Employee Car Pricing Will Soon Be a Scam

[David Sklansky]

Car manufacturers, I believe, sold a ton of cars by charging the no haggle price they offer to their employees. But I believe they made little profit on these deals.

Although they will have to find a way to make it un obvious, my prediction is that they will start building in much more profit on the deals employees get. After all, that is a very minor perk to them, doubly true because many don't even take advantage of it. And with the number of customers far greater than the number of employees, they can easily find other, sort of hidden ways, to reimburse the employees, while still using the same advertising ploy. Watch.

[DaveKForty7]

nh

[jakethebake]

Holy crap!!! Am I in the right forum?

Anyway, the carmakers, especially the U.S. ones, are in a deep hole right now. A former CFO of one told me that essentially their logn-term strategy is to manage to hang around long enough for the other to go under. This is a lousy business.

[MelK]

You mean they expect a profit over the long term?

The bastards.

The old cash back offers were completely on the up and up too. /images/graemlins/smirk.gif

[MelK]

[ QUOTE ]
Anyway, the carmakers, especially the U.S. ones, are in a deep hole right now.

[/ QUOTE ]

In 20 years, 40% of cars bought in the US will be manufactured by Chinese companies.

[jakethebake]

[ QUOTE ]
[ QUOTE ]
Anyway, the carmakers, especially the U.S. ones, are in a deep hole right now.

[/ QUOTE ]

In 20 years, 40% of cars bought in the US will be manufactured by Chinese companies.

[/ QUOTE ]

I don't know how you came up with the 40% number. Eventually they'll be a significant, but not 40% in 20 years.

[DougShrapnel]

The profits may have been built into the financing. It is possible the car manufacturers made more money from the Employee Discount sales then they did on the 0% financing offer sales.

[Pirc Defense]

Your misktake is that you don't understand that it's already a scam.

[jakethebake]

[ QUOTE ]
Your misktake is that you don't understand that it's already a scam.

[/ QUOTE ]

Not to mention, the additional perks alluded to is already what is killing these companies.

[Jimbo]

[ QUOTE ]
Your misktake is that you don't understand that it's already a scam.

[/ QUOTE ]

Perhaps you have a very very loose definition of scam.

Scam definition (http://dictionary.reference.com/search?q=scam)

I watched most of the ads carefully and not one said that employee pricing either had no profit or was a lower price than you might be able to negotiate on your own.

No scam

[SCfuji]

it is the fault of the unions.

[MelK]

[ QUOTE ]
it is the fault of the unions.

[/ QUOTE ]

How dare those uniions expect health coverage for their members. What a scam. Once the jobs move to the Chinese companies, you won't have to worry about the unions. /images/graemlins/smirk.gif

[pearljam]

In 20 years, cars as we know them will not exist.

[/ QUOTE ]

FYP

[Jimbo]

Actually what will occur is that another marketing strategy will be implemented. Employee pricing ads will end quite soon and another ad campaign will begin, much as it has happened for many decades.

[jakethebake]

What you don't really account for is that the auto companies don't expect to make money on these cars. Their cost structure is so screwed up that they just have to push as many cars out the door as possible, even if it's at a loss.

[SCfuji]

unions were a great idea in the early 1900s but now i think the union demands are hurting american companies. i have no proof, just an opinion.

i am not against benefits and i think taking care of employees is good, but if it is to the point where the company will not be able to have any employees at all it is stupid. they will defeat themselves.

[Pirc Defense]

[ QUOTE ]
Perhaps you have a very very loose definition of scam.

I watched most of the ads carefully and not one said that employee pricing either had no profit or was a lower price than you might be able to negotiate on your own.

No scam

[/ QUOTE ]

I know what you are saying, and I think we're both right.

I didn't ever see any of this advertising, but I'm sure these ads didn't contain any out and out, blatant lies. That gets them into trouble with the Feds. What the ad executives banked on, however, was that the average car buyer was either not intelligent enough to tell, or to apathetic to find out on their own, whether these employee pricing "deals", really were.

