yeah, nowhere in my system does it let me see each and every sale of another store. That would make it extremely easy to compete, wouldn’t one think? Lol...can’t say all stores are that bright.

Shop around for a new store to build a relationship with if you feel this was a bit too aggressive. Or, just read through this page and make an offer that makes sense to you, I’m sure they’ll be all ears.

 

Thats a solid, fair deal and you should be happy! Enjoy your car! Your SA will be very happy to work with you and should treat you very well. He’s in the process of earning a respectable check and should put forth the effort to keep you in the loop throughout the order process for that.

 

trader 220 and porschemeister - -thank you for the honesty and enlightening us as to how the system works... I enjoyed reading and learning.

 

After the SA sent their response you quoted above @PorscheMeister42 , I responded back saying "thank you, but I will be passing on your offer at this time" -- since it just clearly wasn't going to work, no harm plenty of other Porsche dealerships in the country! Furthermore, I ran the numbers and it was less of a discount than I originally stated last night. The SA took about $2k off the price I asked for my trade, I overlooked that when I wrote my post here last night. Therefore, it was actually only around a 1.0% discount.

ALL THAT ASIDE...I got this screenshot in return, I have obviously cropped out their information as I don't want to give them any attention, press, respect, or even, ice water in hell at this point.

I took this as a full court press "f*%! you" - directed right at me. The "we're not for everyone" is such a disrespectful statement IMO and I'm very disappointed in this individuals representation of the Porsche brand and experience.

 

This thread has been an interesting exercise. My goal is not to change anyone's mind on what is or is not a good deal, or a fair deal.

I simply wanted to bring some clarity to the market place. Some of the mark up numbers being tossed around were so far from the actual truth.

The facts are a lot simpler with Porsche business model. With companies like Audi, Benz, BMW.... there is basically trunk money all the time. They get that money based on
the model mix they sell per quarter, and on what the North American Parent company sees in the inventory pipeline. They will incentivize slower moving models all the time with
buckets of cash. Porsche is not nearly as quick to do that and they don't ever put nearly as much cash on the table when they do do that.

Having been a derivatives trader for 20 years I look at the markets for anything a little differently. One of the lessons I learned as a neophyte trader was pretty cut and dry, and is always true:
The market does not care where you are long or short from, the market only cares what the price is right now. I never understood why after a person agreed to trade in their car, they cared about what happened
to that car. Its somewhat common for people to care. Life's too short to worry about what you cannot control. Make a deal you're happy with and enjoy the new car.

 

I've purchased countless cars over the decades, and I treat the car buying transaction just like any other business transaction. I look at the sales associate as neither my friend nor enemy. Just like it's my objective to make a car purchase for the lowest price possible, I appreciate that dealership employees look to maximize their profits. So I don't look for a dealership to look out for my interests; that's my job. And that takes some work.

Fortunately that work has become a lot easier with the internet. From reading this thread it appears that everyone looks for discounts off MSRP. I prefer working from invoice up. After determining invoice prices, I offer the dealer $X profit over invoice. Before going to the dealership I get my car appraised at CarMax and look at the auction prices for cars recently sold that are similar to mine. I then have a very good idea of what the wholesale value of my car is. So there are two dealer negotiations: one for the new car and the other for my current car.

If I can't come to an agreement with dealership 1, I then move to another dealership. There are four dealers within an hour of my house. Even if we can't reach an agreement, I depart from the dealership on friendly terms and always with a friendly handshake. For two of my three past "failed" negotiations, I received a text from the sales manager within an hour of departing the dealership, stating that he agreed to my offer. BTW I also negotiate prices when I have my car serviced. I never have my car serviced without knowing the price for the service beforehand, and the service prices dealers charge are substantially different. For example I've seen over a $400 price difference for the major service for two dealers within 20 miles of each other.

So bottom line is do your homework and try to keep emotions out of negotiations.

 

I said they make a profit of 7-10% all in, including a significant discount. Your numbers of $3500 profit all in on a $60,000 car is roughly 6%. I didn't assume $700 PDI because I cannot comprehend how it costs $700 to do the world's worst car detail, remove some shipping equipment and take the car out of demo mode. But I know nothing. You also had repeatedly said 9% is a good discount, but the average customer is "easily" getting 8% on a Macan? I highly doubt that most people are savvy or aware enough to know they should get 8%, I'd imagine the average discount on a Macan is closer to 5-7%. A 6% discount on average, using your numbers of a $60,000 car, results in a profit margin of 8%, which fits squarely into what I said. I'm sure dealerships get some kind of additional kickback from the banks, whether it be PFS or elsewhere. I know they do, because some SA's have told me they do. Unless they were lying then too, which is a sore spot for you for some reason, cause as we all know, car sales never involves lying.

