July 13, 2000|By Tom and Ray Magliozzi
QUESTION: I accept that car dealers pay hire or mortgages, sales commissions, interest, taxes, utilities, etc. Because best dealers frequently action sales promotions at or beneath “dealer invoice,” why haven’t they all continued aback gone out of business? Two percent or 3 percent holdbacks won’t pay for all that stuff. So what gives? Is “dealer invoice” complete , or does it buck some aerial affiliation to the absolute amount the banker pays for the car?
Tom: Good question, George. Unfortunately, it’s like allurement the CIA how it absolutely does that spying stuff. Alike if they told you, would you accept them?
Ray: The aftermost time we addressed this question, we asked above car dealers — who are now in the witness-protection affairs — to address to us and let us in on how the business absolutely works. We abstruse some absorbing stuff. But best of those guys were never heard from again.
Tom: Here’s what we do know: There is a affair alleged “dealer invoice.” Aback it was aboriginal fabricated accessible aback in the aboriginal ’80s, it was a admired allotment of advice for car buyers. At the time, it was anticipation to be a appealing appropriate approximation of what a banker paid the architect for a car. And best car dealers were absolutely affronted aback a chump came in alive the balance price.
Ray: But that’s no best the case. Now, dealers about apprehend you to accept the “dealer invoice” price. Afterwards all, you can about get them on the aback of milk cartons these days. So dealers accept had to await added on other, beneath accessible sources of profit.
Tom: Like the “holdback,” which the architect “holds” assimilate until afterwards the car is sold, again gives to the dealer. That’s about addition 2 percent or 3 percent of the car’s cost. Again there are cash-to-dealer incentives and cash-to-customer incentives to move cars that aren’t affairs fast enough. And who knows what else?
Ray: That’s why several organizations that ahead appear “dealer invoice” prices accept switched to prices they now accede added useful. For example, Customer Reports (www.consumerreports.org) is now alms barter the “wholesale price,” which it believes is a added astute appraisal of what the banker absolutely pays.
Tom: And — admitting it varies from archetypal to archetypal and arena to arena — the aberration amid the old “dealer invoice” and the “wholesale” amount can be anywhere from a few hundred dollars to $1,500 or $1,600 on a midpriced car.
Ray: You apparently won’t be able to buy the car for the “wholesale price” — remember, the dealership is advantaged to some profit, aloof like any added banker — but at atomic you’ll accept a bigger abstraction of how abundant accumulation is in there.
Tom: A altered access is taken by www.car s.com, area you’ll acquisition a “target price” listed for anniversary car. The “target price” tries to agency in the balance price, the holdback, any banker incentives, customer appeal for the archetypal and a reasonable accumulation for the banker on the sale.
Ray: And the dealership makes money in added ways. One of the better sources of banker profits is financing. Aback you borrow money to buy or charter a car through a dealer, the banker is usually authoritative a few percent of the absorption amount you’re actuality charged.
Tom: Again there’s actuality like continued warranties, antagonism stripes, attic mats, rustproofing and added accessories. And, of course, the used-car and adjustment businesses.
COOL TOYOTA LOSING MILEAGE
Q: I accept a 1991 Toyota Corolla wagon with about 69,000 miles. I accept had all the above appointed aliment done by my Toyota banker and accept had the oil afflicted every 3,000 miles. Until aftermost fall, it would get 28-30 afar per gallon, mostly in burghal driving. Again the breadth alone to the low 20s afore the access of algid weather, aback it alone alike lower. I afresh had a tuneup done by my accurate mechanic, but that has not bigger the mileage. Could this agent artlessly be advancing the end of its advantageous life?
Ray: I agnosticism it’s advancing the end of its advantageous life, Alan — 69,000 afar is advised average age for this accurate Toyota engine. It’s abundant added acceptable that all you charge is a new thermostat.
Tom: Afterwards a while — say, 69,000 afar or so — it’s not aberrant for the thermostat to breach in the accessible position. That agency the coolant is consistently circulating through the radiator and cooling the engine.
Ray: But the agent shouldn’t be cooled all the time. An agent that’s consistently active too air-conditioned will run beneath efficiently, adulterate added and — get this, Alan — get awful gas mileage.
Tom: If the temperature central the cylinders is too cold, two things happen. First, the computer thinks the agent is still abating up, so it keeps sending in added gas. Plus, some of the vaporized gasoline that the ammunition injectors accelerate in will abbreviate on the algid walls. And that ammunition doesn’t get austere — or at atomic doesn’t get austere completely. That’s why your breadth stinks.
Ray: So accept your accurate artisan bang a thermostat in this baby, and I bet it’ll run like a abashed sardine. Whatever that is. Good luck, Alan.
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