These employee pricing "deals" are aimed squarely on the most uninformed of consumers and, as such, could be classified as a scam, though not in the illegal sense of the word.

I use scam in the sense that you would call an overpriced product a scam, such as a $3 candy bar from a vending machine. It's the only machine for miles around, so you mutter "what a scam" as you slide in three bucks. You could substitute the word "racket" for "scam" in my original post and the intent and meaning would have been the same.

[Toro]

[ QUOTE ]
unions were a great idea in the early 1900s but now i think the union demands are hurting american companies. i have no proof, just an opinion.

i am not against benefits and i think taking care of employees is good, but if it is to the point where the company will not be able to have any employees at all it is stupid. they will defeat themselves.

[/ QUOTE ]

I'm not a union guy so this post is not a shill for unions but I don't think they are to blame. The reason the US auto companies are in trouble is that they make lousy cars compared to Japan.

And I don't believe the poor quality is due to the workers. It's got to be the engineering. My Camry with Japanese engineering was actually manufactured in Nashville.

If our engineers can't design a quality car they should just copy the Japanese.

[SomethingClever]

[ QUOTE ]
The reason the US auto companies are in trouble is that they make lousy cars compared to Japan.

[/ QUOTE ]

Ding!

[PTjvs]

[ QUOTE ]
[ QUOTE ]
The reason the US auto companies are in trouble is that they make lousy cars compared to Japan.

[/ QUOTE ]

Ding!

[/ QUOTE ]

In the past, I worked for an auction company that essentially liquidated the assets of two Delphi plants that were being shut down, and I can tell you from this experience that yes, it really is, at least to a very large extent , the fault of the UAW. They would simply prefer the entire collapse of the auto industry , one plant at a time, to seriously negotiating. UAW workers get ridiculous starting salaries (not that anyone is every hired on as a new hire these days), enjoy incredible wages for what is in many cases unskilled labor, and amazing benefits.

Auto workers make far more money for sitting beside a centerless grinder reading Hustler than teachers do for performing one of the mos timportant jobs in the country.

Gogo UAW!

[Toro]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
The reason the US auto companies are in trouble is that they make lousy cars compared to Japan.

[/ QUOTE ]

Ding!

[/ QUOTE ]

In the past, I worked for an auction company that essentially liquidated the assets of two Delphi plants that were being shut down, and I can tell you from this experience that yes, it really is, at least to a very large extent , the fault of the UAW. They would simply prefer the entire collapse of the auto industry , one plant at a time, to seriously negotiating. UAW workers get ridiculous starting salaries (not that anyone is every hired on as a new hire these days), enjoy incredible wages for what is in many cases unskilled labor, and amazing benefits.

Auto workers make far more money for sitting beside a centerless grinder reading Hustler than teachers do for performing one of the mos timportant jobs in the country.

Gogo UAW!

[/ QUOTE ]

I don't dispute any of that but if the US cars were of the same or higher quality than the Japanese, the US companies would be profitable despite the high salaries and excellent benefits.

They are basically asking their workers to take less money and benefits because the product sucks, due to inferior engineering/design.

[jakethebake]

[ QUOTE ]
I don't dispute any of that but if the US cars were of the same or higher quality than the Japanese, the US companies would be profitable despite the high salaries and excellent benefits.

[/ QUOTE ]

No they wouldn't. Their legacy costs are too high.

[scotty34]

[ QUOTE ]
I use scam in the sense that you would call an overpriced product a scam, such as a $3 candy bar from a vending machine. It's the only machine for miles around, so you mutter "what a scam" as you slide in three bucks.

[/ QUOTE ]

This is not a scam, this is pricing according supply and demand, which is how price is determined for essentially every other product.

[stabn]

[ QUOTE ]
Car manufacturers, I believe, sold a ton of cars by charging the no haggle price they offer to their employees. But I believe they made little profit on these deals.

