So, were auto prices just too high? [Archive]

Ghoulish Delight

08-25-2005, 08:37 AM

And is a more permanent price adjustment in store?

For anyone who hasn't been following, after GM announced that they were hemoraging money, they went out on a limb and started selling their enitre 2005 stock at the employee discount price. Those discounts, depending on the vehicle, can be quite substantial, up to a few thousand dollars.

The result? 41% increase in sales. It was so successful that Ford and Chrysler followed suit. Despite insistance to the contrary, GM has extended the promotion beyond the original Aug 1 end date to the end of September, and it's now encompassing some of their 2006 models. Ford as well is going through September, and Chrysler hasn't even announced an end date.

So is this a sign that the industry had allowed prices to drift a little too high for the market? Or is it just a psychological reaction to the phrase "employee discount"? I wonder if they'll try to get away with doing another "employee discount" promo at the end of the 2006 model year, but perhaps make those discounts not quite so deep. I also wonder if there's a legal requirement that if they say "employee discount" then it has to actually match their employee discount.

Name

08-25-2005, 09:45 AM

I think it is a number of factors, one being that many people have a hard time resisting a "sale" so much that they will buy things they don't need just because its on sale. and the other factor may be that they were just everpriced for the market.

Morrigoon

08-25-2005, 10:26 AM

The truth is, American cars are overpriced for what you're getting. At comparable prices, customers are flying to German and Japanese vehicles in droves. The automakers either have to change the public's perception of value (by not only improving quality, but getting people to believe they have), or lower prices.

scaeagles

08-25-2005, 11:51 AM

I believe that cars have always been overpriced. On the few times I have purchased a new car, I did all of my internet homework on kelly Blue Book, and deomnstrated complete patience. If you can handle waiting a few days and taking calls from salesmen after you've left their premises, you can usually get the employee discount price already.

I paid a bit over 20% less than the sticker price for my last new vehicle. I think all they're doing is opening up the lower prices good patient hagglers will pay to those who aren't good, patient hagglers.

We have a Cadillac dealer in town saying they'll beat the official employee discount price on some vehicles by as much as 2500. Now how can they do that? It's because the cars are priced WAY above the cost of production.

Ghoulish Delight

08-25-2005, 12:02 PM

We have a Cadillac dealer in town saying they'll beat the official employee discount price on some vehicles by as much as 2500. Now how can they do that? It's because the cars are priced WAY above the cost of production.Ah, but that doesn't mean they are over priced. I'm talking over priced from a pure supply-and-demand standpoint. From that perspective, the definition of overpriced has nothing to do with profit margin on an individual unit, it has to do with whether they would make more money by lowering price and increasing volume. It looks like that's the case, that the prices were outpacing the demand curve. But was it JUST that the prices were too high, or was a combination of lower price + marketing spin?

Isaac

08-25-2005, 05:14 PM

I heard on the news about 3 weeks ago that SUV sales are going down the tubes lately due to the rising gas prices. I think those cars in general are too expensive but the dealers could get away with charging those prices because they were more in demand. Now the demand is for smaller cars with better gas mileage so something had to be done to get the bigger gas guzzlers off the lots. Offering the consumers a lower price makes sense.

Hmm.... where the hell is Nirvana Man ?

TigerLily

08-25-2005, 06:58 PM

OMG don't get me started on the car industry. My BF was a finance manager for 10 years. he did help me get an amazing deal on my car, but it was not a good experience. By the time I got my car I was very angry and just wanted to leave. the dealership was very angry and just wanted me to leave...it was bad, but I got a great deal...LOL...it just took 5 hours of pushing for it....*sigh*...bit yes they are over priced and money is to be made in all areas front/back and then there's the area the dealership will never give up...

MouseWife

08-26-2005, 10:36 AM

To me, just about everything is over priced. I mean, they keep raising the prices and people keep paying the prices. However they can, sometimes those payments are not easy ones.