My point, again, was that someone on this forum said that the dealer markup on the 911 is 8%. You are telling me the dealer markup is 10% + holdbacks of 0-5%, regardless of car. The best dealers then have a margin of 15%, plus any bank or leasing kickbacks they get. That is my point, a 8-9% discount is a good discount and, in my mind, allows for a fair profit for them, margin wise. 911 discounts are significantly smaller, apparently based on supply and demand. Dealerships know the supply and demand curves better than I do, and apparently they believe they can sell enough cars to make a profit by discounting 3% and making people feel blessed to get that. My point was that on 911's, the profit margin at the extremely common 2-3% discount is 10-15%. On a $140,000 car that's $14,000-21,000 in profit. If that's what the market is, then great, I understand capitalism. My point was that people, even people informed enough to be on this forum, are misguided about what the real profit margins actually are, and feel good about their 2-3% discount. 20-25% was probably too high, I'll admit that, but when dealerships are willing to discount a car 17-18%, that tells me that they're either still somehow making a small profit on the car, or they're taking small losses. It's Porsche's fault for building a car that no one apparently wants at the price they're asking, but it strains credulity to believe that dealerships are taking 7-8% losses on $75k Caymans. That's a $6,000 loss at 8%, or $7,360 on a $92k Cayman GTS, so I guess dealerships should be going out of business left and right since according to you they sell 25 cars a month, most of which are Macan's that they make "bupkiss" on.

I said this before, where are you when they mark up a GT3RS for $35,000 or a Speedster for $40,000 AND make their 10-15% markup profit. I don't care what they sold my car for, my point wasn't that they should have taken a loss on my trade or on any trade, as I've said a thousand times, I fully expect dealerships to make a profit. They're a business! My point was that they lied to me in an attempt to make an obscene profit, and then still made a gigantic markup. Do you care when a customer reads "KBB Best Resale Value Three Years In a Row", buys a Porsche expecting good resale value, then gets absolutely murdered in a trade by a dealership out to make an obscene profit? Of course you don't care, screw that customer, they're an idiot for buying a 718 Cayman in the first year that it was released with the new engine, before anyone knew how bad demand and resale would be. Of course you don't care when the dealership makes 20% on that guy, because he made a bad business decision, right? That's the attitude every single dealership has, they are going to do absolutely ZERO favors for anyone to get them out of a turd trade in, right? You made a bad choice, you have to pay for it. Somehow I'm supposed to feel bad for dealerships when they make the same bad move on a used car? That makes no sense. They don't feel bad for me, why should I feel bad for them?

 

Dude. My point isn't that the Fidelity warranty is the best deal on planet earth, my point is that it makes zero sense for Porsche to be charging $3000 to a dealership for a warranty that usually covers less about 2.5 years of time when a customer pays FULL RETAIL to an insurance company for a significantly longer period warranty and it's $600 more. Porsche offers it as unlimited mileage because they know that most people drive their cars 5-15,000 miles a year, so the mileage number is irrelevant because you will run out of time long before you reach 100,000 miles. Someone buys a 39 month old lease return, 3 months after it's been returned at 36 months, CPO Macan at 36,000 miles, that car has 33 months of warranty on it. You would have to drive 2,000 miles a month, or 24,000 miles a year to reach 100,000 miles before you reach the 72 month mark. Most 911 lease returns are in the 15-25,000 range after 3 years. It's almost impossible to get there. I'm sure it happens, but it's gotta be like 1 out of 50,000 that someone runs out of mileage before months. My dad works in insurance, a warranty is insurance...and as he tells me, there has never been a major insurance company go out of business. I believe Fidelity is making a significant profit on their warranty, and I'd imagine Porsche makes a larger and more significant margin on their warranty. Again, the point isn't that Fidelity is a better product, it's that it makes no sense for Porsche to charge their dealers what is essentially "retail cost" for an aftermarket warranty.

 

And THIS is exactly the kind of crap that I'm talking about.

 

This is very close to what I try to do as well. I've never been rude or angry with any dealer, I just thank them politely and attempt to leave. What frustrates me is that the general dealership move, at least around here, is to offer $5-7k under what you believe wholesale will be and then you have to fight like tooth and nail and endure all sorts of just blatantly ridiculous statements to get them closer to what you've calculated wholesale is. I keep repeating, just be honest. That's all I want. Once a sales person is aware that I'm informed about what to expect, the process should be incredibly quick and easy. Here's what wholesale is, we'll offer you close to wholesale. You know what our margins are, you want a 9% discount, we can give you 5% based on market conditions, not because we're "losing money on this car". Or, great, we can give you 9% because our margins are 12-15% and we can make a reasonable profit all-in on a 9% discount. It should take like...2 minutes. But it is extremely rare to find someone willing to give you that kind of experience. I get they don't usually start that way because the majority of people are not informed enough to know they can get 9% off, but once it's clear that you're dealing with someone who knows what's going on, if you want to make a sale, listen to what the customer is saying. If it doesn't work, it doesn't work. But again, this kind of experience is extremely rare.