Although they will have to find a way to make it un obvious, my prediction is that they will start building in much more profit on the deals employees get. After all, that is a very minor perk to them, doubly true because many don't even take advantage of it. And with the number of customers far greater than the number of employees, they can easily find other, sort of hidden ways, to reimburse the employees, while still using the same advertising ploy. Watch.

[/ QUOTE ]

I'm sure they already did this.

[Eurotrash]

you're out of your element, Sklansky.

[tonypaladino]

Manufacturing cars is a money losing business, banking is where they make their moneyl. Ford, for example, keeps losing money, while Ford Motor Credit Company is making oodles financing purchases.

[Jimbo]

[ QUOTE ]
use scam in the sense that you would call an overpriced product a scam,......

[/ QUOTE ]

I understand your perspective in theory but in reality there is no such thing as an overpriced product if indeed somoene (anyone) chooses to purchase said product. People purchase a product when it's perceived value either meets or exceeds it's price.

[Stuey]

[ QUOTE ]
you're out of your element, Sklansky.

[/ QUOTE ]

If you got hooked up with the O girl (http://forumserver.twoplustwo.com/showflat.php?Cat=&Board=exchange&Number=3335817&Fo rum=,,,,,,,All_Forums,,,,,,,&Words=&Searchpage=6&L imit=25&Main=3335817&Search=true&where=&Name=5&dat erange=&newerval=&newertype=&olderval=&oldertype=& bodyprev=#Post3335817) the first time you posted in oot would you post in oot if you wanted to buy a car on the cheap?

The man be smart. Someone hook him up already.

[KidPokerX]

great idea, but what's the catch?

[Stuey]

[ QUOTE ]
great idea, but what's the catch?

[/ QUOTE ]

He can't say I told you so unless...

[slamdunkpro]

This promotion was nothing like what auto employees really get. My cousin worked for Chrysler. He got a new car every two years for about half the sticker price. In addition, Chrysler financed it at almost 0% and he had no freight or dealer prep charges. The only agreement was that he couldn’t sell it for 2 years.

But the whole car-pricing thing is the newest twist on an old cycle. Back in the 80’s when car sales were slow, the average time between new car purchases was around 6 years. The manufactures sought to decrease this time frame with financing incentives. Remember the 4% game? They did this so people would push up their timetable for a new car purchase. It worked. Then next year they had the same problem, only worse as the purchase interval has shrunk slightly. So they had to offer a greater incentive – like 2%. This cycle has repeated itself over and over. In addition, automakers have increased the quality and lifespan of cars due to increased competition. It’s a vicious cycle, they need you to buy a car sooner to generate cash flow yet the last car you bought will last 10 + years. Plus the buying public has been conditioned to say “what’s the better deal this time?”

[KidPokerX]

I still highly doubt this.

[Slow Play Ray]

[ QUOTE ]
Your misktake is that you don't understand that it's already a scam.

[/ QUOTE ]

*ding*

I knew someone would beat me to this.

[Derek in NYC]

With certain exceptions such as the Ford Mustang and the Chrysler 300 series, the big-3 automakers make no profits at all on the cars they sell (SUVs/trucks excluded). The reason they discount cars to employees, fleets, rental companies (and now to the general public) is because their union contracts obligate them to pay out a relatively fixed amount. The OEMs cannot reduce labor costs by limiting production. So inventory always gets built. Inventory = expense. Thus, the OEMs discount to avoid inventory backlogs, even though it is well proven that such discounting cannibalizes the future (2006) model year sales.

[Jimbo]

[ QUOTE ]
This promotion was nothing like what auto employees really get. My cousin worked for Chrysler. He got a new car every two years for about half the sticker price. In addition, Chrysler financed it at almost 0% and he had no freight or dealer prep charges. The only agreement was that he couldn’t sell it for 2 years.


[/ QUOTE ]

Not unless he was a senior Vp he didn't. If he did have this agreement he most certainly was in upper management and this perk was included in his employment contract.