Insider Secret: Dealerships Pay The Same Price For New Vehicles

May 1st, 2016 by

Ford Window Sticker

Have you ever wondered why a company like Walmart can price it’s items so low?

They may sell the same exact item as the store down the street but at a price that’s far lower.

Oftentimes, it’s because of their vast size that Walmart is able to get bigger discounts on the products it resells to customers.

It might surprise you, however, that the automotive industry doesn’t work the same way.

Many consumers think that the large, city automotive dealers can offer bigger discounts than the hometown dealership because of their size. They’d be justified in believing that, too. Considering the Walmart vs. hometown grocery store scenario, it makes sense.

Furthermore, it’s not uncommon for large auto dealerships to advertise huge discounts (more on this in a bit), making it appear as though they get the same vehicle for less than the smaller dealership would.

The truth is that a dealership that sells 75 cars per month in a town of 3,500 people pays the same price for a vehicle from the manufacturer as a dealership that sells 750 cars per month in a city of 35,000 people. Manufacturers do this to ensure that the industry stays competitive, but in a fair manner.

It also ensures that consumers get transparency during their car-buying journey. Sadly, old and outdated sales tactics by dishonest dealerships have tainted this fairness for the consumer.

The truth is that a dealership that sells 75 cars per month in a town of 3,500 people pays the same price for a vehicle from the manufacturer as a dealership that sells 750 cars per month in a city of 35,000 people.

So, how do bigger dealerships show bigger discounts? The answer is in the question itself: “show”. Dishonest dealers might “show” one thing in an advertisement, but the actual price could vary significantly once you actually purchase.

Just like one Ford dealership in a small town will pay the same amount for a new Taurus as another dealer in a large city, the rebates are fixed as well. In fact, rebates aren’t based off of the dealer you purchase from, they’re calculated by where you live.

Given that dealers pay the same amount for a vehicle, and given that your rebates won’t be any different no matter where you purchase, why do some dealers advertise cheaper than others?

Here’s the sad-but-true answer to that question: too many dealership play games. While no car buyer should have to suffer through getting games played on them, the sad truth is that it does happen.

The fine print bites consumers every time. If it’s too good to be true, it probably is. For example, many dealers will run advertisements that show thousands below MSRP. It sounds good on paper, but what they may not tell you is that the price is dependent upon a minimum trade allowance of $5,000 dollars.

That means if you don’t have a trade-in, or if they don’t deem your trade as being worth $5k, you won’t actually get the advertised price.

Kind of sneaky, don’t you think?

Another tactic is to use rebates that you won’t actually qualify for. It’s true that there’s a rebate for almost anything you can imagine. If you belong to a certain organization, you might get an extra $500 rebate. If you own a certain vehicle, you might get a bonus rebate.

Remember, however, that rebates are the same for you no matter which dealer you buy from. Unfortunately, many dealerships price their vehicles in a way that reflects every rebate possible. Hardly anyone qualifies for the full amount.

They’re lucky if they qualify for half of the rebates!

Every day however, consumers blindly walk into dealerships, unfairly believing that they’re getting a great deal. Once they’re fired-up about the vehicle they’re buying, and just as they’re getting ready to sign on the dotted line and drive their new vehicle away, the dishonest dealership blindsides them with the actual price to purchase.

It’s a terrible feeling to feel like you’ve been tricked. Many times, however, the dealership has built so much anticipation around the vehicle that the customer purchases it, anyway!

The worst part?

They might have just paid more than they would have with the honest dealership.

Not only did they pay more than they were told they would, but they were also hit with fees in the business office while signing papers.

So, how do you spot an honest dealership? Believe it or not, they do exist. First of all, you should NEVER pay fees to buy a vehicle. You’re already paying for the vehicle, why would you pay a dealership to be their customer?

Be careful, as dishonest dealers will disguise these fees as “administration fees”, “DOC fees”, “title fees”, and much more.

Dealerships like Pettijohn Auto don’t charge fees, and are quick to tell their customers that.

What does this all mean for you?

Since most other dealerships charge their customers anywhere from $99-$599 for these so-called fees, it means that you’re instantly saving that much by going with a non-fee dealer such as Pettijohn Auto.

Honest dealers also advertise without a lot of small print, and their prices won’t seem “too good to be true”.

Some dealers charge up to $599 just to do paperwork for your vehicle purchase. Pettijohn Auto does not.

It’s a total shame that people all across the country are paying more than they should for a vehicle, when they’re told that they’ll actually pay less!

At Pettijohn Auto, we believe in transparency.

Being in a small town since 1924, we know that our honesty is key to our continued success.

That’s why we charge zero fees.

That’s why we advertise prices we can actually give to our customers.

Next time you’re looking for a new car or truck keep in mind that every dealer pays the same for new vehicles from the manufacturers next time you shop, and the rebates you qualify for will often be the exact same regardless of where you actually buy from.

Stop paying fees just to be a customer and when you’re ready to start shopping, we’d be glad to help you find the right vehicle for you.