What I'm saying is if Ford said no ADM's, and demand far outstripped supply, unless you're a friend of a dealer, you won't get one unless you buy it in the secondary market from a flipper. If you're not a "friend" of a dealer, you're going to pay market price.

 

I know what you are saying. i don't see it happening with a Ford product though.

I'm quite sure in that scenario Ford would produce more for demand unless they had announced a specific cap. I understand though that even with the Bullitt announced as a 7700 build it has been said/hinted that if there remains demand after 7700 is built they will build more.

Ferrari's, Lamborghini's/ etc are different fish

 

I'd like to share how GT500 sales were handled where I work back in late 2005 and early 2006 just to give you all a different perspective on the process. I can't stress enough that I am not condoning anything that happened, just reporting what I saw. While I have always been consulted by management for ordering and pricing of our GT500's, I am just one of many managers here who give input, before the owner decides pricing.

We were allocated just 5 GT500's for 2007, but by the time allocation was communicated to us in January 2006, we already had a list over 90 people deep. Ended up have a couple hundred people come and go from the list (and occassionally come back on and back off the list again). The size of the list fluctuated daily, but ranged from 70-100 people at any given time. So, pricing wasn't nearly as difficult for us to decide as who to sell them to. As you can imagine, if there were 100 guys on our list and only 5 cars coming, 95 guys were gonna be mad, so we honestly weren't really excited about how to allocate which customers we'd sell to, especially since this was going to be a lot of grief for 5 transactions compared to the 1,800 or so car sales we process annually.

Any method of distributing cars was going to peeve the vast majority of customers on the list. We considered several methods, including 1) first come, first serve, 2) lottery drawing, 3) auction style or eBay, 4) prioritized by prior business with each customer, 5) auction with proceeds above a certain amount to charity, etc. Lots of methods were proposed, but each was going to alienate the majority of customers on the list. The idea in searching for the best method was to pick the method that would please or satisfy the most people possible while alienating the fewest people possible.

I was the keeper of our GT500 list as I am our store's SVT Team Leader. I don't sell cars, nor do I set pricing, but I am responsible for training our guys on SVT/Shelby products and contacting customers who need info about these products. So, that said, I contacted everyone on our list to just probe about their ideas for how we should price and allocate GT500's. This took weeks, but provided a lot of valuable info about how most of our customers felt a fair method of distribution would look like, and what kind of pricing sensitivity there was. I was on several Mustang forums getting feedback from lots of consumers looking to buy (including several of you on the TMS forums that I recognize from other forums).

We're in an affluent area, and we value our prior, local customers above all others, so we put out-of-state buyers on the bottom of our list, regardless of any offers they had. We knew that selling to out-of-state buyers meant we'd likely never see them again, and we wanted a long term relationship for sale, service, parts, body work, etc.

There was a large group that said they wouldn't pay a penny over MSRP - about half of the group - and many of those guys said they would wait as long as it took to get one at MSRP and they'd be happy to wait until all the people with more money than brains got their GT500's. Fair enough. We were hoping that we'd get enough GT500's over the multiple year run that we could eventually get to the MSRP crowd and earn their business, too.

There was another group that said they would pay a little over MSRP - perhaps a few thousand - but wouldn't pay the big ADM's they were already being quoted at other neighboring dealers (the going rate was $20K to $25K over MSRP at the time).

There was a couple dozen on the list that said they'd pay whatever it took basically, with offers from them (not us) varying in the $10K, $15K, $20K, and $25K range.

So, armed with all of this information, I asked the owner & management team what price they would set for all of our GT500's. They threw out the big offers and the MSRP offers, and went for a happy medium at $10K over MSRP on a first come, first serve basis to any local on the list who had already been a customer with us in the past. The idea was that we'd have a much better price than the other dealers in our area, while giving our loyal and local customers first shot at ordering cars to their specifications.

