How have employee discount prices offered by auto makers affected vehicle sales?
Published September 1, 2005 | September 2005 issue
"We're really busy. It's kind of nuts actually. ... [Sales] were steady [before the deal], but now we're going over the top. I'm guessing we're probably going to see about a 40 percent increase in our new business, within a 40-day period."
Scott McPhee, General Sales Manager
Northern Motor Company (Ford-Lincoln-Mercury)—Escanaba, Mich.
"It's really stirred up the market, similar to what they did in 2001 [when they were offering zero financing]. ... It was kind of flat [prior to the deal] as everyone knows where GM was sitting with it too. ... We actually wish we would have geared up a little bit more with inventory. We were kind of playing a little conservative with our inventory at the time, and I wish we would have been geared up a little bit more for all the traffic that was there."
Jeff Albers, General Sales Manager
Schwan Pontiac GMC—Mandan, N.D.
"We had a phenomenal June and we sold a lot of vehicles and by about the middle of July we were out of new vehicles. ... Volume is up, profits are not necessarily up, because the employee price deal sets the amount of money we're allowed to make on the transaction and it's only about, depending on the vehicle, about $300 to $600 over invoice. So $300 or $600 over invoice doesn't go very far as far as paying the lights, electricity, insurance and everything else you've got to pay for. I'm very disappointed in this program because now we're starting our third month on it, inventory levels have been wiped out across the country so we have nothing to sell, but yet people are still interested in buying cars under the program. And because they've made it a three-month program, it is no longer just a one-time special deal. ... I think the buying public now realizes this is just another incentive that they can wait around for. And the consumers can wait longer to buy a new car than GM can wait to sell a new car."
Craig Tilleman, General Manager
Tilleman Motor Company (five GM vehicle brands)—Havre, Mont.
"New car sales are up as far as I know across the board in most every dealership I've talked to. We're up quite a bit. It's hard to say at this time of the year [whether high sales levels will continue] because '05 stuff is starting to run out, and right as of now Chrysler is not offering the E. P. (employee price) on '06. So I don't think you're going to see the months that we saw last month. ... That's part of the problem is that there's just not enough '05. If they'd have done it earlier in the year you'd have moved a lot more merchandise I think because we wouldn't have run out of stuff."
Jim Bacon, Sales Manager
Juneks Chrysler-Dodge—Spearfish, S.D.
"It's been extremely good. ... We're moving inventory, and the customers are getting a good deal. It's hard to say (how much sales have been affected) because July is traditionally a good month. July was up 50 percent over June, but July and August are typically good months. I think they said that overall the zone was up 27 percent for all the dealers. I was kind of heavy in inventory as it was ... but there's certain things that we're going to run out of; we're going to run out of minivans and Grand Cherokees, and probably some of the Wrangler packages before the end of August. As long as they keep doing it, we'll keep selling cars."
Jim Toye, Sales Manager
Park Chrysler-Jeep—Burnsville, Minn.
"It really generated lots of new car business. Now all of the sudden we're [overstocked] with used, so now we've got to sell some used, because it [caused] a lot of people to buy new. They extended it again this month, and I don't know what's going to happen. So far it's slow, but it's always slow at the beginning of the month, it was last month too. I looked back, and we were actually ahead of last month this month, and we said, 'Oh boy, it's slow,' but you do half your business the last third of the month. We were short of inventory, sure; we ran out of a lot of things. That was the idea, to close out the '05 inventory. ... Some dealers don't like it because they are paying a percentage so it's kind of fixed, what they pay you. I've heard talk of a lot of dealers who weren't [happy with it], but we were a one-price store to start off with. So we always had that, and it wasn't much different for us."
Todd Darwin, Sales Manager
Zaharia's Ashland Ford—Ashland, Wis.