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PranK

What do you think of new car fixed prices?

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Honda and Mercedes keen to use a fixed price model to remove dealer negotiations. Interesting points in the article about dealers no longer needing to carry so much stock but I'm not sure it's going to be good for the dealers in the long run.

https://www.caradvice.com.au/903067/canberra-debates-honda-and-mercedes-plan-to-fix-new-car-prices/

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I think it is weird we have assumptions about some sales being fixed price (eg bottle of milk) and others requiring a negotiation (eg a car or a home loan). You can't bargain with web sites, fixed prices (which the seller succeeds or goes out of business with) are the future.

Definitely doesn't need government to set specific rules for selling cars. The industry is on borrowed time anyway, we will all just rent auto driving cars for a trip in no more than 20 years so a car dealership is not a good long term investment.

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Yeah I agree. I can't really understand why the Gov feels it needs to get involved. Why do there need to be rules about whether you can negotiate on a price or not?

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4 minutes ago, PranK said:

I can't really understand why the Gov feels it needs to get involved.

Because it can. the Australian motorist has been subjected to Federal Gov't incompetence and interference since the first number plate was bolted on. Remember the "Button Plan" it f**ked the Australian motor Industry we just didn't know it at the time, The bullet was fired in 1983 and killed the beast 35 years later. But the plan itself was thwarted by us, the great Aussie Motorist refused to play the game. original models outsold their badge-engineered counterparts; for example, the Toyota Corolla and Camry outsold the Holden Nova and Apollo seven to one. The market always has the final say, If the consumer doesn't like the idea, Honda and Mercedes will drop it like a hot rock. But their competitors may beat us to it.

Currently Volkswagen loses US490 per vehicle it sells, Mercedes loses US700 per vehicle sold, BMW loses US1300 per vehicle it sells, Toyota MAKES US628 per vehicle sold,  Porsche MAKES US11000 per vehicle sold GO PORSCHE!

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3 hours ago, Duncan said:

I think it is weird we have assumptions about some sales being fixed price (eg bottle of milk) and others requiring a negotiation (eg a car or a home loan). You can't bargain with web sites, fixed prices (which the seller succeeds or goes out of business with) are the future.

Definitely doesn't need government to set specific rules for selling cars. The industry is on borrowed time anyway, we will all just rent auto driving cars for a trip in no more than 20 years so a car dealership is not a good long term investment.

But buying a bottle of milk @ $2.00 vs buying a car @ $35,000 is quite different. Seems fine to me if you want to haggle with a large cost, but pay fixed for small goods.

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As long as there is pleb pricing, fleet pricing, auto club member pricing, pricing for leasing companies, etc etc, there will be ways to work around any "fixed" pricing that might be mandated.

As long as it is possible to buy a dealer demo, even if it has only done 350m off the back of the truck, through the forecourt and into the delivery centre, for a different price, because it is no longer strictly "new", there will be ways to beat the system.

Etc.

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On 11/24/2020 at 10:57 AM, Rusty Nuts said:

 Porsche MAKES US11000 per vehicle sold GO PORSCHE!

That's because anything with a GT badge is bought almost completely by speculators, who have sucked enough dealer caulk to be favoured on the delivery lists. SO many of their cars in europe get sold multiple times with delivery kms on them. Therefore, Porsche doesn't make the same money on parts and servicing as comparison to.... MB's AMG division or BMW's M, for example.

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I use to own a Tesla, there was no negotiation at all, the price is the price, its all done online. I was OK with this as its the same for everyone.

However when we went to buy the wifes new car and my ute earlier this year, all gloves were off as I didn't want to be the chump overpaying...  I preferred the Tesla model personally. 

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Also if Merc and Honda go to fixed price, i assume they would need to lower their prices so people dont go elsewhere to negotiate a new deal, or they will run a lot of special deals to get people to come to them rather than negotiating a cheaper price at BMW or Mazda. 

Orrrr they may price their cars competitively, forcing others to also fix their prices at a competitive level.

Orr they form a cartel and rip all of us off (probably this option right?)

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4 minutes ago, Tobz said:

Also if Merc and Honda go to fixed price, i assume they would need to lower their prices so people dont go elsewhere to negotiate a new deal, or they will run a lot of special deals to get people to come to them rather than negotiating a cheaper price at BMW or Mazda. 

Orrrr they may price their cars competitively, forcing others to also fix their prices at a competitive level.

Orr they form a cartel and rip all of us off (probably this option right?)

Honda are deliberately targeting selling a lot less cars under the agency model.  They're predicting selling almost half as many cars under the new format.  I'm really not sure where they're going with their plan of attack.  They will make MORE money out of each car as they're taking the middle man out in effect, but overall they will make less money as they will sell a lot less parts down the line having half as many customers needing their cars serviced.

They have a MASSIVE shitfight on their hands though before anything goes ahead as first they will get their arses sued off by all of the dealers that have had their dealer agreements torn up which is in breach of those contracts.  Those dealers (11 in Victoria alone) will be suing for lost revenue until the expiration of their contracts (in some cases 2 or 3 years of earnings)

Added to that what they're offering the dealer network as a delivery fee has been seen as being far from acceptable so the remaining dealers that haven't got the arse and will be the dealers performing the agency model are fighting the whole thing going ahead at all unless Honda come to the party.

I'd be surprised if Honda outlasts all of this.  Yes I know that's a big call but they have a LOT going on and none of it is good....

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You reminded me that earlier this year Honda was considering leaving the aussie market, im guessing if this doesnt work, they are likely to withdraw. May be they only stayed to trial this as a last ditch attempt to be profitable in aus?

Update: Honda rules out leaving Australia, but may reduce its dealer network or appoint an independent distributor | CarAdvice

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@Tobz allegedly they lose money on practically every car they sell in Australia.  You can only do that for so long.  If that's the case then they need to have a good hard look at their manufacturing and supply chain expenses as every other brand seem to be able to pull it off successfully.  On top of that Hondas certainly aren't cutting edge, latest technology so I really can't understand how that can be.  Their expenditure on innovation in the cars has been minimal.  No all new models to speak of, minimal upgrades to existing models (which for the most part are already waaaaay behind competitors vehicles in terms of technology).  As I said, I see some writing on the wall and what is written aint good......

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