The response was incredible and we sold out immediately. We had about 30 guys on the list say that $10K was more than fair, and they'd be willing to pay that if we could get more GT500's. 5 lucky guys who were quick on the draw and at our doorstep with a deposit in hand got their orders submitted here. All 5 were very pleased with the $10K ADM, as all had shopped elsewhere just to be saavy. And they knew there were a couple dozen guys in line behind them hoping to take their spot. Some of these guys knew each other (lots of Mustang clubs around here).

Additionally, you know we got some hate mail, of course, from the MSRP crowd. Oddly enough, we also got some hate mail from the big spenders who weren't quick enough to secure one of the 5 cars, who tried to bump those 5 off the list by offering us silly ADM's well above the $10K. A lot of them yelling about their money not being good enough for us, and they'd find another dealer willing to make a killing on a GT500 to get an early car, etc. I took a lot of heat from the 90+ on our list that we could not get a GT500 for. As I mentioned at the onset of this long winded story, we could only make 5 guys happy, leaving everyone else without a car.

So, 4 of the 5 guys actually took delivery. The fifth guy, who had bought numeous cars, trucks, suv's, Mustangs from us over the years had to back out when he had a huge change of circumstances in his life. We refunded his entire deposit without question and put his car on the market. As the dealers around us were continuing to get $70-75K for their coupes, the boss here thought we should start at $70K and see what happens. Not a price I would have picked, but not my decision. It took 2 phone calls and that car was sold to someone else within 24 hours. That guy had heard enough quotes for $75K that he felt $70K was a "deal" even though it was about $25K over MSRP.

We ended up getting a 6th GT500 when Ford announced the red stripe appearance package, so we ordered it on the spot without a customer lined up for it. When it arrived, the boss thought $25K over MSRP might be a good starting point again, as we had sold the first wave of GT500's for well below the market. And, if it sat for awhile, they could always lower the price. Sure - whatever. Again, more than I would have priced it at if I were king for a day, but oh well. Wouldn't you know it, the car sat on the showroom less than a day and it was gone for $25K over MSRP! I spoke to that customer several months later at a car show (he didn't know me, nor did he know I worked where he bought the car). He had been looking at Corvettes, BMW's, etc. that were comparable money, but really wanted a Shelby and thought he spent appropriate money for a 500hp car.

That was it for 2007's. I started working on the boss well in advance of the first 2008 GT500 arriving. Showed him how ebay pricing had really dropped and that big ADM's were gone. Really tried to persuade him that we should be closer and closer to MSRP as time progressed. With the GT500KR coming out soon, hardly anyone was asking about GT500's anymore. While the final say on pricing comes from the owner, he made great strides by getting much closer to MSRP. Our first '08 GT500 went for $55K (about 7-8K ADM). At that price, it sold with one phone call to a guy who had waited us out since day one. He had originally told us to let him know when a GT500 was available for $55k or less, so he took it immediately when called.

Our 2nd '08 GT500 sold last week for that same $55K amount (again, about $7-8K ADM). As we're in the middle of winter with snow off and on, it took longer to sell this one (about 2 weeks). Guy that bought it has probably bought about 20 vehicles from us in the last 10 years (local business owner) and his wife made him buy it to treat himself.

Our 3rd '08 GT500 has already been sold, but is still at the factory. This customer has been frantically searching for a vert to buy in a very specific color combo that nobody else had, nor would they order. Customer threw a very generous offer at us (very big ADM - more than the first two '08's combined), and we gladly ordered this very specific car for him. He will be doing extensive mods to the car, and price just wasn't an issue for him - securing one with that was to his specs was his priority.

Our 4th '08 GT500 was ordered to my specs, as if I were going to buy it for myself. I won't be, but it is a combination we've never had, but I've seen in person at a Mustang show last year. It is not priced yet, nor have we told anyone it's coming, so it'll become available when it arrives in March or April. By then, the market might be MSRP around here, but we don't know yet.

I hope my report has been good reading. It would be interesting to hear the same kind of recap from the other 3,700 Ford dealers out there to see how their GT500's and customers were handled.