We did get a Ford SUV recently. A small one. I really don't like the big ones but I did need more than a car. We've had a van for about 10 years which served us and our lives quite well but now only have really just one child who cruises with us. We wanted something we could comfortably travel in and carry all of our junk.

BUT yes, the gas mileage, even for a smaller suv, sucks.

I can not believe the costs of new vehicles. Blows me away completely. I guess I always hear my mom telling me 'I only paid $19,000. for this house...'.

We did look at the smaller vehicles, at a GM dealer, that had great gas mileage. But, I also worry about their safety factor. When traveling I always look at what side the boy is sitting on and encourage him {on a two lane road} to sit on the side not facing traffic.

A question for anyone who knows~ all of those safety airbags that they now have on the side of cars {mine doesn't}: if air bags aren't safe for kids, can kids sit next to these? Or are they blown out in a way that doesn't harm them as the front air bags do?

Great topic, GD. Just don't get me started on housing prices....

Ghoulish Delight

08-26-2005, 10:41 AM

A question for anyone who knows~ all of those safety airbags that they now have on the side of cars {mine doesn't}: if air bags aren't safe for kids, can kids sit next to these? Or are they blown out in a way that doesn't harm them as the front air bags do? The side curtain airbags are inflated downards, and are much smaller than front passenger airbags, so they don't pose the same kind of danger to small children.

MouseWife

08-26-2005, 10:44 AM

The side curtain airbags are inflated downards, and are much smaller than front passenger airbags, so they don't pose the same kind of danger to small children.

Thanks, GD.

Oh, and about the gas mileage, we went to the dealer yesterday and were cruising around looking at the bigger trucks {I guess the 150's/250's} and wanted to see what type of mileage they got and it said they didn't have to post it!!!!!

scaeagles

08-26-2005, 10:45 AM

Front airbags are unsafe for kids because they blow directly at the passenger. Side airbags blow straight down, so they don't directly impact the individual they are designed to protect.

Our 2005 Chrysler Town and Country has a cool airbag feature - it has a pressure sensor in the front seat. If there is no one in it, it is on. If there is weight in it less than 100 lbs, it is off. If the weight is over 100 lbs, it is on. Not that that is on topic in the least, but I thought it was cool. It also has adjustable pedals, making it much nicer for my 5'1 wife, as she no longer has to hug the steering wheel to drive, making it much safer for her should she ever be in an accident where the airbags deployed.

I love housing prices at present - as long as I don't have to move. Makes me look good on paper. In 1993, I paid 108K for my 1900 sq foot house. Those houses in the neighborhood now are going for about 500K. So I have lots of value, but I couldn't buy anything comparable for less than 500K, so it's a catch 22.

MouseWife

08-26-2005, 10:51 AM

scaeagles~my suv also has that side passenger dealio and I think it is pretty cool, too. If you sit in the seat incorrectly, also, it won't be on. {I had time to read some parts of my manual...}

Well, yeah, since you are in a house you are doing great. I just can't believe how they keep going up. I would bet your house is worth more than that. The last I heard on the news is that they went up to about $600,000.

Ghoulish Delight

08-26-2005, 11:36 AM

scaeagles~my suv also has that side passenger dealio and I think it is pretty cool, too. If you sit in the seat incorrectly, also, it won't be on. {I had time to read some parts of my manual...}
Ah, but what's really cool is the Jaguar feature that uses sonar to determine the position of the passenger. If they lean forward, with their head near the dash, it disables the airbag as well.

scaeagles

08-26-2005, 12:40 PM

We all can't live in your world of wealth, GD.

Ghoulish Delight

08-26-2005, 01:03 PM

We all can't live in your world of wealth, GD.
Hah, I wish.

MouseWife

08-26-2005, 01:08 PM

We all can't live in your world of wealth, GD.

I was going to say...

