Buyer's Group

jmfox · Mar 28, 2007

It is hard to answer the profit question without knowing more facts. When I bought my last truck I first went a family friend and obtained some prices. Later on in the week I stopped by another dealer who gave me a price far less for the same vehicle. When I called my friend to check it out, he explained the other dealer was selling the new vehicle for less than he paid Ford. He further explained how floor plan financing worked and about incentives and auto manufacturers rewards to large volume dealers. His advice to me was to buy it from the other dealer, and I did. (Today he works for the other dealer.) Since then I generally look for the most successful dealer I can find. Not always, but sometimes success is good evidence of happy customers and an efficient selling machine.

jmf

mrbobcat · Mar 28, 2007

Valid point on new cars and trucks, but to my knowledge no dealer gets better terms or price on a machine.Some of the larger dealers pick up there machines to save some freight costs. For the sake of argument , they all are the same.
Remember this is a hypothetical situation.

jmfox · Mar 28, 2007

People are entitled to a good living. If they sell one machine a year they need a big profit and a lot of warranty work. If they sell 10,000 units I expect they can make less on each machine and make a better living. As a buyer, I like to reward good business, but there is only so much I can do regarding their happiness. To force a buyer to do business with a local Bobcat dealer or buy a John Deere just doesn't make sense to me.

jmf

Kendall69 · Mar 28, 2007

I've heard this warranty, service, etc. etc. etc. for years from a variety of dealers, auto, tractor, general stuff and it a bunch of hooie.

I gave my local guys a chance to earn my business,and if they decide to be many dollars more than a dealer across the United States, guess what, I buy by price, not service. I have never ever had to take a product back to the dealer for service in 40 years of buying vehicles, one every two years.

My tractor came from South Carolina ( I'm in Southern Ca. ) The dealer gave me the same "line" about service etc., but kept his price high - a week later the equipment was delivered from South Carolina. The price for delivery is a wash by not paying the tax. So what I saved was real dollars.

I always give the locals a chance, just this week I priced a irrigation controller, local guy said $325.00, and none in stock have to be ordered. E-bay had one $275.00 free shipping, again real dollars in my pocket. That's like buying the product and getting a free dinner steak out, a no brainer.

I'm also dealing right now with two dealers in Ca. and they are both 8k more than a dealer in TN. Should I pay the extra 8K, so the dealer "might" have to work on my tractor in warranty, or give me the privilege of asking a question because I'm part of his club, that I paid 8k, to get into.

Here's what I don't get. If a dealer in ( no name Iowa) is cranking out units at x dollars, AND MAKING MONEY obviously, why don't more dealers copy that model. Personally I would rather sell 100 items and make $1000 ea., than 2 units and make 8k ea. but then that's me, a numbers guy.
I know lately what I am seeing on car lots, if you ask for "internet sales", you get a much better price than just walking in and talking to sales.

The days of " we give great service" yadda, yadda, yadda, are long gone.

OK, lets do this, and I will sign a piece of paper, you sell me at rock bottom price, and I will never ever ask you a question, or seek service from you with regards to the sale, how about that? I don't want to pay for something I am not going to use any way. Besides more often that not in reading service horror stories, the manufacturer or dealership will beat you up on service any way.

theoshin · Mar 28, 2007

not to beat a dead horse, but does anyone know what a tc costs the dealership? i would think a honest profit would be somewhere around 3-4 thousand on a 40g machine

radman1 · Mar 28, 2007

Ok, I will throw in my 2 cents. My guess is the dealer's price is probably about 20-25% off of list. Dealer has set up costs (although this number is open to debate) and maybe shipping but shipping may depend on volume. Dealer will give 5-10% off price to customer before squealing. How close am I?

