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Smart car shoppers do their research. Some Western Slope car shoppers include dealerships in Denver, Denver suburbs, Boulder, etc. in their research. Before you buy at a large Front-range dealership, there are a few things you should know.
It's no secret how big retailers like Walmart and Home Depot are able to offer such low prices: they get discounted prices for buying in volume, sometimes selling items to the consumer at the same price that a local, independent retailer would pay wholesale.
It doesn't work that way in the auto retailing industry. Did you know that all Subaru dealership's - large, small and in-between - pay the same price when buying cars from the manufacturer? There are no volume discounts or quantity breaks - no matter how many are purchased. At Rocky Mountain Subaru of Grand Junction, we pay the same for new cars as do mega dealerships in Salt Lake or Denver. Our MSRP and invoice price is set by Subaru of America.
So, why do consumers have the perception that they'll buy for less in Denver and bigger is better?? Probably because they thought large dealerships could buy for less and therefore sell for less. They also see super low prices advertised in the newspaper and on the internet or are quoted low prices over the phone or by email.
How can these dealerships sell so low and still stay in business?
In order to compete, some large dealerships have continuous ?sales? where they advertise a vehicle for a very low price (called a loss leader) similar to grocery stores who lure you in by advertising "loss leaders" on milk or by selling thanksgiving turkeys for pennies on the pound (and while you?re buying that huge turkey for $5 you?re also spending $200 on other items).
The big difference is there are hundreds of turkey's at the grocery store but usually only one advertised vehicle at the dealership. By the time you get to the dealership, the advertised or quoted car has been sold (surprise!) or it isn't what you wanted - for example maybe it has manual transmission or comes with no CD player or floor mats (surprise.).
The truth is it's easier to get away with "tricky" marketing in large cities. In Grand Junction, we don't market "loss leaders" because we know it wouldn't take long for local folks to spread the word about misleading advertising tactics. Like the furniture or carpet store who has been "going out of business" for 3 years, after awhile you don't pay attention or believe the advertising anymore.
If we were to treat a customer poorly at our dealership, chances are we'd run into them at the mall, little league game or in a doctor's waiting room. Plus they'd tell their friends and family. This is not a concern for the mega dealership in Denver or Salt Lake.
Are you sure you?re getting price quotes on matching vehicles?
All Subaru Dealers are computer networked and can access each other's inventory. Why is this important to you? When we have the vin# of a car from another dealership, we can look up that exact vehicle and make sure we're comparing apples to apples. The most common reason we cannot match or beat another dealer's price quote is because the cars are not the same. Here's what usually happens: The customer tells us what they want and we quote a price, let's say it's on an Outback with leather, moonroof, and 6 disc CD player. The customer comes back to us with quotes from large dealerships that are hundreds and even thousands less. If we have the vin#, we?ll look up the other vehicles, and often find they're not the same. For example, their price quote is on an Outback basic model, with cloth interior and manual transmission. The customer is unknowingly getting prices on apples and oranges. No wonder we couldn't beat their price and how disappointing for the customer. We've all had the frustrating experience of calling a store ahead of time to make sure they carry a certain item and when we get there, they don't have it. It's usually an honest mistake and on an item that costs less than $10.
We believe it is criminal to knowingly mislead a customer into driving 4-6 hours to buy a $20,000+ vehicle that is not really in stock. We absolutely hate to disappoint a customer, and we'll do everything we can to help them find the car of their dreams but we are always upfront and honest about what we have in stock and how much it costs.
Here's a true story: We received an email from a customer who wanted a price quote on a new 2006 model with specific options. We didn't have exactly what he was looking for and told him it would be hard to find because there were not many models made with those exact options. He was surprised and confused to hear this because he had received quotes from at least 4 other Colorado Subaru dealers. When we researched all the Dealers in the West/SW/NW states, we found only 2 had the exact model - one at a small dealership in Texas and 1 in Los Angeles.
OK, so what about the western slope residents who do buy in Denver for that lower-than-low price?
Can you stand another true story (with fictitious names)?
"Joe and Mary Citizen" wanted a new Subaru Outback 2.5i, in blue with automatic transmission. We quoted $24,183 ($200 over our cost) but they got an even lower price on an identical car from a Denver dealer, who offered $23,683 - $300 below dealer cost! Understandably, Joe and Mary drove to Denver and purchased the car at the quoted price.
Did the Denver dealership lose money? Of course not, in fact, they actually made about $3,000 or more. How? First, they didn't give Joe and Mary the maximum amount they could have on their trade-in.
Also, remember the "$300 below dealer cost" that was quoted? Well, Joe and Mary unknowingly paid a high dealer handling fee. At Rocky Mountain Subaru, we charge a handling fee of $189.95, which covers the costs to file the necessary documents relating to the vehicle transaction (for example, to the Bank, Insurance company, City, State, and DMV offices). Joe and Mary paid a $595 Dealer Handling Fee(!) - in our opinion, about $400 more than was necessary. Before you buy, ask about the dealer handling or documentation fee. On the front range, expect to pay about $300-$600 in additional fees (it?s how they can consistently quote prices $300-$600 lower than us!).
How else did the dealership make money from Joe and Mary's transaction?
Joe and Mary wanted to purchase an extended warranty. What they didn't know was that the warranty company was owned by the same company that owned the dealership. There were other warranty products that provided better coverage. Exhausted from driving 5 hours to Denver, and spending 3 hours at the dealership, Joe and Mary were worn out and didn't read the fine print on the contract or double check the dealer's math or intentions.
Had Joe and Mary bought from us, they would have saved thousands. Consumers often focus too much on the selling price and not enough on other parts of the transaction. We didn?t get the chance to talk with them before they drove to Denver but we had valued their trade at $1,500 over what the other dealer gave them. They would have saved $400 in dealer handling fees. Plus, we could have gotten them a better interest rate and extended warranty package. It would have taken them two hours tops to drive away in a new car.
The bottom line is this: a car is a major investment and consumers should pay the lowest price possible, which includes getting the most for their trade and securing the right financing and insurance.
If you're thinking of buying outside the area from a mega dealer,
1. Come see us first and
2. Bring us the vin # of the cars you're looking at and we'll verify availability, price, and the model code.
3. We'll also give you an idea of the TOTAL price you can expect to pay (we know their dealer handling charges) and....
4. we'll value your trade for free
If we can offer you the same deal, we will. If not, you're armed with more information and will face less surprises when you arrive on the other side of the hill.
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