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FiatGusto
01-26-2012, 02:12 PM
Some on this site are paying less than what Fiat says is dealer cost for their 500`s. I don`t
understand how a studio can sell a car below their cost and expect to stay open. To say that they
just make it up somewhere else just seems very odd to me.
I had my own business for 45 years, and knew that if I sold an item below cost, I lost money.
That was a rare occasion for me luckily.
But, this seems common with some Fiat dealers of late.
Are some of these cars the early ones that did not have the extras; is Fiat NA rebating some
dealers and not others; are the invoice prices quoted not the truth?

My studio is 285 miles away. For obvious, selfish reasons, I don`t want them to fail. So I would
really appreciate a tutorial on how this is going to play out.

Goodness, the thought of driving 500 miles to the next closest Studio is scary.

500ways
01-26-2012, 02:25 PM
Some on this site are paying less than what Fiat says is dealer cost for their 500`s. I don`t
understand how a studio can sell a car below their cost and expect to stay open. To say that they
just make it up somewhere else just seems very odd to me.
I had my own business for 45 years, and knew that if I sold an item below cost, I lost money.
That was a rare occasion for me luckily.
But, this seems common with some Fiat dealers of late.
Are some of these cars the early ones that did not have the extras; is Fiat NA rebating some
dealers and not others; are the invoice prices quoted not the truth?

My studio is 285 miles away. For obvious, selfish reasons, I don`t want them to fail. So I would
really appreciate a tutorial on how this is going to play out.

Goodness, the thought of driving 500 miles to the next closest Studio is scary.

In addition to the many obstacles FIAT has to overcome to re-penetrate the North American market, one critical test is pricing. What is the price this market will bear? That's a question for any new product.

In addition, they need market share for exposure. One way to do it is for the mother ship to subsidize the car. The difference between invoice and final sale price is rebated back to the dealer. They may be using the ad budget for such a tactic. For example, instead of paying for air time, they reallocate those dollars to rebates. You kill 2 birds with one stone. You put more cars on the street and the folks driving them around are doing the advertising for you. Viva capitalism!!! LOL

epb
01-26-2012, 07:44 PM
Some on this site are paying less than what Fiat says is dealer cost for their 500`s. I don`t understand how a studio can sell a car below their cost and expect to stay open. To say that they just make it up somewhere else just seems very odd to me. I had my own business for 45 years, and knew that if I sold an item below cost, I lost money. That was a rare occasion for me luckily, but this seems common with some Fiat dealers of late.

Not all businesses work on a straight profit/sale retail model, where you buy something for 10 cents, sell it for 15 and make 5 cents. With printers, companies are willing to sell cheap because you'll pay through the nose for ink cartridges.

While car dealerships like to make money, they don't necessarily need to sell cars at a profit to do it. They make money on the financing, for one thing. Then there are the upgrades they hit you up with in the Finance Dept, which are all pretty much pure profit - tire and glass protection plans you'll almost never use, paint protection that's just a wax job, extended warranties that result in you giving them $2000 now for protection in 4 years when your manufacturer's warranty runs out, so you're loaning them money and paying them interest. The big money-maker for most dealers is servicing the cars sold - more cars out the door means more cars coming back for service, so you're making money after the sale even on the warranty work since the manufacturer is paying "book time" and your techs are doing it much faster.

Then the manufacturers themselves offer dealers cash for moving the most volume, regardless of what the cars sold for. Dealers can also make/save some money by reducing the number of cars on the lot, as they pay every month the car just sits there - it's worth shaving of a couple of hundred if you'll save more money simply by removing the car from your inventory. It goes on and on.

F500
01-26-2012, 09:49 PM
dealers want to sell their products in hopes the customer brings it back for parts and service. when new car sales are slow, the dealer must rely on the 'back end', parts and service. for years the mentality has been to get the cars on the road first and then do your best to take care of your customers so that they come to YOU for their parts, service and any warranty issues that may arise.