 

That has already happened.

This was one of crazyhorse's points on his initial post. The secondary market was alive and well for the better part of nine months. Many dealers sold their GT500s below MSRP at times to other dealers to flip rather than sell the GT500s themselves at a fair price to the locals.

 

Brian, thanks for sharing. Interesting reading.

 

Thanks, Jon. Although I'm certain that it is dull reading for many, but I thought it might be interesting to hear how we agonized over trying to hit the market just right while being very competively priced. Some people who aren't in the business might think it is very simple to just slap a price tag on a car and call it a day. When, in fact, it was hard work to seek feedback and process it from dozens after dozens of people and try to make as many people happy as possible on such a highly restricted commodity. We knew pricing and distribution would be very sensitive issues with these cars and we agonized over striking the best balance we could between short term and long term profitability for the sale, service, parts (and yes, we even had body shop time for one GT500 when a customer's son damaged it in their driveway at home!).

I spent literally hundreds of hours speaking with potential customers on the list when they first contacted us and all subsequent contacts after that. Then, tracking the ordered cars for those few customers often meant several conversations per week with them to let them know where their cars were in the process. Very, very labor intensive for just 5 cars.

 

Brian,
Thanks for your recount. I have a different story for each different dealer I visited. I visited at least 15. I narrowed it down to 2 dealers that sold them all for MSRP. I could have afforded the ADM, but, that was not the point. I chose these guys because it was clear they cared about the customer more than the immediate pop. They did more of the first come first served and required that they be local. Lucky for me, they still considered 2 hours away local. They both told me exactly where I stood in line. they were upfront that the owner wanted one and he had a few special customers. Ultimately, one of them ran out of allocation and I did not get one of theirs. I did not hold this against them as they clearly had their customers best interest in mind rather than making money. The one that sold me the car won my future business. I would not, however, hesitate to buy from the first had the GT500 not worked out. I respected that they were putting customers first.

So, I could see how it would be difficult to satisfy all of the customers. But, charging the few lucky ones a fat ADM, does not seem to be the answer (IMO, anyway). You (by that, I mean your dealership, not you specifically) likely could have satisfied the majority of them by using the above formula. Your dealership would have lost a large profit this year, but would have earned the respect of all the customers on the list (except the ones that felt they could buy their way up the list. Those people likely would not have been loyal customers anyway). That respect translates into lifetime customer/dealer relationships. Many of them, like you, would realize they weren't getting one and maybe bought another Mustang variant from you.

 

I like pancakes.

 

It's amazing how many people who could not get a GT500 from us ended up buying other vehicles instead (from us). We sold quite a few Mustang GT's and GT/CS's to guys and gals that couldn't get GT500's (not just from us, but anywhere). We also had people with changing needs/wants while they waited who ended up buying trucks or SUV's from us instead. Of the 6 guys who bought GT500's from us in 2007, we've sold several more vehicles since then to them (one of those guys has bought two more cars from us since buying our very first '07 GT500). Some of the big spenders who were mad at us for not letting them pay their way to the top of the list have since bought other kinds of rigs from us, although a couple of them are pursuing us for a GT500KR (which we get none of, as far as I can tell) and we've been offered $100K for a KR by a couple of them and we can't even get them one. Crazy how much some people will pay for a Mustang - I know I could never do that, but I'm just a working guy.

I truly believe in all my conversations with our customers on the GT500 list that most understood that even with an ADM we were much cheaper than most dealers out there and we made a good impression with most. Sure, we alienated a few guys, but I just can't think how we could have prevented that even if we had sold them all at MSRP. 6 cars total, and a couple hundred people competing for them, so most got left out making the reason almost irrelevant. I found it a relief that our owner turned down big offers $25K, $30K, etc. after we communicated $10K on the initial allocation. He stuck by his word, and we did not go back on any of those deals, even though I've sure heard dozens of horror stories in the forums over the last two years about dealers who did just that.