Hey, I went to Monterey last week {or so} from Yosemite. All along the way, just past El Portal, we were passed {on and off} by a group of Ferrari's {don't know if I spelled it correctly, doesn't matter, really, right?} . Turns out they were headed into Monterey, Laguna Seca and downtown, for shows, etc.

What a freakin' treat to see all of the vehicles I saw! Old ones, souped up ones. Right on the street to check out. Ah, now THAT was green eye inducing. And made me so want to take one and cruise up and down Hwy 1!!

Cadaverous Pallor

08-26-2005, 01:25 PM

My '94 Maxima is still chugging along. I think mid-nineties Maximas are possessed by the devil because they never die. I see 10 copies of my car every single day. Think about it, these things are 10 years old! If you see a car that old on the road, odds are it's a freakin' Maxima ;)

I did put a lot of work into it over the years but it's not bad compared to the cost of a new car. At this point I know I'll probably get another 5 years out of it.

My evil side wishes it would die so I could go take advantage of these awesome employee discount sale prices, but I know I can't afford that anyway.

scaeagles

08-26-2005, 02:00 PM

I know I can't afford that anyway.

Well, if you'd get a real job instead of that librarian crap, maybe you'd make enough money. :evil: :p

MouseWife

08-26-2005, 02:12 PM

Hey! I resemble that remark! {sort of...don't have the librarian job part, though...}

CP~ Our van is a '94 Ford Aerostar XL. The ac doesn't work anymore and neither does one of the automatic locks. We have put way too much money into it as well but it still runs and I have to admit, I still love it. It still has it's Mickey head on it, as it has since we bought it. I know, it is just a vehicle but it has been with us through so much, through so many trips with the family. I fondly remember using those built in child seats...*sigh*

But we don't see too many in very good shape on the roads. At Costco, the gas station attendant told the Hubster "Wow, Aerostar. Don't see those around much anymore." Now come on! They aren't like Hugos or anything like that!!!

Well, you are strong not to give in to the sales. When we went for the SUV I was leaning towards a Mustang. My husband said 'What about the kids?' I replied 'What kids?' Well, my memory of them came back and we got the suv.

When we want to drive a sports car, we can rent one, I guess.

scaeagles

08-26-2005, 02:24 PM

I salute all of you that are willing to deal with car repairs. I hate them. My first car, acquired in 1984, was a 73 Chevy Nova. Ironically, in spanish, Nova means "doesn't go". Spent so much freakin money on it and it never did work that well. So now I buy new with 7 or 10 year warranties so I don't have to pay for it. I've found it to be worth it. We got a 10 year warranty on our Hyundai Santa Fe (purchased three years ago) so that my then 8 year old could have it when she turned 16 and not have to have car repair bills for a couple years still.

I think quality has increased, though, in how cars are made. They offer the extended warranties are dirt cheap prices anymore because the cars simply run well and last longer.

MouseWife

08-26-2005, 02:34 PM

Oh my gosh, no!! I hated the car repairs!! Brakes, radiators, the lack of AC. Always something. We had a great warranty, as well, until it expired. Then it was paid for and we didn't want a payment. Hubster rides his bike to work and I only take the kids around.

BUT that is what was killing me. I told the Hubster that it wasn't safe and we HAD to get a new car. So, when we could swing it, we did. We still drive the van and plan to use it to help keep the miles off of the suv. We put on a lot of miles and I don't want to wear out our warranty in a couple of years!!!

People told me not to buy a new car but the headaches I had, the stress I had with the van. Ugh. I swear, it was killing me. The last time I took it into the shop {major brake work} I went and rented a really cool Gran Prix and I did not want to take it back! {hence my leaning towards the Mustang}. My feeling of stress disappeared the minute I got behind the wheel. So, yeah, I HAD to get a new car.

I do like the Hyundais. We had one before and never really had problems with it.

