We have no idea how many people felt they got really hosed on price when they last purchased a vehicle. No one seems to track stats on hosings of that nature.
But the fine people of J.D. Power and Associates do have some insight into how Canadians “feel” about the prices they pay at dealerships, how much they “think” dealers make on each vehicle sale, and if those amounts strike them as fair or unfair.
J.D. Power conducted its survey on the above questions this spring (April-May), and noted that while there was some variance between buyers of the various brands, between one-fifth and one-quarter of all owners felt they had, in all likelihood, overpaid for their new ride.
Consequently, this group of buyers, at least one-fifth of all respondents, felt they had paid an “unfair” price.
Well, it just so happens that J.D. Power also surveys dealerships. During the same period as the consumer survey, the responding dealerships said they earned an average “front-end” gross profit of $1,161 per new vehicle sold.
How much did consumers “think” dealers made on each new vehicle sold? About 36 per cent of respondents estimated the dealer profit at more than $3,000, while a further 26 per cent estimated it to be between $1,500 and $3,000.
In its press release of this survey, J.D. Power felt this “extremely inflated (consumer) view of retailer per-vehicle gross profit” was a big problem for dealers, especially as many consumers don’t know and/or appreciate all the dealership expenses that have to be recovered by those profit margins.
The problem, as I see it, is that’s not really a problem, just a situation. It’s virtually impossible for both parties to be happy all the time. And a little wariness on both sides is a not bad thing.
There are other factors dragging down the perception relationship too. For example, how can a customer feel like she’s just stolen a car when she over-extended herself to hand over a cheque for $30,200 or so (the average transaction price YTD)?
And everybody thinks everybody charges too much for everything that’s in-demand. I don’t recall ever asking myself, after buying a delicious and refreshing Mocha Coconut Frappuccino from my favourite coffee emporium, “My, my, how can they sell these things for only $6.95?”
And yet another problem is that nobody wants to pay more than somebody else did — something that’s extremely hard to establish either way. If you suspect the price is unfair, you would prefer that everyone got hosed too.
Which reminds me, time to water the lawn.