5% under MSRP w/ Chapman Chevy

HawaiiEV said:

Will GM sell Silverados direct for 5% under MSRP? Do you guys think Chapman auto group is going to win over new customers with such a deal? Is it possible dealerships that take advantage of customers when times are tough are going to end up hurting their business long term? Can I go to a Tesla service center or Napa and order parts for a Tesla to do my own work?

Click to expand...

Lol I can't tell who you're asking those questions to... but IMO...

1) GM doesn't sell Silverados. The dealerships sell the cars to individual buyers. Your deposit is just a form of lead-generation that gets your data sent over to a local dealership so they can make the deal happen when the time is right. The reservation guarantees you nothing other than getting your name on some list that hopefully the dealer calls first when the order book opens. But as far as I can tell, that same dealer that has your pre-order is allowed their own discretion to open their order book to their buddies at the Country Club first and skip the people that put in a $100 deposit. As we've discussed in the other thread, GM has limited control on how sales to consumers happen.

2) Chapman does what Chapman wants to do as an independent dealership. I'm sure GM has shared their allocation methodology with the dealers... and Chapman seems to think getting pre-orders in their own allocation is in their best interest. But if Chapman gets 50 pre-orders and GM caps EV allocation at a dozen to a single dealership in the launch model year, I don't now what Chapman is going to do.

3) Yeah, there's been a lot of research that suggests that dealers maximizing their profits really harms consumer perception to the brand involved. Ford has identified that consumer attitudes toward purchasing vehicles has dramatically shifted to "order to buy" rather than "go to showroom and buy". I've sat through enough corporate meetings to know that addressing the impact to "their business in the long term" takes a back seat to padding profits today. In the auto industry, the major players get forced to innovate when their backs are against the wall. Tesla shook up the auto industry and very rapidly put the automakers behind the 8-ball to change. And for the most part they have. But for now, the dealers are not behind the 8-ball, and they still hold a lot of power and sway (much to EVTrucking's chagrin).

4) You can order fairly cheap parts from Tesla and do your own work. There are also lots of aftermarket support for various items. However, the most important aspects of Tesla's Powertrain (batteries, inverter, electric motor, etc) are nowhere near having the off-the-shelf friendliness when compared to say a Chevy Malibu Epsilon LZ4.

HawaiiEV said:

Thanks for your answers. I’ve got another question. If you have an issue with your Tesla which is clearly Teslas fault and they don’t want to take responsibility, will the Tesla service center advocate for you and fight “corporate”? If the service center screws you over will corporate fight for you to get service from the center? Just asking some questions to play devils advocate.

Click to expand...

I think your best bet is to research people's experiences on the prevailing Tesla internet forums. Because Tesla's customer base is so large now, there is no singular response regarding Tesla Service experience. Some people have stellar experiences. And others just get crapped on. Sometimes people will tell Tesla to re-align crooked doors and that particular service center says "sure why not." Then other times, someone will have a super crooked door and that the service center tells the owner that no repair can be provided because it's 'within spec'. It's frustrating to be sure, but it's probably no different than if you sample thousands of Chevy customers across thousands of different service centers.

Anecdotally, experiences are all over the place for the small sample size of Tesla owners that I'm familiar with. For example... a neighbor with a Model X was surprised with an issue with his front doors (not the Falcon Wings) and the "self presenting" feature. The front doors are supposed to open a bit and allow people an easy time to plop right in without the painful experience of actually opening the door with their full strength. But, on his particular Model X, the front passenger door just violently swung open and dinged his Jag that was parked next to it. When he went into Tesla and showed them the door just whacking whatever instead of a "self presenting" gentleness, Tesla actually fixed the issue and gave him a goodwill payment to get a new side mirror installed on his Jag. This was under his warranty period. This guy thinks Tesla is the best thing ever.

But then my other neighbor with a Model X had an issue with that sensor on the Falcon Wings that is supposed to limit how high they go. So when you're outside, they open fully. But if you're in your garage, they open kind of half-way as to not hit objects above the car. This feature worked great for months, but then one time the doors just fully opened in his garage. This busted the hell out of his garage door opener and an overhead bin above his car. His doors got scraped and his garage door opener had some plastic bit that got cracked. He's still under warranty too, so he takes his Model X in. Tesla says they can't replicate the issue and it must be user error. Told him to GTFO lolol. They wouldn't fix the car let alone pay for the damaged paint. So now he can't have his kids get in the back of his Model X in the garage because he's thinking it's going to bust the overhead parts again. This guy is not happy with Tesla. The owner with the good experience thinks the second owner just didn't have the right "interpersonal skills" to get good service.

