Just what is the price of a new car?

What does a new car really cost? A strange question you may well ask but is there really any point in having a recommended list price when it bears little or no resemblance to what the actual invoice price ends up being? Having recently visited several car dealers as part of my day job, I have been fascinated by the fact they all seem to be very process and customer driven, and want to build value in the service they offer and the range of cars they have for sale but the guys I spoke with could not remember the last time they sold a customer a car ‘full up’ as they say in the trade i.e. the list price with no discount given.

Even though lead times for certain prestige models had grown considerably and therefore there were no cars on the ground some sales people were prepared to offer a discount when the incentive for the customer was just getting his hands on his new car.

The point is why bother training and coaching sales people if they are just going to distress the products they are selling to get a sale?

New car prices

Is the retail price of a new car just a yardstick, a notional figure on which to start negotiations? Maybe it’s like a westerner doing buisness in China when they find out the signed contract is just the start of negotiations. But let’s remember, usually you can’t negotiate on the price of an expensive electrical item even if you do buy the overpriced extended warranty.

In my long experience I recall that if I made a connection with the customer, took them through a careful qualifying process and made sure I delivered the promises I made then I would often get the sale simply by being better than the competition and whilst of course I by no means sold every car full up I made sure that the deal worked for my company and myself as well as the customer.

However in this day and age it seems that price is the focal point, before any value has been built in. This, in and of itself, may explain why so many customers end up with cars that they don’t necessarily want because they have been so hung up on the best price to the detriment of all other aspects of the transaction.

We also need to consider, of course, that with the vast array of extras being offered alongside every car, sales execs can still make the deal work by attaching some finance and insurance products to the car so that there may be a bigger discount on the metal as long as the customer is happy to take the add-ons.

New car prices

It is certainly an interesting transformation the car trade is going through but I for one would be quite worried if I got a massive discount off a new car without really trying too hard because I would be slightly concerned that firstly it simply wasn’t worth what the manufacturer thought it was and secondly what the car may be worth in three years time.

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2 Responses to Just what is the price of a new car?

  1. Steve Boucher April 12, 2011 at 2:16 pm #

    Whilst good training, ongoing coaching at the dealership and following processes is the correct approach to ensuring sales staff maximise every opportunity, when there is pressure from dealership management and manufacturers to hit new car targets, ultimately money talks. Can you honestly say that, for example, a Vauxhall Corsa is significantly better than a Ford Fiesta? If two cars offer pretty much the same benefits, the dealerships are reasonably matched in terms of service, the dealer that offers the best deal will win. Can you honestly say that when you are out shopping for anything, price doesn’t factor highly in your decision of where you buy from? If the rise of internet new car sales does the dealership experience really count for anything? Look at what is happening elsewhere – Waterstones vs Amazon, HMV vs I-Tunes, etc.

  2. Mark Robbins April 15, 2011 at 3:12 pm #

    That’s a hard one to answer and again is subjective depending on where your values lie, we nearly always shop at Waitrose, not because there are no other supermarkets that can match them price wise, there are, however, we keep coming back to Waitrose because of their clear insentive on “Customer Service”

    We have tried many of the other supermarkets and would agree that we could reduce our shopping bill by doing so, but it never seems to be enough to be just about price, we always end up going back to Waitrose because of the service element, and let’s face it, over a 12 month period we spend on average £8,000 (the price of a small new car) plus, that’s £8,000 a year, not every few years!

    So, do people buy cars just on price? yes, some do, but i wouldn’t mind betting there are still many who appreciate good old fashioned service and will pay that little bit more for it. For many The Dealership Experience really does count for something……………………

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