The GT500 years will sure be memorable to me for a long time with all the trials and tribulations that came with "the list" and pricing. Selling 2005-6 Ford GT's was super simple in comparison. We sold five of those and those were easy transactions.

 

Thanks for your input, Brian.

 

You've got to love the free market! I've read all of Brian's posts, along with everyone elses and totally agree with Brian. By the way, I'm not a dealer and have never worked in the industry. However, I have a very good understanding of the free market.

Let's say you own an 04 Mystichrome Cobra Convertible with 8K on the clock. You decide to sell it and price it at $29,900 on Auto Trader. You receive two calls and schedule each person to come to see the car on the weekend. Both parties show up around the same time. Both want the car and one is willing to pay you $31k for the car. Do you:

A Sell it to the highest bidder, regardless of how high it goes
B Tell both buyers that you can't sell the car over what your asking, that just wouldn't be right.

You know as well as I do, you'll take as much as you can get!

I have never, or will ever pay MSRP for a vehicle, let alone an ADM. It's not in my nature, regardless how nice it is. However, there are a lot of people that HAVE to have it NOW, or as soon as they can get their hands on one. Why should't an owner of a business with mostly low margins on sales have the ability to make big profit on a popular item? Remember, it's not a fixed price, it's the Manufactures Suggested Retail Price.

Supply in demand will always rule the retail sector. It's not evil, it's just part of the system. It's the same thing that's happened to the old muscle car market. Prices are insane. Some people are getting close to $20k for six cylinder Mustang Coupes! Forget anything with a big block if you're not a millionare. Again, supply in demand. As a consumer, I always like when supply is larger than demand, as everyone does.

Over the next couple of years when the next better car comes out. These Shelby's will become used, some thrashed, used cars. Their value will drop and anyone that paid ADM's will take a bath when they sell them. It's what happends. I know some of you will say, that will never happen. In the late 70's and early 80's, because of fuel and insurance prices (sound familiar?), you could get your hands on Boss and big block Mustangs for a song. I remember a 68 Shelby GT500KR Convertible for sale in 83 for $6k. The car was very clean, red with a black top and interior. God, I wish I had a crystal ball!

Whether you think that dealers are thieves or not. That's how the system works. Get use to it.

 

Brian, that is basically what I was trying to say. As long as the customers are at peace with how you handled it, they would still be your customer even though you did not get them one. I just think that had it been handled without any ADM, then all of them would have understood that it was a supply thing, not a money thing. The guys that were high on the list but refused to pay ADM and did not get one, felt like your dealer was concerned about money, not the customers. We (customers) understand that dealers need to make money. At MSRP, they are. We just don't understand why they need to make excessive amounts. Even $10,000 is excessive profit.

1bad, The free market was not the only factor here. Hype was more of an influence on price than Supply and Demand.

Your Mysti example holds true for that situation. The GT500 situation is different. Customers were led to believe they would not be able to get a car without paying through the nose. I had mulitple dealers try to tell me only 1000, or 2000 of them were being made and for only one year. They were lying to customers to create a false sense of rarity. People bought into it and the market blossomed on a false pretense. HTT had already said they would make as many of them as people wanted. That quote got lost when it came to the dealers.

This ADM battle will never have a winner. My purpose is to give people who are researching cars some perspective when they are faced with paying an ADM in the future. If they pay an ADM on an informed decision, then that is their perogative. I learned about them when Terms and Mach 1s were commanding ADMs. Let the first suckers pay it, then buy when the market slows. If more people felt this way, the market would slow sooner.

 

If I turn this around and talk about all the other vehicles in the Ford lineup, other than GT500's, for a moment...

Likewise, we (dealers) understand that customers need to get a discount. At a price below MSRP, they are. We just don't understand why they need us to sell at a loss well below invoice.

You would be surprised how much of what we sell is priced below our cost, and many dealers are doing the same to remain competitive. I'm not crying a river or singing the blues as it's what our market economy dictates based on supply and demand. Plus, we stay in business anyway thanks to profits from other departments here, but it always amazes me how deep the discounts are. F-series trucks are a great example. Biggest volume seller on the planet, but huge discounts/rebates none-the-less.

