I was just at the San Marcos, Texas Honda dealer to test drive a S2000. On the test drive, the salesman and I were talking about business and I asked him how sales were holding up in general. He told me that normally by this time of the month each salesperson would have sold about 6-8 cars. This month, he said each salesperson had only sold 1 or 2 cars. He said they had not seen it this bad since 9/11/01. I felt bad for him. He wasn't the typical car salesman type and he seemed very polite and honest.

 

I have a feeling that a lot of people are going for the American carmakers' 0% interest deals that have just popped up again recently. However, I think this is a poor business decision on the part of companies like Ford. They are shooting themselves in the foot in the long run and are just postponing their own sales slump until a later date. They obviously can't keep doing this forever, and they aren't making much money in the meantime.

 

Sounds like a good time to buy an S2K!

 

The "Catch-22" of slow sales - they may have to make more money on each car to make up the slack. You would think a slow sales time would be a good time, but a lot of time it can make it harder to deal. For sure on a car like the S2000 - there a not a LOT of them sitting around waiting for buyers.....

Dennis

 

In theory, raising prices to increase profits when sales decline ,may work if you have a monopoly. In the real world since there is more than one Honda dealer and numerous other brands of cars to choose from, a downturn in the car market causes reduced prices. BTW, I'm finding tons of S2000 cars on dealer lots.

 

Being a Honda sales consultant, let me explain why that store (and many others) are a little slow. There was a dock strike and MANY Honda parts are not at the factories throughout North America. There have been production slow downs and some models have even had their prodution lines halted. The model year change hasn't helped either. DWynne is right. If I'm going to sell less cars, I need to make more money on each and every one. The Zero percent come on's are ruining the car business. Your trade is holding less and less value due to the influx of vehicles into the used car market. Credit unions and lenders, other than the financial branches of the big three are having problems getting customers to take 7 and 8% loans (that are still good rates). When the financial arms of a company are making less money, the invoices of that manufacturers cars go up.... ANYWAY, GM, Chrysler, and FORD can kiss my ass - someone will expose the smoke and mirrors soon enough and the domestic market will soon be trucks only. Build your "cars" for their target audience, i.e. Hertz, National, and Enterprise. Sorry, rambling... The fact that most Honda models are holding fairly close to MSRP really turns off most customers, as well. Currently, if you want a discount on a Honda, you have to be shopping a Civic. New Accord=MSRP+, S-2000 ('02)=MSRP - '03=2K over, Pilots=MSRP+, Odyssey MSRP+, CRV=MSRP+, what's left....High demand vehicles should be easier to sell, but getting them is currently a problem. Most Honda stores only have a few 2002's left and they probably are all Civics. Everone else is whoring out their '02's in a fire sale.

 

I wondered how long it would take for the weakening economy to impact the auto industry. It appears that it is happening now.

My local Honda dealer has a beautiful Spa Yellow sitting in his lot for about two weeks. When I bought my S the average time it took this particular dealer to sell the car was about 2 to 3 days. Generally, as soon as the car rolled off of the carrier someone was waiting for it. I bought mine 3 hours after the dealer received it.

My wife and I just bought a 2003 Acura TL TypeS. We we able to negotiate much more then I thought possible.

I'm not convinced that it's the 0% financing offered by the big 3 that is taking the business from Honda. I think the latest round of layoffs and the corporate scandals have eroded consumer confidence. I think people are afraid to spend right now. We are in an economy that resembles 1990-1991. People are scared.

I do agree with secretvampire in that the Big Three are shooting themselves in the foot with the 0% financing. Sooner or later, they have to make a profit. I think, however, that they are willing to sacrifice some profit in the financing sector of their business in order to keep the assembly lines moving and to maintain (or try to maintain) market share.

As far as the S2000 goes, I think in the short term the dealers will be slightly more negotiable. All of the Honda cars, not only the S, are desirable and the dealers know that. In the past they have been independent as far as price is concerned. I still don't expect to see Hondas being offered at great price reductions or with 0% financing, but I do expect the dealers to be a little more negotiable.

 

Some dealers deal, some do not.

A bad trend lately is large companies buying a bunch of dealerships. These groups like Sonic and Hendrick own a lot of dealerships now. So not only does each dealership have to make money, they have to make money for the parent company. I have found it nearly impossible to deal with these "big company" dealers - Sonic for sure.

When I talked to the "locally owned" dealers (not just Honda, other brands too) they seem to have no problem dealing. They tened to be smaller dealers and you would assume they would not be able to deal, but the opposite seems true. A lot of the high volume dealers are owned by a big company and don't tend to deal. Of course, a lot of it is the area of the country you live in too.

It is worse with "high line" brands since there are usually no competing dealers around. For example, my local BMW dealer is Sonic owner and the closest other dealers are 90, 120, 180 miles away. So they figure most folks can't/won't go elsewhere for a deal.

Is that what the rest of you have found as well?

Dennis

 

[QUOTE]Originally posted by DWynne
[B]Some dealers deal, some do not.

A bad trend lately is large companies buying a bunch of dealerships. These groups like Sonic and Hendrick own a lot of dealerships now.

 

Tmorrow, One word sums it all up, "demand". If you try to increase prices to increase profits when you are selling less cars because of reduced demand, you will sell even less cars. When you increase prices, you reduce demand even further. It doesn't matter whether you need to make more money or not. This is simple economics.