I bought an atv once. Dealer said $200 for set up on top of the price which was near retail. I also knew the dealer price of the atv. I knew for fact that the manufacture allowed them $45 for set up. The rest is markup. Called dealer in next town. Told him I was serious and would buy tomorrow. Shot him a price, he said ok and next day I bought it.

theoshin · Mar 28, 2007

i think i got around 8-9% off list. interested to know what dealer cost was.

jmfox · Mar 28, 2007

20%+ sounds about right based on the difference between what my dealer quoted and what panther1400's dealer quoted.

jmf

jgl1962 · Mar 29, 2007

theoshin....gets the point of my question. I was just asking what you think a reasonable profit would be on a $40000 purchase. I didn't specify cost,list or sell..I should have. What I am trying to determine is what you think a dealer should make in dollars after all costs (frt, prep) on a machine that has an msrp of $40K regardless of what the markup from cost is. BTW I would never walk on a 8-9% deal (though more is more better

As far as the impression that people should buy their way into a club, I suppose it looks that way.

One of the issues that we struggle with and it ties in with this discussion,is that the equipment we sell (yes Bobcat) was for decades sold with afew exceptions to people who use it to make their living. That scenario is the basis for the mentality of my post before. The cost of being a member of that "club" becomes very reasonable to most of them. Average use on a machine used in constrution, landscape or rental is 4-500 hrs a year. With many particularly dairy's going way beyond that. 1000-1500 hrs or more is common.

We support our customers to the level I described. Truth is when you use stuff that hard It's going to break now and again and it only breaks when you're using it, in warranty or out, 2weeks old or 10 years.

With the Toolcat and Utility vehicles which are fairly recent additions to the line, comes something new to us,the regular folks buying for pleasure or to take care of their places. I know some of you here use your TC's to make a living, I think lots don't.

The consumer market is very different and they do not put the hours or the abuse (intended or incidental) on the equipment that people who use them for a living do. So I grant the point that there is less value to "club" membership to the casual user. Because of the lower utilization there is also less likelyhood that the profit given up on a low margin sale can be made up on the back side.And that is assuming you do buy your filters etc. from us and not off the net or elswhere.

This new group of customers should not be ignored or shunned they will be more and more important as time progresses, and we will evolve accordingly..to a point. I will never allow a dealer 2 states away to drive me down to 3%-4% margins.

panther1400 · Mar 29, 2007

"I will never allow a dealer 2 states away to drive me down to 3%-4% margins"

It sounds like what you are saying is that making $1600 (4%) on a $40,000 is not enough for you to place an order for a toolcat and some attachments?

jmfox · Mar 29, 2007

It's interesting that you can articulate what you're selling. Most dealers just start with a big number that they would love to get and with each cut love you less. I never really thought of it as a club, but it would not help as I like exclusive clubs less than being the subject of fat profit. Although I do like dealing with someone who likes what they are doing, I'm not looking for a relationship or to join a gang when I'm shopping for a machine.

jmf

jgl1962 · Mar 29, 2007

Panther.....Nope.

trlbrkr · Mar 29, 2007

I just ordered a 5600D,road package,cab,hf,control kit,mauals,extra mounting frame,rear window guard,block heater,62"bucket,90"mower,60" utility fork w/grapple,satellite radio and spray on liner..list $53,286- purchased for $46,000- I dealt with 2 dealers and both I would of been happy purchasing from..price offer's were the same but I decided on the one that gave me his home number,responded quickly to calls and e-mails, had sold more tcats and let me know what attachements were overpriced or problematic and the ones that will work for me..

jgl1962 · Mar 29, 2007

Fox..I didn't bring the club term into the discussion.

That's certainly not how I look at it.

I am not the best at expressing myself in this forum.

As I said before ( I think) this whole situation rarely happens to me and when it does, if I've done my job, I've sold the customer on myself and the dealership and they buy from me (and they come back over and over). In the rare instance that they buy out of state after all that (less than 5 times and many hundreds of machines in 12 years). I stand by my statements, we are polite and professional with everyone....my rotting fish comment might make you think otherwise

.

Maybe there's something wrong with me but every week I get calls from 100's of miles away and I don't low ball. People actually are disgusted with me if I'm higher than the local guy "geeze you're $X more than the guy down here!".
We hope to make a decent profit (not a killing) on everything we do and treat people well in the process. We don't sell on the web, we have a great group of loyal customers that grows every year and they bring us new folks every year.

