if I am wrong here.
A quick look at and a comparison of a Taurus and a Camry you give shows that the Taurus is discounted $1,625 ($23,325 MSRP - $3,000 rebate -$18,700 typical cost), while the Camry LE V6 is discounted $1,959 ($22,959 MSRP - $0 rebate - $21,000). Does it mean that dealers discount Camry more than the Taurus, according to Edmunds (if that was your source?) I find this hard to fathom. Is my math off? Both are fine cars, it's just that traditionally, and especially recently domestic car dealers tended to offer larger discounts than the imports, even before rebates are accounted for.
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Feb 05 '04
12:19 pm PST
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Re: A wonderful review... (Reply to this comment)
by mkaresh, in Cars & Motorsports
I'm not sure why, but most people are under the impression that the mid-90s SS had a different engine than the regular Caprice. In fact, it was the same engine.
The SS was initially available only in black, but later was available in other colors.
The main thing that set the SS apart was its much larger wheels and tires, reduced amount of chrome trim, and a small trim plate to create a BMW-style kick-up in the rear side window. (Later the sheetmetal was revised to give all Caprices this kick-up, which has carried over to the current Impala.)
Amazing how much difference these alterations made. People hated the looks of the Caprice but liked those of the Impala SS.
All in all, the Impala SS was very inexpensive for GM to create. A very profitable venture.
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Feb 04 '04
8:29 am PST
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A wonderful review... (Reply to this comment)
by androoos
...but I still could never buy the current Impala "SS". Being somewhat young, my first introduction to the Impala SS was the 1994 Caprice-based car. The ads caught my eye, since it was only available in black, and had catchy titles like "Darth Vader's Personal Car". That's separate from the 260hp (!!) V8 and REAR WHEEL DRIVE! At the time, 260hp in a full size car was...rare. I still miss it to this day and I keep a nicely polished 1/18th scale model of the 1996 Impala SS as a reminder of the car.
Anyway, great review, I enjoyed reading it.
JC
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Feb 03 '04
9:33 pm PST
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