Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
02-13-2006 | 04:35 PM
#1
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Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
http://netscape.edmunds.com/advice/b...2/article.html
It's long and probably many of us have seen such reports before. Also, I
think it first appeared a while back (there's a reference to selling a 1999
new car, IIRC). Edmunds recklessly doesn't indicate the dates. The author is
an undercover reporter posing as a car salesman. He worked at a
"high-pressure dealership that sold Japanese-made cars," then a "no-haggle
dealership that sold American cars." The following, while often stated here,
seems worth noting again:
---
I'll repeat what Michael, my [car dealer's assistant sales manager], told me
about Caucasians . He said white people never come into the dealership.
"They're all on the Internet trying to find out what our invoice price is.
We never even get a shot at them. I hate it. I mean, would they go (to a
mall) and say, 'What's your invoice price on that beautiful suit?' No. So
why are they doing it here?"
I was already beginning to see the impact of the Internet because of
something that happened during my first few days there. I was sent to the
service department to talk to customers waiting for their cars to be fixed.
Salespeople feel this is a good source of leads to buy new cars. Say a
customer has just gotten nailed with a $2,000 quote for a transmission.
Now's the time to move in and pitch the virtues of a new car.
There were typically a dozen or more people waiting for their cars to be
serviced. They would either watch TV or read while they drank coffee and
Cokes from the vending machines. I handed out my business card and chatted
with a few people. One young guy was killing time by goofing around with his
Palm Top computer. He was outfitted in designer jeans and a T-shirt, so I
wasn't surprised to hear that he had just bought the radical new SUV our
dealership sold. Michael had told me these vehicles were selling for over
sticker prices, so I asked Mr. Palm Top how he made out.
"I got an awesome deal," he said.
"How awesome?"
"Three hundred below invoice," he smugly answered.
I asked how he did it. He said he checked prices on the Internet. He then
called the fleet manager and made the deal over the phone.
I had a schizophrenic reaction to this. Part of me admired the fact that he
had outfoxed the dealer. But the car salesman side of me was angry that I
never "got a shot at him." It seemed like just a matter of time before
people who, in the past, walked onto our car lot, would be on the Internet
making deals.
The salesmen are only vaguely aware of this developing trend. I was standing
on the curb next to George and we saw one of these high-demand SUVs ready
for delivery.
"Another damn Internet sale," George said. "Why don't they turn that car
over to us? We'd get a grand over sticker. Instead they're selling it at
invoice. Does that make sense?" As the days passed I noticed more and more
cars marked "carsdirect.com." And as I approached people on the car lot they
often informed me that they were here to see the fleet manager. More
Internet customers.
---
It's long and probably many of us have seen such reports before. Also, I
think it first appeared a while back (there's a reference to selling a 1999
new car, IIRC). Edmunds recklessly doesn't indicate the dates. The author is
an undercover reporter posing as a car salesman. He worked at a
"high-pressure dealership that sold Japanese-made cars," then a "no-haggle
dealership that sold American cars." The following, while often stated here,
seems worth noting again:
---
I'll repeat what Michael, my [car dealer's assistant sales manager], told me
about Caucasians . He said white people never come into the dealership.
"They're all on the Internet trying to find out what our invoice price is.
We never even get a shot at them. I hate it. I mean, would they go (to a
mall) and say, 'What's your invoice price on that beautiful suit?' No. So
why are they doing it here?"
I was already beginning to see the impact of the Internet because of
something that happened during my first few days there. I was sent to the
service department to talk to customers waiting for their cars to be fixed.
Salespeople feel this is a good source of leads to buy new cars. Say a
customer has just gotten nailed with a $2,000 quote for a transmission.
Now's the time to move in and pitch the virtues of a new car.
There were typically a dozen or more people waiting for their cars to be
serviced. They would either watch TV or read while they drank coffee and
Cokes from the vending machines. I handed out my business card and chatted
with a few people. One young guy was killing time by goofing around with his
Palm Top computer. He was outfitted in designer jeans and a T-shirt, so I
wasn't surprised to hear that he had just bought the radical new SUV our
dealership sold. Michael had told me these vehicles were selling for over
sticker prices, so I asked Mr. Palm Top how he made out.
