If you read any of the disclaimers and footnotes at popular 3rd party websites like www.edmunds.com or www.kbb.com, they point out that "holdback" is not profit. Holdback is money that the manufacturer (not just Ford, but most car companies) gives the dealer to offset the cost of flooring the car for the expected average time of 90 days on the lot. Some cars sell quicker, but many sit unsold longer, so the average is about 90 days which is how much that holdback money works out to. This line of our income statement is typically a breakeven most months, as it is for most car dealerships.

Holdback from Ford equals 3% of the base MSRP of a vehicle, and it's usually 3% for most manufacturers. If it were not for holdback, dealers could not afford to have a nice selection of hundreds of new vehicles on the lot for consumers to test drive and purchase from on the spot, and we'd have to resort to being a catalog seller who special orders everything.

 

Did anyone see the artical in Motor trend ( Jan.'08) pg.104,
"Chad McQueen takes on the world's most famous car chase" ? great artical, and pretty good shot of the new Bullitt catching some "air"

 

Yep - I read the article online. I want to pick up the magazine though just to keep it. All the reviews I have read have been really good so far.

 

Motor Trend Bullit article link:
(http://www.motortrend.com/roadtests/...ustang_bullitt)

 

Holdback IS profit when the car sells right off the truck or is a retail order. This does make a plan sale for an ordered car more profitable for the dealer than selling from stock on a plan (provided the car has been on the ground a while).

 

Well of course, but what Brian is saying is that Holdback is calculated out to statistically break even across cars sold as orders with immediate delivery and cars that sit for months on end.

Ripping the holdback out of a new car special order may seem fair to the person special ordering, but that generates a loss on the car sold that was sitting around for months on end. For every action there is an equal and opposite reaction applies just as well to accounting.

These things are made to be long term cash flows, not short term rips - which is where dealers can go wrong with ADMs - ADMs make you think short term and you can make poor long term decisions....

 

Dixie Flatline was kind enough to explain what I was going to say.

The fact is, Holdback is provided by the manufacturers to allow dealers the means to have a vast inventory sitting on the lots for customers to choose from on the spot. 90% of what we sell is from inventory, with about 10% being special orders, so most customers like to see hundreds of shiny new rigs to choose from versus having to wait a couple months for a special order. Without Holdback from Ford, we could not have any inventory in stock. The holdback we actually get for a fresh rig sold day one has to compensate for a stale rig that's been collecting dust on the lot for 6 months that we are paying interest on after the holdback is used up.

That said, looking at the entire Holdback account on our income statement (or any dealer's income statement) for any given month will show that it is a breakeven account at best, and that is Ford's intent by design (holdback at 3% of MSRP works out to about 90 days of flooring), so Ford doesn't consider it a profit line either. The 3rd party websites I mentioned feel this way, as well, hence the reason they list disclaimers telling consumers that Holdback is not profit and is typically not negotiable.

 

I really get the feeling that many people think the car manufactuer should almost give their cars away.
"Hey I want to buy your car?"
"Great! We're so happy you picked our product we're going to sell it at a loss!"
"That's great! That's just the deal I was looking for. You've earned my repeat business"
"Well with customers like you I don't know how much longer we'll be able to stay in business."

 

No, just not adm the car to death.

 

I can understand the anger over ADM's. But aren't we jumping the gun on ADM's on the Bullitt?
It seems everyone on this forum who is getting on got MSRP or less.
I got x plan from my dealer without any hesitation on his part- I go in tomorrow to give him my x plan pin and get some of the paperwork out of the way.
So I really don't think ADM's are a concern. You can't blame the dealers for trying to get an ADM- and I think soon most who are trying will see that they can't get it and will sell for MSRP.

But reading what many others have posted in these forums- they really begrudge the dealer from trying to make any profit at all. They act as though the dealers should all slash prices to below cost.

 

We sell plenty of new vehicles at a true loss - all the slow movers that Ford forces on us to unload to the public. Happily, though, Ford is closing factories and eliminating excess facilities and employees so they can be lean (and consequently stop forcing so much stuff on us that we can't sell). There are very few vehicles we can sell anywhere near MSRP, let alone above MSRP. 99% of what we sell is sold at about the Invoice Total +/- a couple hundred dollars. Factor in the factory rebates available to consumers, and most new cars are bought by customers for way less than the dealers had to fork over to the manufacturer!!!

On average, new car sales of all brands nationwide lose about $30 per car sold (net profit after expenses). Used car sales of all brands nationwide make a few hundred dollars per car sold (again, net profit after expenses). Service, parts, and body shops typically make money and without them, selling new cars would not be economically feasible for most dealers.

 

There's a dealer two miles from my house. They're pretty big and one of the original Ford appointed dealers. Our family's bought 5 Ford's there over the 30 years I've lived in the area. Granted last Ford I owned was a 1991 Escort GT, but the dealership won't even talk to me about an 08 Bullitt without a $500 deposit on an agreement that the price will be $5-10K over MSRP.

There've been at least three 08 Bullitt's up on Ebay for ADM auctions. One was sold Buy It Now for close to $40k. Talk about suckers, but that was probably an overseas purchase anyway.

I'm not trying strip all the profit out of the purchase for the dealer, everyone's better off if they feel they helped build a constructive deal. But by the same token, if you pay an ADM and go to sell the car 5-10 years from now, what are the resale values going to be based off? Certainly not the MSRP+ADM....

 

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I think that is the one that the dealer relisted claiming a 'deadbeat' bidder. No surprise.

 

No, that one you're talking about was one of the very first that was listed - the sales guy made the mistake of absolutely burying in the details the fact that the auction was for the amount over MSRP. Claimed "No Reserve!" in the auction title - who was the deadbeat bidder?

It later went for $5,800 over MSRP on 12-07.... x2.


Heh, the dealer I talked to locally mentioned ebay, so I've been keeping a close watch on the proceedings ever since the big media blitz.

The only one sold for over MSRP in the past week was for $100 over. Guess I'm not the only one watching the auctions as a barometer.

 

Here's one on eBay:

http://cgi.ebay.com/ebaymotors/Ford-...spagenameZWDVW

Not something I'd buy, but it does look pretty good. I do like that turned dash a lot!

 

Looks like #0004. Didn't someone report they checked on it and it had apparently been sold? I gues it didn't sell

 

Yeah, I wonder what the reserve is on that....

 

Hello,
I was notified by a friend at my local Ford Dealer when they picked up the production info on the Bullitt. I went down, dropped a deposit. All I left with was the build sheet dated for 10 Dec 07. Needless to say mine arrived 21 Dec 07. It is a very nice mustang, fun to drive. It is now in my garage. It is number 295. I didn't pay any ADM, although they were going to charge me, they never did.

 

Where are you located ?.