Personally, I think Tesla is just unpredictable and like a box of chocolates... you never know what you're gonna get. But nobody is ever going to "fight" for you... there is no consumer advocacy team at Tesla. To your point, GM, Ford, and Stellantis all have consumer advocacy to help offer corporate-funded goodwill/special-consideration to help guide a dealership's response to a good outcome in certain situations.

EVTrucking said:

Before I move to PA I will wait and see what Chapman does when the EVs start shipping.

5% below MSRP begs the question of just much they make at MSRP. Must be a good bit. 5% of $70k is $3,500.00. For those getting the late Summer 2023 RST that is a $5,250.00 discount on a $105k MSRP.

We will see how things shake out in 2-3 yrs.

Click to expand...

Assuming EVs are similar to non-EVs, a Silverado RST @ $100,000 (I like round numbers) is going to make the dealer about $15,000. So yeah, giving up $5,000 to get a marginal $10,000 is cool. But I think the key for Chapman may actually getting the cachet of being a high volume EV seller, and maybe getting more future Chevy EV allocation.

But we all know EVs are not your normal car. My problem is I only worked with autos pre-COVID. In this current situation with constrained supply, parts shortages, and massive seller strength, things are all jumbly wumbly. I couldn't dream of paying MSRP (let alone over MSRP) for anything just 3 years ago lol. Assuming another recession hits AND the major automakers go back to their old sales practices, maybe we will return to how things used to work lol.

First thing to get out of the way... if you have a preconceived notion of "dealer invoice", just table that for now. I know sites like TrueCar and Edmunds purport to give you some inside scoop or some BS. Hell, a sales person may even show you a "authentic dealer invoice" for a car during a price negotiation. This "invoice" concept is total trash. TrueCar and Edmunds are just lead-gen to send prospective into a buying funnel at a dealership. And there are a ton of fake dealer invoices out there. So do me a favor and just "forget" the concept of dealer invoice when you read the following explanation.

Also, every car is going to be different; the goal isn't to know exactly how much a single car margin is; it's more of a general trend. Sooooooo the easiest way to answer your question on "how much does the dealer probably make on a car" is with an analogy of a hypothetical car. Since my dumb-azz only knows pre-COVID, let's take a 2018 Chevy Malibu LT with a BEFORE destination MSRP of $21,680. With $875 destination it'd be $22,555 full MSRP. Destination varies by geography in the USA, but MSRP before destination does not vary by state. So I like starting with this MSRP before destination, because you will see the same value in Idaho as I would have seen here in California, or someone in Texas, etc. This lets us all talk about the same car and come away with something meaningful.

There's always some one-off-example of "I know so and so and they came away with a car for like blah blah blah." I don't want to talk about the one offs. I am speaking about the average volume transaction (pre COVID). With all those disclaimers out of the way... let's start talking numbers.

[A] Normally, a dealer will pay a "wholesale" (notice how I didn't call it dealer invoice) price that is about 87% of MSRP before destination. So, some accountant somewhere likely recorded an approximate accrual of $18,861.60 somewhere in some accounting ledger for this Malibu. But this is by no means the dealer's actual cash marginal cost of that car. You know somewhere out there some Malibu buyer was shown a fake "dealer invoice" of 93% of the MSRP (around $20,000) and thought that's what the dealer paid. Total bull.

(B) Ok so now it's time for the factory to consumer incentives. These are the ones you used to see published on Chevrolet.com before COVID or advertised on some nationwide 4th of July Promo. These could be say $1,000 cash. Easy enough.

[C] Next consider factory to dealer incentives. These vary based on a ton of factors. Sometimes it's geography (like the West incentive is usually less than the Plains). Or, the incentive will be tied to how much stock the dealer is carrying. Bottom line, these incentives change all the time and are a huge wild-card. But, for the sake of this example, let's say Chevy was offering the variable dealer incentive of $1,500 because the 2018 MY Malibu I'm talking about had been aged past 100 days on the floor but the 2019's hadn't dropped yet.

