QuestionSomeone, a person on Yelp in Phoenix, (I don't believe) is trying to tell me stuff about destination charges on a vehicle that I don't think are true. He also said that dealers pay the same price for the exact same model of a car anywhere.
If that is true than why are the destination charges listed by Edmunds.com, Truecar.com and on Consumer Reports True car site.... for a 2014 Toyota RAV4XLE FWD different in Texas (gulf coast region) than they are in rocky MT region(NM, AZ and CO at least)?
This is what this person said: "Now I know you are either lying, or truly have no idea what you're talking about. The destination charge is a set charge. By law, it is the same in every state. It may vary by model, so one model may have a $200 destination charge, and another model may have a $700 destination charge, but that destination charge for that model is the same in Alaska as it is in Hawaii as it is in Florida as it is in Maine. But hey, you read it on the Internet, so it must be true, right? -
Dan M., Founder, president, and CEO, Toyota Motor Corporation. ^ It's on the internet, so it must be true!"
This Phoenix Yelper says it can't be true that in Albuquerque, where there are 2 Toyota dealers (both Larry Miller's group) that, are paying more for my RAV$ than they are in Phoenix.... consequently that, and lack of competition resulted in best price I could get being over $2000 more than in Phoenix... where there are 10 dealers. I said competition can help result in a lower price for the consumer...
I also believe... and this may be incorrect that some of these dealers in Phoenix sell a tremendous volume of cars... compared to ABQ, at least... they may purchase 400 cars of one model (and not take delivery of all at the same time) and in Albuquerque, if they purchase 100 cars, the dealer pays more. Is that incorrect?
AnswerHi Patricia,
Interesting question ...at least the part about destination charges is interesting because while my first inclination is that destination charges are a function of distance from the originating factory and are therefore different for every region ...but not every dealership. For instance every dealer in the Pacific Northwest Region would pay the same destination charges for a Toyota Camry as the other Toyota Dealers in his region ...but I need to double check that hunch and will let you know.
The second question concerns the dealer cost of the vehicle and using your example of the Larry Miller Group and the ABQ Toyota dealer I can tell you without reservation that every Toyota Dealer pays the same for the same exact car. It doesn't matter that the Larry Miller Group buys 10 gazillion Camrys nationwide or even in Phoenix ...he pays the same as the little aToyota dealer in ABQ. Now that I've said that let's talk about the exceptions to that rule and since I don't know if Toyota does this for sure or not I will use Ford who I know does. Let's say that the production manager at Ford walks outside to see what they have in their inventory and sees 100,000 Ford Taurus's sitting out there and looks at his dealer order bank and sees zero Taurus's ordered and says "holy sh#% I've got more Taurus's than brains ...what am I going to do?" what they have done historically is put together a stair step program for their dealers to get them to push Taurus's out the door. Those programs work like this ... For the first 10 Taurus's a dealer sells he might get an extra 250 per car off the invoice then for the next 25 it may go to $500 per car ..retroactive to the first car ...then for 40 Taurus's he may get an extra $1,000 per car ($40,000) and so on up to a maximum of say $2,500.00 per car at 100 Taurus's (250,000.00) it gets to point when a dealer is a few cars from the next stair step that he will actually buy the cars himself and title them and sell them like he would a grounded demo sort of. Here Larry Miller would have a huge advantage over the little guys if he is able to blow out a lot of Taurus's ...but other than that and some dealer development dealership pricing concessions a new dealer might be able to negotiate ...everyone pays the same. We used to buy Ford Trucks brand new out of Canada back when the exchange rate worked more favorably for us because we could buy them cheaper from Canadian dealers than we could buy them from Ford ...until Ford put their foot down and put a stop to that practice.
I hope that answers your question ...if not please ask a follow up or as many as you would like ... Larry Miller can sell Toyotas cheaper in Phoenix than your guy in ABQ because he can work on thinner margins due to their volume.