I have to end my comments on this issue...I'm not making friends I'm afraid.
Customers and businesses get to choose how they operate right or wrong, everyone has an opinion.

jgl1962 · Mar 29, 2007

trlbrkr

You got a good deal, and the dealer made a few bucks. You have a salesman who will steer you clear of the crap and help you get the most from this purchase and future purchases.

Congrats to you both

Kendall69 · Mar 29, 2007

...It sounds like what you are saying is that making $1600 (4%) on a $40,000 is not enough

My point EXACTLY!

How busy or stubborn, or confused does one have to be to not want to make $1,600.00 on something that is infinite ( you can ALWAYS get another one from the manufacturer). It's not like the item your selling is the last one made or a collectors item - though some dealers believe so.

Customers are not stupid. The product comes in, you you prep the unit which you get paid for, call the customer and it's gone - less than 24hrs, on your lot. Maybe I am the stupid one, but ANY MONEY, for this transaction is always better than no money.

I guess some dealers also want to walk away from getting paid to do warranty work, oh sure the manufacturer only pays $$ dollars for the warranty work, and we all know the job is worth $$$$ dollars - yea right...

I may be ole fashion, but $1,600, is still a lot of money for me, and like my great grand pappy uses to say - $1,600.00 is a whole lot better than $0.00 dollars.

Looks like I have to open a tractor store, because if dealers are willing to walk away from $1,600.00, then someone has to be there to pick it up.

It just must not be enough to get paid for prep work, get paid for warranty work, get paid with dealer incentives, get $1,600.00 by the customer.

I gotta get back to plowin, this high finance stuff is giving me a headache...

mrbobcat · Mar 29, 2007

$1600 is alot of money until you consider:

No incentives from facotry
Your slaesman deserves a paycheck
He is driving a $40,000 truck , burning $200 of diesel a week + maint costs.
1.5% dealer particpation in the financing ( that must be the incentive hes talking about)
Floor plan costs
Do you want it dropped off with enough fuel to get it off the trailer ( thats how the dealer gets it) .For 40 grand you wont expect the tank filled up?
Bobcat does not pay for prep , you do .... so take that off the 1600.
Dont forget the techs that have to goto school twice a year ,
Insurance liablity and hazzard , even if the machine is on the lot for only 24 hrs , still cost money

If you look at all the costs involved with being a dealer ( or any busniess) , 3-4% would not even cover overhead.

It looks like you own some nice equipment , have you asked ( or even taken one for that matter) for a hat , jacket , trinket ect ect ...... do you think the "hat fairy" drops those things off in the middle of the night like santa ??? No they cost $$$

This is gonna get me in a rant , and like it was said before not making any friends.
Some people must just wake up in the morning thinking every one is out make a million and is gonna screw them and will never be happy.

jgl1962 · Mar 29, 2007

Mr. Bobcat,
I think the incentives he's talking about are hold backs like the car business where invoice isn't invoice...so margin isn't margin.

I know some ag mfr's do this to a point and some also pay the salesman a decent spiff per machine directly. Bobcat doesn't. Good post..you said in one post what i never got around to saying in 3 or 4. Now I will slip away and let you take the heat

.....I'm gonna go wait for the hat fairy now...excellent!!!

mrbobcat · Mar 29, 2007

jgl1962 said:
Mr. Bobcat,
I think the incentives he's talking about are hold backs like the car business where invoice isn't invoice...so margin isn't margin.

I know some ag mfr's do this to a point and some also pay the salesman a decent spiff per machine directly. Bobcat doesn't. Good post..you said in one post what i never got around to saying in 3 or 4. Now I will slip away and let you take the heat .....I'm gonna go wait for the hat fairy now...excellent!!!

You had very good points in your threads , there are alot of things in "Bobcatland" that people dont know , & will never know. We are not a car dealership , there are no fancy "holdbacks" or incentives that are hidden.

I have my flame suit on ... i can take the heat.

I couldnt resist the hat fairy comment ... buts its true.