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Non-Cattle Specific Topics
Coffee Shop
dealers shutting down
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<blockquote data-quote="HerefordSire" data-source="post: 662424" data-attributes="member: 4437"><p><em>Plant capacity is being lowered. This reduces supply. Demand has already been reduced. By closing dealerships, the capacity is taken out of the system thereby lowering supply. Wherever demand and supply meets a sale takes place. Therefore, the trick to increase prices, is to lower supply hoping demand will increase in the future.</em></p><p><em></em></p><p><em>Historically, new vehicles are bait for the "bait and switch" to used cars and for back-end financing. Ever since stickers were required to be placed on vehicles to protect consumers, there has not been much mark-up in new vehicles so when the dealer made a new car deal, they focused on the back end trying to grab more than a couple of points on interest rates and marketing extended warranties. Additionally, new vehicles are nice to show depreciation logic to a consumer. A dealer can show the consumer how much a vehicle depreciates as soon the the vehicle is driven under new ownership, many times creating negative equity, unless the consumer places a large down payment towards the purchase. It is very easy for a dealer to convert a potential buyer to buy a year or two old same type vehicle with close to half the price in exchange for some wear and tear. This could lower the payment with the same amount of money down and the dealer can still tear someone's head off on the back end.</em></p></blockquote><p></p>
[QUOTE="HerefordSire, post: 662424, member: 4437"] [i]Plant capacity is being lowered. This reduces supply. Demand has already been reduced. By closing dealerships, the capacity is taken out of the system thereby lowering supply. Wherever demand and supply meets a sale takes place. Therefore, the trick to increase prices, is to lower supply hoping demand will increase in the future. Historically, new vehicles are bait for the "bait and switch" to used cars and for back-end financing. Ever since stickers were required to be placed on vehicles to protect consumers, there has not been much mark-up in new vehicles so when the dealer made a new car deal, they focused on the back end trying to grab more than a couple of points on interest rates and marketing extended warranties. Additionally, new vehicles are nice to show depreciation logic to a consumer. A dealer can show the consumer how much a vehicle depreciates as soon the the vehicle is driven under new ownership, many times creating negative equity, unless the consumer places a large down payment towards the purchase. It is very easy for a dealer to convert a potential buyer to buy a year or two old same type vehicle with close to half the price in exchange for some wear and tear. This could lower the payment with the same amount of money down and the dealer can still tear someone's head off on the back end.[/i] [/QUOTE]
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dealers shutting down
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