So, were auto prices just too high?

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

Quote:

Originally Posted by scaeagles

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

Quote:

Originally Posted by MouseWife

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

Quote:

Originally Posted by Ghoulish Delight

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!!!!!

08-25-2005, 08:37 AM	#1
Ghoulish Delight I Floop the Pig Join Date: Jan 2005 Location: Alternative Swankstyle Posts: 19,348	So, were auto prices just too high? 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. __________________ 'He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.' -TJ
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08-25-2005, 09:45 AM	#2
Name Title Join Date: Jan 2005 Location: here Posts: 779	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. __________________ Signature
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08-25-2005, 10:26 AM	#3
Morrigoon I throw stones at houses Join Date: Jan 2005 Location: Location: Location Posts: 9,534	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. __________________ http://bash.org/?top "It is useless for sheep to pass a resolution in favor of vegetarianism while wolves remain of a different opinion." -- William Randolph Inge
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08-25-2005, 11:51 AM	#4
scaeagles I LIKE! Join Date: Jan 2005 Posts: 7,819	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.
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08-25-2005, 05:14 PM	#6
Isaac the one n only Join Date: Jan 2005 Location: Anaheim Posts: 1,236	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 ? __________________
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08-25-2005, 06:58 PM	#7
TigerLily Senior Member Join Date: Jul 2005 Location: Lancaster, CA Posts: 101	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... __________________ ]Sea World Pictures[/color] my yahoo blog
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08-26-2005, 10:36 AM	#8
MouseWife Senior Member Join Date: Jan 2005 Location: Da' Beach Posts: 2,957	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.... __________________ Summa' time....when the livins' easy......... Last edited by MouseWife : 08-26-2005 at 10:45 AM.
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