From: cs012055@cs.brown.edu (Hok-Chung Tsang)
Subject: Re: Saturn's Pricing Policy
Article-I.D.: cs.1993Apr5.230808.581
Organization: Brown Computer Science Dept.
Lines: 51

In article <C4vIr5.L3r@shuksan.ds.boeing.com>, fredd@shuksan (Fred Dickey) writes:
|> CarolinaFan@uiuc (cka52397@uxa.cso.uiuc.edu) wrote:
|> : 	I have been active in defending Saturn lately on the net and would
|> : like to state my full opinion on the subject, rather than just reply to others'
|> : points.
|> : 	
|> : 	The biggest problem some people seem to be having is that Saturn
|> : Dealers make ~$2K on a car.  I think most will agree with me that the car is
|> : comparably priced with its competitors, that is, they aren't overpriced 
|> : compared to most cars in their class.  I don't understand the point of 
|> : arguing over whether the dealer makes the $2K or not?  
|> 
|> I have never understood what the big deal over dealer profits is either.
|> The only thing that I can figure out is that people believe that if
|> they minimize the dealer profit they will minimize their total out-of-pocket
|> expenses for the car. While this may be true in some cases, I do not
|> believe that it is generally true. I bought a Saturn SL in January of '92.
|> AT THAT TIME, based on studying car prices, I decided that there was
|> no comparable car that was priced as cheaply as the Saturn. Sure, maybe I
|> could have talked the price for some other car to the Saturn price, but
|> my out-of-pocket expenses wouldn't have been any different. What's important
|> to me is how much money I have left after I buy the car. REDUCING DEALER PROFIT
|> IS NOT THE SAME THING AS SAVING MONEY! Show me how reducing dealer profit
|> saves me money, and I'll believe that it's important. My experience has
|> been that reducing dealer profit does not necessarily save me money.
|> 
|> Fred


Say, you bought your Saturn at $13k, with a dealer profit of $2k.
If the dealer profit is $1000, then you would only be paying $12k for
the same car.  So isn't that saving money?

Moreover, if Saturn really does reduce the dealer profit margin by $1000, 
then their cars will be even better deals.  Say, if the price of a Saturn was
already $1000 below market average for the class of cars, then after they
reduce the dealer profit, it would be $2000 below market average.  It will:

1) Attract even more people to buy Saturns because it would SAVE THEM MONEY.
 
2) Force the competitors to lower their prices to survive.

Now, not only will Saturn owners benefit from a lower dealer profit, even 
the buyers for other cars will pay less.

Isn't that saving money?



$0.02,
doug.