For example, with the current factory rebate that everybody qualifies for and our deep discounts, all of our new 2008 F-150 Lariats (one of our most popular sellers) are priced $6K to $8K below MSRP. There's even more of a discount on the more expensive Super Duties (typically $7k to $10K below MSRP). That's all of them, every day, day after day. We sell about 1800 vehicles per year. 5 GT500's over MSRP, but the other 1795 waaaaay below MSRP. Do the math and it is staggering how much those discounts add up to over the course of a year. Most customers come in expecting these huge discounts all the time and they get them on the mainstream stuff 100% of the time. So, when a car like a Ford GT or GT500 come along where demand exceeds supply (whether true or preceived), I can see why dealers would want to price to the market.

Like many of you, I have never paid over MSRP, and never will. That's why I do not own a GT500. I simply could not get one for MSRP, even from my own employer, when I was actively considering it in the fall of '06 before ultimately buying my '07 Mustang GT.

And, like crazyhorse mentioned about the '03 Terms and Mach 1's, I waited until the very end of the '03 model year to buy my '03 Mach 1, and got it on employee pricing with a huge rebate after demand had dwindled down. The early guys paid full sticker with no rebates available. However, my Mach 1 had an MSRP of $29,675, and I paid $23,222 by being patient.

GT500 buyers are in the same boat. All the early "gotta have it" guys that paid $20K, $25K, and higher ADM's are done and out of the market now. ADM's have been steadily declining since then, and MSRP is on the horizon. If a 2009 GT500 comes to fruition, then MSRP will likely become the norm at some point, but I still don't think MSRP is the norm yet.

 

I understand what you mean about the customer expectations. That is how the Auto industry runs business. They know exactly what the customers are expecting. They expect rebates and huge discounts. So, the factory prices them as such. Without rebates, they are making huge profits. The dealers are also onto the customers games. They find ways to make the customer feel they got a good deal while still making enough to justify the sale. How many poor dealership owner's do you know? Are they refinancing to stay in business? I doubt it.

The answer is volume. Sell many cars at small profits. Keep the customer happy and sell them a lot of other goods and services. Get referrals from the happy customers and the business thrives. I buy from dealers based more on the experience and customer relationship than I do the bottom line price. Maybe I'm old fashioned.

 

I understand what you mean about the customer expectations. That is how the Auto industry runs business. They know exactly what the customers are expecting. They expect rebates and huge discounts. So, the factory prices them as such. Without rebates, they are making huge profits. The dealers are also onto the customers games. They find ways to make the customer feel they got a good deal while still making enough to justify the sale. How many poor dealership owner's do you know? Are they refinancing to stay in business? I doubt it.

The answer is volume. Sell many cars at small profits. Keep the customer happy and sell them a lot of other goods and services. Get referrals from the happy customers and the business thrives. I buy from dealers based more on the experience and customer relationship than I do the bottom line price. Maybe I'm old fashioned.

 

...no adm's in near future

... adm's now....

 

Brain, how did you order the 4th Shelby?!!!I have to know. Now this is drama.

 

I've been in that situation as a buyer. First one at the door of an advertised Mustang, having called on it and left right away to look at it.
Another person appeared seconds after me yelling he'd pay more. The seller did the right thing, remembering me from the telephone conversation, knowing I was first at the door, and sold the car to me for his asking price.

That's honesty and integrity. Selling to the other guy for more would have been nice for him and the seller, but also unscrupulous.
I'd have done the same as the seller.

So no, in that situation, " You know as well as I do, you'll take as much as you can get!" doesn't apply to an honest person.

 

Originally Posted by codeman94
hey George.....are you (or were) you a lawyer?

I always assumed George was a retired car salesman

 

I bet we find a whole bunch of plaid jackets and white shoes in his closet.