"I got an awesome deal," he said.
"How awesome?"
"Three hundred below invoice," he smugly answered.
I asked how he did it. He said he checked prices on the Internet. He then
called the fleet manager and made the deal over the phone.
I had a schizophrenic reaction to this. Part of me admired the fact that he
had outfoxed the dealer. But the car salesman side of me was angry that I
never "got a shot at him." It seemed like just a matter of time before
people who, in the past, walked onto our car lot, would be on the Internet
making deals.
The salesmen are only vaguely aware of this developing trend. I was standing
on the curb next to George and we saw one of these high-demand SUVs ready
for delivery.
"Another damn Internet sale," George said. "Why don't they turn that car
over to us? We'd get a grand over sticker. Instead they're selling it at
invoice. Does that make sense?" As the days passed I noticed more and more
cars marked "carsdirect.com." And as I approached people on the car lot they
often informed me that they were here to see the fleet manager. More
Internet customers.
---
02-13-2006 | 11:00 PM
#3
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Posts: n/a
Re: Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
The vast majority of the salespeople I have encountered by just walking
onto a car lot are inexperienced and uniformed. My favorite question is
"how long have you been working here?" The answer is typically beween
six days and six months. Most of these wanna-be professional
salespeople don't know their product and are clueless about really
serving people.
There are those rare high quality sales people who know their stuff and
know how to be helpfull, but they are few and far between.
Personally I think that the haggle model of car sales should have gone
away fifty years ago. Very few retail purchases require hand-to-hand
combat to get the best price. Don't be surprised that the Internet is
empowering customers to play the game.
John
02-13-2006 | 11:01 PM
#4
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Posts: n/a
Re: Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
Elle wrote:
> I'll repeat what Michael, my [car dealer's assistant sales manager], told me
> about Caucasians . He said white people never come into the dealership.
> "They're all on the Internet trying to find out what our invoice price is.
> We never even get a shot at them. I hate it. I mean, would they go (to a
> mall) and say, 'What's your invoice price on that beautiful suit?' No. So
> why are they doing it here?"
>
Simple, because at the mall the price is the price, period. No slimy
sales managers trying to squeeze every possible dollar out of every
mark, er customer.
John
> I'll repeat what Michael, my [car dealer's assistant sales manager], told me
> about Caucasians . He said white people never come into the dealership.
> "They're all on the Internet trying to find out what our invoice price is.
> We never even get a shot at them. I hate it. I mean, would they go (to a
> mall) and say, 'What's your invoice price on that beautiful suit?' No. So
> why are they doing it here?"
>
Simple, because at the mall the price is the price, period. No slimy
sales managers trying to squeeze every possible dollar out of every
mark, er customer.
John
02-14-2006 | 01:37 AM
#5
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Posts: n/a
Re: Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
John Horner wrote:
> Elle wrote:
>
>> I'll repeat what Michael, my [car dealer's assistant sales manager],
>> told me about Caucasians . He said white people never come into the
>> dealership. "They're all on the Internet trying to find out what our
>> invoice price is. We never even get a shot at them. I hate it. I mean,
>> would they go (to a mall) and say, 'What's your invoice price on that
>> beautiful suit?' No. So why are they doing it here?"
>>
>
> Simple, because at the mall the price is the price, period. No slimy
> sales managers trying to squeeze every possible dollar out of every
> mark, er customer.
not totally off topic, but the last 2 motorcycles i bought new i bought
online. LAyamaha gives quotes that are the "out the door" price,
all-inclusive. you call to confirm, and go there with a personal check.
they already had the info i gave them over the phone, so i was in and
out of there in literally less than 10 minutes. didnt even ask if i
wanted an extended warranty.
too bad cars arent sold like that. even if you go through AAA, costco,
sams, etc, you still have to sit in the "closing room" with the finance
person making a last ditch attempt to add paint sealants, scotchgard,
and extended warranties.