Ghoulish Delight

08-26-2005, 02:37 PM

I think quality has increased, though, in how cars are made. They offer the extended warranties are dirt cheap prices anymore because the cars simply run well and last longer.I disagree with that assessment. I think cars are more disposable and less durable than ever. They offer the long term warranties because A) most people don't keep their cars for the length of the warranty, and since the warranty only applies to the original owner, it's risk free and B) parts are cheaper (for the companies...not for end consumers though) and everything is plug-and-play replaceable so labor is cheaper, so it's not a very big burden.

Ghoulish Delight

08-26-2005, 02:39 PM

I do like the Hyundais. We had one before and never really had problems with it.My Hyundai, with 12,000 miles on it, had some minor issues (http://albums.photo.epson.com/j/AlbumIndex?u=4201551&a=31244541&f=).

scaeagles

08-26-2005, 03:38 PM

My Hyundai has fared somewhat better than yours. :)

My comments about the warranties and better built cars is simply from my own experience. Since 1993, my wife and I have leased or purchased the following new vehicles:

93 Isuzu Rodeo - Great until it hit 38K, or just past the warranty.
95 Dodge Caravan - sucked from day 1. I actually had to invoke the Az lemon law on the dealer. It literally started spewing fluid from the engine the second time I started it after driving it off the lot. After about 9 months I'd had it and threatened them with legal action.
96 Ford Explorer - Purchased this after the Dodge dealer had to take back the minivan. 4 Wheel drive system always broken.
97 Ford F150 - Got when the repairs on the Rodeo were costing us more than a new car would. Never one problem.
02 Chevy Venture - only one step above the Caravan. Fortunately it was a lease.

But then, something magical happened.

02 Hyundai Santa Fe - Not one problem in 3 years.
05 Town and Country - Not one problem in 16 months.

Fortunately, everything was covered by warranty on the vehicles that sucked, expect the Rodeo. Got too expensive to keep repairing.

The Hyundai warranty cost us only 800 to go out to 10/100 from the factory 5 year.

The 05 Town and Country extended warranty cost us only 1200 to extend to 7/70, but that included all regularly scheduled maintenance up to 60K miles.

Both great deals. I don't think it is coincidence that these two vehicles have never had one problem and that the warranties were so cheap. I do believe that the quality is improving. Now, what you say, GD, about repairs actually costing less to make may very well be true, but I think they are building them better so they offer the warranties at a lower cost because they make money on them.

Cadaverous Pallor

08-26-2005, 03:52 PM

MouseWife

08-26-2005, 04:09 PM

My father is an auto mechanic and has been saying for years that cars just get better and better, and this is very bad news for mechanics. Not enough work for them, and mom & pop shops are especially suffering.

Oh, I wish I had you dad as a mechanic. We've kept our mechanic pretty taken care of. I had 3 cars that we constantly had to take in {hello, what does that mean???} as well as my sister took her car in, too.

GD~ Our Hyundai had minor issues, as well. But it was a helluva lot of fun to drive! Small, we used to sneak around the parking lot poles at Disneyland and get really good parking at night.... :D

Ugh! I hope our ford 4wd doesn't crap out on us!!!

Cadaverous Pallor

08-26-2005, 04:20 PM

Well, if you'd get a real job instead of that librarian crap, maybe you'd make enough money. :evil: :pHeehee....after a summer of working only part-time, I'm almost inclined to agree with you ;)

MW - maybe my dad fixed the cars too well? :D

MouseWife

08-26-2005, 07:50 PM

MW - maybe my dad fixed the cars too well? :D

:snap: To him!

I'd imagine his car-ma is pretty good about now. I think mechanics who screw people over eventually get theirs. At least me and my voodoo doll hope so..... :evil:

Cadaverous Pallor

08-27-2005, 11:00 AM

:snap: To him!

I'd imagine his car-ma is pretty good about now. I think mechanics who screw people over eventually get theirs. At least me and my voodoo doll hope so..... :evil:I'd agree. He had to quit jobs with shops that were bent on screwing people over. Now he works at a specialty classic car restoration shop, a fun job for him. :)