Page 10 - ROA Online Riview Library

Orders are now placed on GM’s website either by the owner or SHOWROOM—Cars displayed in the showroom are usually
the sales manager. In the past, many buyers would special order chosen by the sales manager. They would include the newest
cars with options of their choice including a wider choice of col- and hottest models, or even a sleeper that has been in invento-
ors. Today, most cars are ordered by the dealer with popular op- ry a long time and needs to be sold. Every customer sees every
tions packages in colors that would satisfy most buyers. As we car in the showroom, but only a fraction of the cars in the lot.
know, that seems to be white, silver and black. Many Rivieras Since showroom displays are important, the cars are rotated
produced from 1995-99 have the Taupe interior. I’ve been told often. Brochures are on display if they are not too expensive.
ordering popular colors and options streamlines production Some brochures for high-end cars cost as much as $20 each,
and is more profitable for GM. Having cars with popular colors and so are handed out to serious customers only.
and options also makes it easier to trade with other dealers. In SALES—Ideally the dealer wants to turn inventory over within
some states, deposits are not allowed. However, the deposit 60 days of delivery. They never want to celebrate a “birthday.”
makes it less likely that the customer might back out of the sale, They will sell a new car at almost any price to avoid it sitting
leaving the dealer stuck with a pink Regal that no one wanted.
on the lot for a year. The dealer can direct purchases toward
In the early 1980s, special orders took ten-to-twelve weeks. slower-moving models with manufacturer’s promotions, local
Currently, it can be as quick as six-to-eight weeks. advertising, and by giving incentives to their salespeople.
Manufacturers have been working for decades to shorten the Since dealerships are expected to meet monthly sales quotas,
lead time, to improve profit. There are exceptions when a plant the best time to buy a car may be near the end of the month,
would shut down for a short time to reduce inventory. The especially if the dealer needs to make one or two additional
invoice, once a printed form, is now electronic and typically sales to meet “Planning Potential.” Good buys may also be
received three days before the car arrives.
found during the slow months of December and January. The
DELIVERY—The new car becomes the property of the dealer exception being Christmas week when people have time off
upon delivery and payment must be made within days. Most from work, a big Christmas gift for a deposit or a business
dealers finance the purchase of new cars directly with GM, man looking for an end-of-year tax deduction, Although the
but they have the option to obtain local financing. Each new introduction of the new models is not as much of a celebration
car must undergo a PDI (pre-delivery inspection). The PDI as in years past, there are still end-of-model-year sales. Prior-
involves removing all shipping and protective coatings, tie year models usually have extra money “in the trunk” or “on the
downs, and covers, as well as topping off all fluids, taking a test hood” to clear them out, which could amount to three percent
drive, and inspecting for damage. The cost of the PDI as well from GM. GM knows that a dealer won’t aggressively sell a new
as repair for any shipping damage is covered by GM, if damage model until they are rid of the old ones.
is reported within one day. The dealer is responsible to declare Most sales persons will ask about financing and trade-ins. Hav-
any repairs to the customer.
ing a nice trade-in could encourage the dealer to make a better
COSTS—The wholesale price on a new car is the same for every price on the new car because they make more money on the
dealer, regardless of size or used car. But it’s best not to say
number of sales. The differ- you’ve decided to pay cash, since
ence between MSRP and they may hope to finance for ad-
invoice was nearly 20 percent ditional profit.
back in the 60s and 70s. That
has been shrinking since then. With only one exception, ev-
Now it can be as little as three- eryone I interviewed said that
to-four percent as manufac- only the sales manager or owner
turers work to lower sticker can approve a sale. So, when the
prices. The difference between sales person says they will take
invoice and actual dealer your offer to their manager for
cost is usually the amount of approval, they are being truthful.
“holdback,” or three percent. Ownership of the new car is not
An example could be MSRP official upon signing a contract or
= $45,000, Invoice = $41,878, payment. Ownership occurs only
Hold back = $453, and dealer when the car is driven or trailered
cost = $41,425. off the lot, which is referred to as
being “Over the Curb.”
“Holdback” dates to the 1930s
and 1940s when GM withheld NEXT ISSUE: Used car sales.
money from dealers because Thanks to those who without their
some dealers were irrespon- assistance this series would not be
sible and often went broke. possible: Bob Norton, John Camp-
GM withheld three percent bell, Scott Combs and Charlie
and sent them a check every Andrus. A special thanks to John
90 days to help them manage Kyros at GM Media Archive for
their finances. the photos.
10 July/August 2019 The Riview