 

To add insult to my injury (to your point)...

I looked further into the numbers and the SA just moved numbers from my trade to the sales price...so it ended up being around a 1% discount.

After I passed on his offer, he then proceeded to tell me... "Porsche is not for everyone" HA...OKAY!

 

I'm not going to weigh in on the overall debate here (as fascinating as it is!) but the reason why people care about that is because it gives a peek into the information asymmetry of the trade in deal. The dealer has more information than the customer when the two parties are negotiating the trade in deal and the dealer will often imply or directly state a low number for the market value of the trade vehicle to support their offer. The customer ends up taking the deal and then sees the price that the dealer then posts the car for and it is considerably higher than the dealer stated or implied. This sours the customer because they feel they were taken advantage of.

I'm not saying this is how *I* feel - I am perfectly fine moving on after I strike a deal and I fully expect the dealer to mark up my trade a whole bunch when they go to market it but that's the source of the annoyance. No one likes being conned/lied to/fibbed to...

 

There are a few basic differences going on here….

You are sure everything that a dealer or any employee of a dealership says is a lie or its sole purpose is to extract more money than you have deemed a “fair profit” out of someone. It’s nearly a binary world when it comes to dealerships with you. One noted rare exception… you believed a SA when you claim he said the dealership gets a kickback from banks.


You’re sure that every detail done at a Porsche dealership is the “worlds worst.” Forget that only one can actually be the “worlds worst”. Your proclamation is based on nothing. How many Porsche dealerships across the country have detailed cars for you? What % is that number of the entire set of Porsche dealerships? Point being, you make outrageous statements based strictly on your loathsome feeling of car dealers. Just for the record, tell us what else is involved in a PDI and how long it takes a tech to perform one. I am sure you know since you’re sure its not worth what’s being charged.

With regards to people getting 8% off…“You highly doubt” … another fine example of making a generalized statement without an ounce of fact and based on your opinion of car dealers. I said 8% because I have seen the regional and national numbers. So, where you may “doubt” I have seen the actual numbers from Porsche.

You are also quick to give the dealer a “kickback” on financing and include a mention of it in every profit scenario you paint. Okay… what percentage of cars sold are done on either a lease contract or finance contract facilitated by the dealership? Here is a hint, its not 100%. People bring in outside financing all the time, people actually stroke a check themselves all the time.

You keep adding the 5% hold back in all of your margin % scenarios. Okay, what percentage of dealers get all 5%, 4,3,2,1 and 0….? How do you know which dealer gets what? You stated that “in my mind, allows for a fair profit for them” …How do you know what their margin was since you don’t know what % of the hold back they get if any? How would you go about calculating “fair profit” for a Porsche dealership? What are the parameters?

You mention dealers are willing to discount a car 17 to 18%, and that tells you they’re making a small profit, or taking a small loss. OMG, we agree on your next statement. As I said in an earlier post on this thread, I believe that Porsche has priced itself out of the market with the pricing scale on the mid-engine sports cars. On the other hand, others and myself have noted that PCNA has had dealer incentives on these cars. If I was still running a Porsche dealership, I’d be happy to get out from under any of those cars for a b/e. How do you know what % they are making or losing since you don’t know what the dealer incentives may be?

According to me the AVERAGE Porsche dealer sells about 25 cars a month, not all dealers. LA is a market different than most others. Go visit the places were the population is not nearly as dense and the Porsche stores sell 7, 9, 13 cars a month and ask them what its like to have to take a loss on one of the 120 cars they get a year. Again, I am not crying a river for the dealer principles, really I am not even shedding a tear, the point I am making is I am viewing the market from a broader business perspective, where you’re looking at it through your glasses filled with distain for dealerships.



With regards to the GT and specialty cars. In the 10 years I worked for Porsche, neither of the dealers I worked for ever sold a single GT or specialty car over sticker price. The only exception to that were cars that we actually bought in the secondary market for a price over sticker price and were used cars. I don’t condone that practice… blame the dealers, blame the customers who willing pay for them, blame Porsche for not enforcing their own rules, anyway you slice it, it sucks. Amazing we agree again!

Still following along through your last post… this brings us up to your trade in story. You claim the dealership lied to you in order to make a profit. I take that with a grain of salt because you’re sure they lie to you every time they speak. You’ll understand if I don’t take the numbers in your story at face value since you’ve back tracked, or included all kinds of kickbacks which you believe dealers get but have no way of knowing, in every other margin calculation you’ve presented…why wouldn’t you exaggerate the numbers in your trade in “story” too? You’ve demonstrated a propensity to do it, in order to support your assumptions all along the way. Of course, you didn’t include the costs involved with the CPO warranty they needed to put onto your car, because you don’t believe those costs either.

