My JB fiasco has both taught me about how the factory process works, but shed some light on a new problem Dodge has with their ordering process.
With Dodge's latest foray into the six-digit car prices, they've seemingly stumbled into a problem. Most of their dealerships work in the old school way. They get cars in inventory (or take orders) and sell in-person with buyers on the lot. They use these in-person interactions to sell their ADMs, justify their prices and so on. The buyer seemingly can agree or decline the offer. In years past, their clientele were mostly average Joes buying average Joe cars. People who make +/- the 50-60k range and purchasing sub $50k cars. If a car deal isn't perfect, people would simply opt for a different car or walk to a different dealership. Everything is done mostly at the local level.
Now, with high priced cars and trucks exceeding $100,000, they're opening up to a different class and type of buyer. While local buyers still prefer to buy locally, individuals earning over $100,000 per year are far more mobile. If dealership 1 asks for a $25k ADM, they can just as well go 5 states over and order from dealership 2 that has no ADM. When the car arrives, they fly to the location and drive it home, or simply pay to have it delivered cross country. Many people in the 40-50k salary range might not have 2-3 grand on hand after buying a car to secure delivery. Hence why they're stuck locally. The buyers of expensive cars don't follow this same process.
Dealers that trade in expensive cars shouldn't conduct business like they're the only game in town. At the higher price points, a dealership in Maine is competing with dealerships in Virginia, Texas, Ohio since their buyers can just as well show up at either one to take delivery. The old school concept of in-person pressure selling just doesn't work.
I ran into this a few times this week. Talking with these dealerships gave the impression that they thought they were able to justify their high ADMs because they were the only game in town. One even told me, "Well, we have an allocation. We know what we have, It's not like you can just go anywhere and get one." I reminded him that I was in fact calling from out of state and that's exactly what I was doing as I was comparison shopping TRXs. The simple notion that I might call a dealership in Las Vegas was seemingly foreign to them.
It's obvious to me that many of the dealerships I've had contact with in recent months don't "get it." They're attracting more upwardly mobile clients with their higher priced cars. Their average Joes can't afford their product anymore, and they're unwilling to change how they do business to secure the new type of client for those vehicles. Those that do get it tend to do lots of out-of-state business as 100k car buyers are perfectly able to go to where they can get the best deal and aren't limited by a tight budget. These dealerships offer lower or no ADMs, have systems in place to efficiently deliver vehicles remotely, and are savvy to a more dynamic car buying experience (remote docusign, video conferencing, virtual test drives, etc). One dealership I dealt with in Alabama had a decent rate on a car, but they insisted that all their paperwork process be done in person as, "we prefer a personal touch." Even for a good deal, I'm personally not going to travel 8 hours to spend 30 minutes signing contracts. I'd rather pay 2 grand more and e-sign everything in 10 minutes. The TRX in question, btw, had been on their lot for 7 months. The dealership is in a small, rural NE Alabama area where there just isn't much wealth locally. Good luck to them on selling that $108k truck in one of the poorest counties in the state.
One dealer I know on a more personal level has expressed concern over Dodge/RAM's new higher prices. They're pricing out his normal clientele. Where he could afford to move some 80k cars, he doesn't have the local traffic to move a bunch of 100k cars and trucks. Those vehicles collect dust in the showroom while they try to entice out of area buyers via internet listings. Although they get plenty of inquiries, few fail to materialize because, like the previous dealership, their GM hasn't invested in modernizing their business systems and they can't deliver car deals over the internet very efficiently. This turns off the buyers and they go elsewhere.
In summary, Dodge has a problem, and it is the fact that their high priced cars and trucks are forcing dealerships into territory they're not familiar with. Dodge, much like Ford, largely do business at the local level as they've never really been a luxury brand. They do business at a more simple level for simple people. The quickest way to lose a car deal on a $100,000 car is to treat someone who makes $200,000/yr like they make $50k per year. This isn't a classism thing, but one where the high dollar buyer usually has high dollar problems. That of course is high demand for their time, they desire efficiency, and the simple fact that most of these buyers have purchased multiple expensive cars before and they expect a certain level of service for the price.
See, the result of this problem is that many dealerships are doing vastly reduced business as a result. The ones who get it are doing fantastic business. Thus, it's entirely plausible that many of these slow to adapt dealerships are in danger of getting left behind as more and more large dealerships combine to create conglomerates; big box stores if you will. For those who enjoy their local dealerships and the relationships they make, they might find that in moving to a more luxury oriented price point, they're going to make themselves obsolete with their business systems that cater to trading budget vehicles to budget buyers. When they fail to adapt, they get priced out of the market and/or fail to secure buyers. They might end up becoming the next AutoNation dealership... which is basically the Wal Mart of car shopping.