> Elle wrote:
>
>> I'll repeat what Michael, my [car dealer's assistant sales manager],
>> told me about Caucasians . He said white people never come into the
>> dealership. "They're all on the Internet trying to find out what our
>> invoice price is. We never even get a shot at them. I hate it. I mean,
>> would they go (to a mall) and say, 'What's your invoice price on that
>> beautiful suit?' No. So why are they doing it here?"
>>
>
> Simple, because at the mall the price is the price, period. No slimy
> sales managers trying to squeeze every possible dollar out of every
> mark, er customer.
not totally off topic, but the last 2 motorcycles i bought new i bought
online. LAyamaha gives quotes that are the "out the door" price,
all-inclusive. you call to confirm, and go there with a personal check.
they already had the info i gave them over the phone, so i was in and
out of there in literally less than 10 minutes. didnt even ask if i
wanted an extended warranty.
too bad cars arent sold like that. even if you go through AAA, costco,
sams, etc, you still have to sit in the "closing room" with the finance
person making a last ditch attempt to add paint sealants, scotchgard,
and extended warranties.
02-14-2006 | 02:11 AM
#6
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Posts: n/a
Re: Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
SoCalMike wrote:
> John Horner wrote:
>
>> Elle wrote:
>>
>>> I'll repeat what Michael, my [car dealer's assistant sales manager],
>>> told me about Caucasians . He said white people never come into the
>>> dealership. "They're all on the Internet trying to find out what our
>>> invoice price is. We never even get a shot at them. I hate it. I
>>> mean, would they go (to a mall) and say, 'What's your invoice price
>>> on that beautiful suit?' No. So why are they doing it here?"
>>>
>>
>> Simple, because at the mall the price is the price, period. No slimy
>> sales managers trying to squeeze every possible dollar out of every
>> mark, er customer.
>
>
> not totally off topic, but the last 2 motorcycles i bought new i bought
> online. LAyamaha gives quotes that are the "out the door" price,
> all-inclusive. you call to confirm, and go there with a personal check.
>
> they already had the info i gave them over the phone, so i was in and
> out of there in literally less than 10 minutes. didnt even ask if i
> wanted an extended warranty.
>
> too bad cars arent sold like that. even if you go through AAA, costco,
> sams, etc, you still have to sit in the "closing room" with the finance
> person making a last ditch attempt to add paint sealants, scotchgard,
> and extended warranties.
Yep, it stinks big time. Unfortunately electronics retailers are
playing similar games. I walked out of Circuit City without buying a
computer in December because they would not stop hard selling me on the
need to buy an extended warranty. After I said no thank you three times
I gave up and walked out the door and left my ~$700 purchase-to-be
sitting at the check-out counter. I then went home and ordered a new
computer online. If a dealer/retailer isn't making it enjoyable to do
business with them, why bother giving 'em one's hard earned money?
I don't mind being asked once if I would like to purchase accessories,
extended warranties, etc. However, once I have firmly said no then that
should be the end of it. No means no, right?
John
> John Horner wrote:
>
>> Elle wrote:
>>
>>> I'll repeat what Michael, my [car dealer's assistant sales manager],
>>> told me about Caucasians . He said white people never come into the
>>> dealership. "They're all on the Internet trying to find out what our
>>> invoice price is. We never even get a shot at them. I hate it. I
>>> mean, would they go (to a mall) and say, 'What's your invoice price
>>> on that beautiful suit?' No. So why are they doing it here?"
>>>
>>
>> Simple, because at the mall the price is the price, period. No slimy
>> sales managers trying to squeeze every possible dollar out of every
>> mark, er customer.
>
>
> not totally off topic, but the last 2 motorcycles i bought new i bought
> online. LAyamaha gives quotes that are the "out the door" price,
> all-inclusive. you call to confirm, and go there with a personal check.
>
> they already had the info i gave them over the phone, so i was in and
> out of there in literally less than 10 minutes. didnt even ask if i
> wanted an extended warranty.