[D] Now, let's consider variable allowances. These are additional spiffs if your dealer can hit marginal sales goals. Like If a dealer can sell 10 Malibus this month, maybe they get an extra $400 per Malibu on some regional spiff to help dump inventory before the 2019s drop.

[E] And last, there's "holdback". This is about 2% of wholesale that the manufacturer sends to the dealer for selling a car. So in this case the Malibu is a cheap car so the holdback is small at like $375.

So let's do some hypothetical math...

$18,861.60 [A] dealer wholesale
minus $1,000 (B) factory to consumer cash
minus $1,500 [C] factory to dealer cash
minus $400 [D] sales planning allowance
minus $375 [E] holdback
add-back $875 destination
add-in say $500 floorplanning costs (interest/carrying-costs)
=$16,961.60

If you take a trade-in, financing, or other malarkey off the table, then someone could offer to buy this car for $16,961.60 (before taxes, title, doc fees, etc). This is ~75% of the MSRP (with destination). At this price, the dealer likely wouldn't do a deal.

So, to actually get a deal done, I have a general rule of thumb when buying "normal" cars off a showroom lot that had been sitting around (it's easy to spot a car that has aged and isn't some Shelby GT500). If you don't want much stress and you were ok-ish knowing there was still a chance you were over-paying... the rule of thumb is to offer paying a pre-tax and fees subtotal equal to 82% of the MSRP. So in my example $22,555 * 0.82 = $18,495. Do not bring a car to trade, and do not get financing from the dealership.

The sales person at first would tell you how crazy you were being, but if you just sat there and kept saying "I'll buy the car right now if you can make the numbers work" you'd probably get a deal done in a few hours. It wouldn't be fun ... because they'd put you in the sweatbox and keep pinching you (making you wait or having all these stress events to make you want to get out of there by increasing your price). But after 4 hours of pain, nine times out of ten you'd get a car at that price because I think this dealer is still making ~$1,500 and it's "fair."

Back in the day you could probably offer 78% of MSRP on a middling full sized truck and still get a deal done because margins on trucks used to be greater.

Of course a rule of thumb is always just that... a broad rule. You can always tweak your offer and try to play hardball to your heart's content. TBH I think this is an overpay on a Malibu, but I'm just using generic assumptions haha. I've done a new car purchase at 43% of MSRP. It wasn't fun, but at that time the factory to dealer incentives were huge lol.

[email protected], can you clarify what the reservation on a Silverado actually entails? I thought that I had a spot in line reserved and when my number came up, they'd let me place my order. Another poster in this thread is saying that the reservation is meaningless and that the dealer can just sell Silverado EV's to whoever he wants.

I have a reservation and I listed a dealer on Long Island as my dealer. I'm thinking that when my number comes up, that dealer will contact me about placing my order and that if i don't like what that dealer has to say, I can take my order to another dealer. I might have the whole thing wrong.

Can you explain, to those of us who don't know how this will work, just how it will work?

I'll have no problem transferring my reservation to you in Philly if that's what it takes to get a fair deal.

I will be transferring my reservation to Chapman. I transferred my 2021 Bronco reservation to Chapman after they offered a similar discount on the Bronco.

Being from Mass, I had never heard of Chapman. I scheduled a call with the owner/principal who took the time to answer my questions and provide me references.

If any of you have heard of the mess Ford and other dealers have made with the Bronco you know of the fears of lack of communications and dealers taking advantage of the market and screwing the customers.

From converting my Bronco reservation to order, through the convoluted Ford updates through production and shipping, the Chapman team was there for me and their other customers. Many who were buying from outside of PA.

I will put myself out as a reference if anyone has any questions.

[email protected] said:

Yes, the forum is in writing. In addition, multiple people have reached out to me directly via the email listed in my original post...many have created a new reservation or have transferred -- they have all received a reply back from me confirming pricing. Hope to see your reservation soon, Mr DJ!

Click to expand...

Hello Allie...

What I'm saying is will YOU, not this forum, give the Customer the 5% Under MSRP in writing from your dealership?

I have a Hummer EV SUV reserved at a dealership whose POC like you came into the GMC forum offering MSRP, $1K in Free Accessories, and Free Plane fare to its location. Once I signed up, his dealership sent me a Certificate for the Accessories and a Dealer Letterhead Ltr stating the MSRP. So I have no doubt it won't be changed once I order and/or take delivery.

So, what guarantees are you and your dealership giving potential customers?

Thank you, Ma'am...

Mr DJ