We have used car lot on new car dealer row. We get all kinds of customers but most of them usually have credit issues but sometimes we get customers who do have good credit. So the problem is if we don't price are cars, the good credit and cash buyers won't stop unless the car is priced.
On the other hand when the subprime customer comes to pick up his car he sees that the price is much higher than the posted price. What do you tell this customer? If we were to use the price that is posted on the car we can't make any money, we would actually lose money because the way these subprime companies do their"calculations".
A lawyer could easily make a case and sue the dealer and the finance company. Because it is illegal to raise the price just because the customer has bad credit,isn't it? Especially if the prices are posted. I am very concerned with this. It seems to me the only way around this is not to post prices. Is there anyone out there that has encounter this problem?
I might have to do this. Which brings me to the other part of the equation. Extended warranty and GAP you know you have to make it part of the deal. Because if something happens to the car and it stops running so does the paymnet. But the finance company save their butts by stating it is highly recommended but not obligated. Youcan not state that the bank makes this a stipulation because they will tell you that the customer has been warn that this is an option.
The funny thing is the finance company determines what you can sell the warranty for.So they are stating what your profit will be on this. Isn't that starnge for a company that is stating that they have nothing to do with this and telling the customer it is optional!
I feel that after considering this situation it is time to decide if I am a "credit dealer" providing loans to customers that need reliable transportation and advertise that this is what we do. Chances are that in today's financial market I feel that 4 out 5 customers need credit help! Therefore, pricing is really is not important on the lot level.
But how do you advertise on the internet without pricing cars?
I am a franchised dealer that deals with both ends of the credit spectrum. We price all of the higher end models and those that fall into the program car categories we leave unpriced. If we have someone that asks about the price we ask them prequalifing credit questions. If they have credit problems we tell them we need to make sure they qualify because if they do not qualify for that vehicle then what's the price matter. Also for the service contracts I agree partly with Thomas. It sounds like you need to drop your current provider and find a better one. We currently use Zurich at my dealership.
One of my clients advertises online without prices.
In some cases this may lower visitor trust but we compensate with tons of video testimonials from previous customers.
The best thing to do is test everything. When you keep track of your metrics you make decisions based on numbers instead of guessing and opinion.
Put prices on your website for a week, force a ton of traffic there via Pay-per-click, and count the leads.
Take the prices off your website for a week, force a ton of traffic there via Pay-per-click, and count the leads again.
If you really take this strategy to another level, count the sales per lead type and you may find higher quality leads come from different forms of advertising.
Then you let the number dictate what you do...as long as you are legal, of course.
@Dan Creamer - Yes speak to your attorney about the Discounts for Cash. I certainly hope it is fine...people sell houses like this all the time.
Charlie if you focus on your niche it is easier to make this decision. It sounds like you believe "no prices" for subprime and "prices" for good credit or cash.
If you focus on subprime and test it both ways you come up with the answer. You can add something in your advertising that welcomes cash buyers and good credit as well..."Cash Buyer Discounts", etc. This way you cater to the subprime (your more profitable target market) yet you still attract the attention of others.
As for some of the other questions, seek an attorney...I am not one and do not dispense legal advice.
Ask an attorney if "Discounts For Cash" on the windshield is a legal approach. I am pretty sure the law is that both finance and cash buyers have to start negotiating from the same price if one is posted. The chances that a sub-prime customer is going to sue are slim to none but it could happen. I don't think I would stay up nights worrying about though.