>
> too bad cars arent sold like that. even if you go through AAA, costco,
> sams, etc, you still have to sit in the "closing room" with the finance
> person making a last ditch attempt to add paint sealants, scotchgard,
> and extended warranties.
Yep, it stinks big time. Unfortunately electronics retailers are
playing similar games. I walked out of Circuit City without buying a
computer in December because they would not stop hard selling me on the
need to buy an extended warranty. After I said no thank you three times
I gave up and walked out the door and left my ~$700 purchase-to-be
sitting at the check-out counter. I then went home and ordered a new
computer online. If a dealer/retailer isn't making it enjoyable to do
business with them, why bother giving 'em one's hard earned money?
I don't mind being asked once if I would like to purchase accessories,
extended warranties, etc. However, once I have firmly said no then that
should be the end of it. No means no, right?
John
02-14-2006 | 09:39 PM
#7
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Posts: n/a
Re: Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
On Tue, 14 Feb 2006 04:00:16 GMT, John Horner <jthorner@yahoo.com> wrote:
>Personally I think that the haggle model of car sales should have gone
>away fifty years ago. Very few retail purchases require hand-to-hand
>combat to get the best price. Don't be surprised that the Internet is
>empowering customers to play the game.
I'm not a fan of the haggle model either but there is a sort of logic to
it. Cars are big ticket items. The only other purchase that most
people make on that scale or higher is a home. Home purchases are,
surprise, surprise, also sold via the haggle model. Starting salaries,
where most people are sellers, are haggled as well.
When the stakes are high, both buyer and seller tend to be more
aggressive. Both for getting a good deal and at making sure the deal is
made. That is a recipe for haggling.
--
Photos and travelogues from Africa and Southeast Asia: http://www.exile.org
>Personally I think that the haggle model of car sales should have gone
>away fifty years ago. Very few retail purchases require hand-to-hand
>combat to get the best price. Don't be surprised that the Internet is
>empowering customers to play the game.
I'm not a fan of the haggle model either but there is a sort of logic to
it. Cars are big ticket items. The only other purchase that most
people make on that scale or higher is a home. Home purchases are,
surprise, surprise, also sold via the haggle model. Starting salaries,
where most people are sellers, are haggled as well.
When the stakes are high, both buyer and seller tend to be more
aggressive. Both for getting a good deal and at making sure the deal is
made. That is a recipe for haggling.
--
Photos and travelogues from Africa and Southeast Asia: http://www.exile.org
02-15-2006 | 03:42 PM
#8
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Posts: n/a
Re: Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
On Tue, 14 Feb 2006 04:00:16 GMT, John Horner <jthorner@yahoo.com>
wrote:
>Personally I think that the haggle model of car sales should have gone
>away fifty years ago. Very few retail purchases require hand-to-hand
>combat to get the best price. Don't be surprised that the Internet is
>empowering customers to play the game.
Didn't Saturn use that model at first? Do they still use it? I got
the impression it had been abandoned.
How does CarMax price their used cars?
Elliot Richmond
Freelance Science Writer and Editor
wrote:
>Personally I think that the haggle model of car sales should have gone
>away fifty years ago. Very few retail purchases require hand-to-hand
>combat to get the best price. Don't be surprised that the Internet is
>empowering customers to play the game.
Didn't Saturn use that model at first? Do they still use it? I got
the impression it had been abandoned.
How does CarMax price their used cars?
Elliot Richmond
Freelance Science Writer and Editor
02-17-2006 | 11:16 PM
#9
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Posts: n/a
Re: Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
On 2/15/2006 2:42 PM Elliot Richmond spake these words of knowledge:
> On Tue, 14 Feb 2006 04:00:16 GMT, John Horner <jthorner@yahoo.com>
> wrote:
>>Personally I think that the haggle model of car sales should have gone
>>away fifty years ago. Very few retail purchases require hand-to-hand
>>combat to get the best price. Don't be surprised that the Internet is
>>empowering customers to play the game.
>
> Didn't Saturn use that model at first? Do they still use it? I got
> the impression it had been abandoned.
>
> How does CarMax price their used cars?