Porsche does not own KBB. Porsche does not pay KBB to anoint them as the best of anything. Those are decisions KBB makes independent of Porsche. Note that KBB just says Porsche and Toyota for 2018, its does not say the 718 specifically. You can take it up with KBB, but as far as saying I (meaning me personally) don’t care…. I don’t recall you asking me my personal thoughts on the resale value or trade in value of any car let alone the 718’s… how in the world can you speak for how I feel? Further, how in the world can you speak for (and I quote you here) … ” every single dealership”. My question is this…. Given that statement, I assume the subset of Porsche dealers you researched is a statistically relevant subset of the total number of US Porsche dealers? What % of the staffs of those dealers did you study to conclude (and I’ll direct quote you again)…” That's the attitude every single dealership has, they are going to do absolutely ZERO favors for anyone to get them out of a turd trade in, right? “Are you sure 100% of those dealers would do ZERO to get them out of a car? What % of 2017 718 buyers wanted out of their cars in 2019, and came into a Porsche dealer to try and get out of those cars? At almost every turn you make such broad generalizations about every dealership and every one of those generalizations is negative. That’s just not the case. It must be tough going through life thinking everyone’s out to screw you.



ianmSC I am going to apologize to you in advance. Typically, I don’t like to make comments on these boards so personal. I am sorry but I found many of the things you assume are facts so outrageous that I thought others would benefit from both hearing the facts and exposing some of the myths you perpetuate.



People lie, I get it, salespeople especially fall into the trap of lying, sadly enough its human nature. Not everyone lies, and not every word out of every person who works at a dealership is a lie. It’s been my experience, that most of the people at dealerships are good people and honest people. I say that with the confidence, that I have spent a lot more time at dealerships then you have. I say that with the confidence that I have been involved in the buying and selling of thousands of cars which I will go out on a limb and say is probably more than you have been involved with. Its bad business to lie and screw people all the time. Word gets out easily these days and it can destroy a business quickly. PCNA comes down on you quickly and forcefully when clients call them with complaints about dealership practices.



As I have said, and others have said… If you go into a dealership looking for a fight, no matter what anyone says to you in the dealership, you’re going to walk out felling as if you got into a fight.

 

If you don't have access to auction prices, just go to Carmax or some other car buying service to determine the wholesale value of your car. I have never had a new car dealer offer me the same price as I can get elsewhere. They typically offer around 5% less. When I produce documented evidence of my car's value, most dealers will match that price. If they don't I walk. I even had a Sales Manager try to rationalize his lower offer for my car because of the significant tax savings I would receive on a trade-in. I simply told him that the tax savings was my benefit and not his, and it had nothing to do with the value of my car. Since we were over a $1,000 apart on the value of my car, I walked and was able to negotiate my price with another dealer.

Finally, I couldn't care less how much profit a dealer makes on my car. It's been over 15 years since I sold a car myself, and I don't care for the hassle. So if a dealer makes a lot or loses money, it's irrelevant to me.

 

Exactly. For example, the "wholesale" trade-in, auction number I was shown was $36,000. The sales person and used car sales manager told me that was the going wholesale rate, and they couldn't afford to pay more for my trade, because that's all it was worth. I had already received a quote from another dealer for $41,000. Ok, so they're lying to me. I said thanks very much, I think that's a very low offer, and we're so far apart I don't think it's productive to keep discussing. It took a week, but I got them to $42,000. Assuming they discounted their car 5%, they still made a tremendous profit on my trade. I tracked it not because I cared how much they sold the car for or what their profit was, but because I felt (and was!) lied to by a dealer saying they couldn't make a profit or were going to lose money by paying me any more than $36,000 for my trade.

And btw, I drive a 911 now, and I fully and completely expect to get the exact same treatment when I go to trade my current car in. I'll be offered $5-7000 below what I believe wholesale to be, based on extensive research and analysis, and will be told they can't possibly make money if they offer me any more. And then I'll have to spend hours of time and effort negotiating to get them to offer me CLOSER to what wholesale *actually* is, and they will still likely make a massive profit. That is why this process is annoying, because lying is an integral part of the process. They hope that the average customer who walks in has no idea what wholesale is, gets the first offer and takes it, even if that first offer is based on a lie. So for customers who are informed, it's a terrible experience to get them to admit that their offer is based on a lie, and get them to get within shouting distance of fair.

My point isn't that they shouldn't make a profit after they take my car, my point is that they based their offer on a lie, and then made a gigantic profit. I don't understand how someone can't see that makes you feel taken advantage of and lied to.