Why won't dealers discount below MSRP?

Simple answer? The 2010 Prius is new. Dealers know most of the consumers contacting them, and walking onto lots wanting to look at the 2010 are consumers that have been anxciously awaiting the 2010's arrival. Being one of the first in your neighborhood to own a "new" toy, comes with a premium. Usually that premium is paying MSRP or above.

Demand right now is coming from a loyal and already "sold" pool. Once all those that have wanted a Prius for a while now, have gotten theirs and it becomes a more competitive battle to sell The Prius to someone who might be considering and Insight, Fit or even a Corolla or Matrix then we will see what the real market price becomes. Until then dealers are just doing what should be expected. So the simple answer to the question "Why won't dealers discount below MSRP?" becomes, Why should they? Why expect them to? Until the market dictates that they need to lower the selling price, they won't.

 

The dealer did "discount" by adding value to the trade-in, but they wouldn't discount the selling price of the Prius instead even though that works out to the same net price in the end.
That's the part that doesn't make sense.

 

Well my opinion, or feeling about that is that adding value to your trade in is probably more a function of salesmanship than true tangible discount.

Perhaps it's just easier on the ledger or in the books to show X amount of Prius sold at MSRP vs. perceived trade in value of your car. If you are indeed getting more for your trade in than it's real value then good for you, congratulations. But often dealers and salesman want to "hook" a consumer by making them think they are getting a great trade in value, that they wouldn't be able to get elsewhere, but beware. Dealers have a million ways of making up for any bonus they seem to be giving you.

Often it just becomes played back mechanics of a deal. If I'm afraid you are going to go to the Toyota Dealer on the other side of town and purchase, and I can't really offer an alluring "deal" on the product you are purchasing, then the best leverage I have as a dealer is to offer you more for your trade in than you think it is worth, or more importantly than you think my competitor would give you.

Maybe in your case the dealer isn't really making the discount up on the other end. Maybe it does become a true discount. But typically that isn't the case. More often than not, any bonus they might give you for your trade in, get's snuck back into the dealers pockets through some add on's or other means.

That's why most car buying advice, suggests you don't even admit or aknowledge that you have a trade in, until you first determine the price of the vehicle you are purchasing.

The only true way to know how much of a discount you may or may not be receiving would be if someone negotiated purchase of an identical automobile without a trade in. You might see a willingness in that case to discount below MSRP. Shell game.

 

It wasn't me.
The original poster sounded like they had already agreed on a value for the trade and he was then trying to get a discount on the Prius. The dealer would not take anything off of the listed selling price of the Prius, but went back and adjusted the trade-in value of the trade instead. (Really the same discount in the end since both methods end up with lower cost to the buyer.)
So he did negotiate a better deal that cost him less, but for some reason, the dealer would rather do it by adding to the trade than subtracting from the selling price.

 

it may be as simple as the dealer wanting to be able to truthfully say "we are not discounting off msrp on the 2010 prii"

 

$50

 

I walked into the dealership with no deposit and paid less than MSRP for a IV with Solar. I explained to the dealer than I never pay MSRP for my cars. He discounted $50 and told me that it was the first 2010 Prius to sell for less than MSRP. It was just symbolic but now I can say I paid less than MSRP.

 

they charge you $50 inventory tax

 

I'd say it's all of the above, but to a lesser extent greed. FWIW, on the VAST majority of cars and trucks sold in the US, paying even MSRP, let alone a markup above that is just silly. Typically, the only exceptions are low supply, high demand cars, esp. those which have just come out AND people are willing to pay whatever the market will bear. I haven't kept close track but I've heard of crazy markups on Nissan GT-Rs.

Back to the OP's question, if a dealer is charging MSRP, there's limited supply and enough demand at MSRP, then why should a dealer sell for for less when they know they can get some other person to pay MSRP and not have a huge stockpile accumulating?

Toyota does care to some degree about the final transaction price. Cars selling for too low means resale value is hurt. Many American cars have crap resale value partly due to this, large incentives and large # of sales to rental car companies (which depresses resale values). Good examples when one thinks of rental cars are ones like Pontiac G6s, Grand Ams, Sunfires, Chevy Cobalts, and the like.

The OP should either wait it out, try to find some other dealer or means of getting the car below MSRP (Costco, auto broker, maybe carsdirect.com, discount provided to your company's employees, contacting out of area dealers w/lower demand, etc.) or vote w/your feet and buy something else.

I posted in another thread about a $3250 incentive on Altima Hybrids. That's a pretty big incentive on top of the $2350 Federal tax credit. Sure, its slightly worse than TCH mileage is nowhere close to the 2010 Prius but it's a lot faster and uses many (all?) hybrid components from Toyota. The rest of the car including the ICE is a Nissan though.

 

I have been keeping my nose out of this thread on purpose. But since there seems to be a little confusion as to the dealer sticking with MSRP but giving more for the trade, I'll interject a little known practice used by some salesman.

If the used car manager appraises a vehicle for $5,000 and the salesman tells you it is only worth $4,000, that is an extra $1,000 profit for the salesman. 99% of dealers don't do this, but some do. It is usually the ones that are marking the cars with ridiculous add-on packages. What might be happening in this case is that the car still sells for MSRP, but the salesman "gives up" some of the extra money he got from the trade-in value. So if he suddenly gives you another $500 for your trade, that is probably where the money came from. It was there the whole time, he just wasn't playing fair.

And Nissan bought Toyota's second generation Hybrid system, but not all of it. There is NO WAY toyota would ever sells its patent on the power split device, or the inverter/converter technology. Ford is the same way. Think of it like this.. Toyota sold Nissan and Ford the bowling alley, but kept the pins and the balls to themselves. The heart and brains of the HSD system will always remain Toyota's intellectual property.

 

It makes a difference in the comission the salesperson is paid probably...

 

Profit is profit. If I sold you a II at msrp and gave you the true appraised value of your car (say $5000), it would make exactly $0.00 difference in commission to me if I sold you the Prius at $4,000 under MSRP but only gave you $1,000 for your car.