>
> Elliot Richmond
> Freelance Science Writer and Editor
I always got a laugh out of this; Saturn actually marketed this 'no
haggle' approach as a benefit to the customer. I pointed out to more
than one Saturn owner that anyone -- *anyone* -- could go in to any
dealer's showroom and buy a car for the amount listed on the sticker,
anywhere. Refusing to deal with the customer may have been a good thing
for Saturn, but it certainly was not a customer benefit.
RFT!!!
Dave Kelsen
--
AIBOHPHOBIA - the fear of palindromes.
> On Tue, 14 Feb 2006 04:00:16 GMT, John Horner <jthorner@yahoo.com>
> wrote:
>>Personally I think that the haggle model of car sales should have gone
>>away fifty years ago. Very few retail purchases require hand-to-hand
>>combat to get the best price. Don't be surprised that the Internet is
>>empowering customers to play the game.
>
> Didn't Saturn use that model at first? Do they still use it? I got
> the impression it had been abandoned.
>
> How does CarMax price their used cars?
>
> Elliot Richmond
> Freelance Science Writer and Editor
I always got a laugh out of this; Saturn actually marketed this 'no
haggle' approach as a benefit to the customer. I pointed out to more
than one Saturn owner that anyone -- *anyone* -- could go in to any
dealer's showroom and buy a car for the amount listed on the sticker,
anywhere. Refusing to deal with the customer may have been a good thing
for Saturn, but it certainly was not a customer benefit.
RFT!!!
Dave Kelsen
--
AIBOHPHOBIA - the fear of palindromes.
02-18-2006 | 02:43 AM
#10
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Posts: n/a
Re: Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
Dave Kelsen wrote:
> I always got a laugh out of this; Saturn actually marketed this 'no
> haggle' approach as a benefit to the customer. I pointed out to more
> than one Saturn owner that anyone -- *anyone* -- could go in to any
> dealer's showroom and buy a car for the amount listed on the sticker,
> anywhere. Refusing to deal with the customer may have been a good thing
> for Saturn, but it certainly was not a customer benefit.
well, *Supposedly* they were priced "more fairly".
toyota's scion brand uses the same philosophy, called "pure pricing".
what you pay is whats on the sticker, and theyre all basically the same
price. no "trim levels", no packages. all have the same standard
equipment, including A/C, pioneer MP3/CD, power windows/locks. the big
price diff is between the standard and automatic. a scion xA costs less
now than my civic CX hatch did new, in 1998. so id say you get a decent
deal for the price.
last time i checked, the difference between MSRP and "invoice" was $600.
that doesnt include holdback, which may not be applicable. not a lot of
"dickering" room when youre dealing with $600. they apparently arent
hurting for sales, since they arent included in the "costco auto buyers
program" near me.
GM is supposed to follow the same type of model, in lieu of its
"employee pricing" deal, which led to record sales while it ran.
sounds interesting- a midrange extended cab sierra pickup for less than
a tacoma, ram, or f150. theyll likely do well.
> I always got a laugh out of this; Saturn actually marketed this 'no
> haggle' approach as a benefit to the customer. I pointed out to more
> than one Saturn owner that anyone -- *anyone* -- could go in to any
> dealer's showroom and buy a car for the amount listed on the sticker,
> anywhere. Refusing to deal with the customer may have been a good thing
> for Saturn, but it certainly was not a customer benefit.
well, *Supposedly* they were priced "more fairly".
toyota's scion brand uses the same philosophy, called "pure pricing".
what you pay is whats on the sticker, and theyre all basically the same
price. no "trim levels", no packages. all have the same standard
equipment, including A/C, pioneer MP3/CD, power windows/locks. the big
price diff is between the standard and automatic. a scion xA costs less
now than my civic CX hatch did new, in 1998. so id say you get a decent
deal for the price.
last time i checked, the difference between MSRP and "invoice" was $600.
that doesnt include holdback, which may not be applicable. not a lot of
"dickering" room when youre dealing with $600. they apparently arent
hurting for sales, since they arent included in the "costco auto buyers
program" near me.