With Dodge's latest foray into the six-digit car prices, they've seemingly stumbled into a problem. Most of their dealerships work in the old school way. They get cars in inventory (or take orders) and sell in-person with buyers on the lot. They use these in-person interactions to sell their ADMs, justify their prices and so on. The buyer seemingly can agree or decline the offer. In years past, their clientele were mostly average Joes buying average Joe cars. People who make +/- the 50-60k range and purchasing sub $50k cars. If a car deal isn't perfect, people would simply opt for a different car or walk to a different dealership. Everything is done mostly at the local level.
Now, with high priced cars and trucks exceeding $100,000, they're opening up to a different class and type of buyer. While local buyers still prefer to buy locally, individuals earning over $100,000 per year are far more mobile. If dealership 1 asks for a $25k ADM, they can just as well go 5 states over and order from dealership 2 that has no ADM. When the car arrives, they fly to the location and drive it home, or simply pay to have it delivered cross country. Many people in the 40-50k salary range might not have 2-3 grand on hand after buying a car to secure delivery. Hence why they're stuck locally. The buyers of expensive cars don't follow this same process.
Dealers that trade in expensive cars shouldn't conduct business like they're the only game in town. At the higher price points, a dealership in Maine is competing with dealerships in Virginia, Texas, Ohio since their buyers can just as well show up at either one to take delivery. The old school concept of in-person pressure selling just doesn't work.
I ran into this a few times this week. Talking with these dealerships gave the impression that they thought they were able to justify their high ADMs because they were the only game in town. One even told me, "Well, we have an allocation. We know what we have, It's not like you can just go anywhere and get one." I reminded him that I was in fact calling from out of state and that's exactly what I was doing as I was comparison shopping TRXs. The simple notion that I might call a dealership in Las Vegas was seemingly foreign to them.
It's obvious to me that many of the dealerships I've had contact with in recent months don't "get it." They're attracting more upwardly mobile clients with their higher priced cars. Their average Joes can't afford their product anymore, and they're unwilling to change how they do business to secure the new type of client for those vehicles. Those that do get it tend to do lots of out-of-state business as 100k car buyers are perfectly able to go to where they can get the best deal and aren't limited by a tight budget. These dealerships offer lower or no ADMs, have systems in place to efficiently deliver vehicles remotely, and are savvy to a more dynamic car buying experience (remote docusign, video conferencing, virtual test drives, etc). One dealership I dealt with in Alabama had a decent rate on a car, but they insisted that all their paperwork process be done in person as, "we prefer a personal touch." Even for a good deal, I'm personally not going to travel 8 hours to spend 30 minutes signing contracts. I'd rather pay 2 grand more and e-sign everything in 10 minutes. The TRX in question, btw, had been on their lot for 7 months. The dealership is in a small, rural NE Alabama area where there just isn't much wealth locally. Good luck to them on selling that $108k truck in one of the poorest counties in the state.
One dealer I know on a more personal level has expressed concern over Dodge/RAM's new higher prices. They're pricing out his normal clientele. Where he could afford to move some 80k cars, he doesn't have the local traffic to move a bunch of 100k cars and trucks. Those vehicles collect dust in the showroom while they try to entice out of area buyers via internet listings. Although they get plenty of inquiries, few fail to materialize because, like the previous dealership, their GM hasn't invested in modernizing their business systems and they can't deliver car deals over the internet very efficiently. This turns off the buyers and they go elsewhere.
In summary, Dodge has a problem, and it is the fact that their high priced cars and trucks are forcing dealerships into territory they're not familiar with. Dodge, much like Ford, largely do business at the local level as they've never really been a luxury brand. They do business at a more simple level for simple people. The quickest way to lose a car deal on a $100,000 car is to treat someone who makes $200,000/yr like they make $50k per year. This isn't a classism thing, but one where the high dollar buyer usually has high dollar problems. That of course is high demand for their time, they desire efficiency, and the simple fact that most of these buyers have purchased multiple expensive cars before and they expect a certain level of service for the price.
See, the result of this problem is that many dealerships are doing vastly reduced business as a result. The ones who get it are doing fantastic business. Thus, it's entirely plausible that many of these slow to adapt dealerships are in danger of getting left behind as more and more large dealerships combine to create conglomerates; big box stores if you will. For those who enjoy their local dealerships and the relationships they make, they might find that in moving to a more luxury oriented price point, they're going to make themselves obsolete with their business systems that cater to trading budget vehicles to budget buyers. When they fail to adapt, they get priced out of the market and/or fail to secure buyers. They might end up becoming the next AutoNation dealership... which is basically the Wal Mart of car shopping.