GM is supposed to follow the same type of model, in lieu of its
"employee pricing" deal, which led to record sales while it ran.
sounds interesting- a midrange extended cab sierra pickup for less than
a tacoma, ram, or f150. theyll likely do well.
02-18-2006 | 06:21 AM
#11
Guest
Posts: n/a
Re: Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
SoCalMike wrote:
> GM is supposed to follow the same type of model, in lieu of its
> "employee pricing" deal, which led to record sales while it ran.
Which ultimately proves the fact that so many people are suckers for
promotions and advertising.
> GM is supposed to follow the same type of model, in lieu of its
> "employee pricing" deal, which led to record sales while it ran.
Which ultimately proves the fact that so many people are suckers for
promotions and advertising.
02-19-2006 | 04:24 AM
#12
Guest
Posts: n/a
Re: Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
High Tech Misfit wrote:
> SoCalMike wrote:
>
>> GM is supposed to follow the same type of model, in lieu of its
>> "employee pricing" deal, which led to record sales while it ran.
>
> Which ultimately proves the fact that so many people are suckers for
> promotions and advertising.
or a good price. which just goes to show how overpriced thed been all
along.
> SoCalMike wrote:
>
>> GM is supposed to follow the same type of model, in lieu of its
>> "employee pricing" deal, which led to record sales while it ran.
>
> Which ultimately proves the fact that so many people are suckers for
> promotions and advertising.
or a good price. which just goes to show how overpriced thed been all
along.
02-20-2006 | 01:43 AM
#13
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Posts: n/a
Re: Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
SoCalMike wrote:
> High Tech Misfit wrote:
>> SoCalMike wrote:
>>
>>> GM is supposed to follow the same type of model, in lieu of its
>>> "employee pricing" deal, which led to record sales while it ran.
>>
>> Which ultimately proves the fact that so many people are suckers for
>> promotions and advertising.
>
>
> or a good price. which just goes to show how overpriced thed been all
> along.
as a side note...
how much more does it cost to build a $57,000 cadillac escalade vs a
$34,000 tahoe?
> High Tech Misfit wrote:
>> SoCalMike wrote:
>>
>>> GM is supposed to follow the same type of model, in lieu of its
>>> "employee pricing" deal, which led to record sales while it ran.
>>
>> Which ultimately proves the fact that so many people are suckers for
>> promotions and advertising.
>
>
> or a good price. which just goes to show how overpriced thed been all
> along.
as a side note...
how much more does it cost to build a $57,000 cadillac escalade vs a
$34,000 tahoe?
02-20-2006 | 01:49 AM
#14
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Posts: n/a
Re: Edmunds.com Article on Buying Cars (Excerpt on Internet Negotiating)
SoCalMike wrote:
> SoCalMike wrote:
>
>> High Tech Misfit wrote:
>>
>>> SoCalMike wrote:
>>>
>>>> GM is supposed to follow the same type of model, in lieu of its
>>>> "employee pricing" deal, which led to record sales while it ran.
>>>
>>>
>>> Which ultimately proves the fact that so many people are suckers for
>>> promotions and advertising.
>>
>>
>>
>> or a good price. which just goes to show how overpriced thed been all
>> along.
>
>
>
> as a side note...
>
> how much more does it cost to build a $57,000 cadillac escalade vs a
> $34,000 tahoe?
zip. and it's not like the tahoe doesn't have a 100% NET manufacturer
margin either!
> SoCalMike wrote:
>
>> High Tech Misfit wrote:
>>
>>> SoCalMike wrote:
>>>
>>>> GM is supposed to follow the same type of model, in lieu of its
>>>> "employee pricing" deal, which led to record sales while it ran.
>>>
>>>
>>> Which ultimately proves the fact that so many people are suckers for
>>> promotions and advertising.
>>
>>
>>
>> or a good price. which just goes to show how overpriced thed been all
>> along.
>
>
>
> as a side note...
>
> how much more does it cost to build a $57,000 cadillac escalade vs a
> $34,000 tahoe?
zip. and it's not like the tahoe doesn't have a 100% NET manufacturer
margin either!
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