What gives with dealers on tractor house?

[MORRISONSTEEL]

This really doesn't make any sense. You're not the one loaning the money, it's the lending company. They are the ones that assign risk, and they determine the financing rate based on that. Your dealership isn't getting any of that "additional interest" money, the lender is. Your dealership also isn't the one doing the repo to recuperate if the buyer defaults, again that's to the lender.

Now, if you decide to give a better deal to a valued return customer, or a customer that had sent business your way...then that's completely understandable and appreciated. But Joe Blow coming off the street shouldn't expect to pay different amounts...

My local Kubota dealer drives me nuts with their pricing. They start everything basically at MSRP and you have to fight tooth and nail to get down to a reasonable price. They do that on tractors AND implements, new and used.

As a very stark contrast, my closest Massey/Kioti dealer has a fantastic business model. He will literally show you what his cost on the machines are, and he builds in $1000 profit/commission for each new sale. No games, no drawn out haggling. Very honest guy. Does the same type process with implements too. And because of that, he has some of the lowest prices you'll see on Kioti and Massey products, and has earned a big following. His dealership is very successful.

I agree with the other posters... If I have to "call for price" then I probably won't bother. In my experience, when I do finally call, those prices are usually listed much higher than the other listings, and they don't list them because they don't want everyone to see that their price is higher.

Showroom is actually correct here in pretty much all of his statements. As far as the lending arm is concerned they are not necc accepting full recourse, many times this is on the dealer so yes this can affect the price. Is the dealer getting some of that interest, probably not necc in the form of an interest payment but would it be wrong for an oem to offer a bonus through their finance arm if said dealer uses them for a specific percentage of their sales? Nope, this could be done in many ways like interest rate buy downs, etc. As far as dealers "invoice cost" it is not a true reflection of the actual dealers realized cost AFTER the settlement of the machine. Invoice must be the same for legal reasons but how a dealer is reimbursed through other methods it is not. This can be done in many many ways, advertising co-op $, bonuses on sales levels or commitment levels, market share, order date, original purchase date, it really just goes on and on. The shear # of oem programs that exist for dealers is staggeringly complicated that for many dealers requires full time employees to monitor, train, approve deals based on how complicated it can be. Virtually every dealer is involved in some form of if not all of this, it is a completely honest trade practice and has been around for decades. It is not a tractor thing its really just part of the retail world when representing an original mfg.

 

[TSO]

I can appreciate that both if you are explaining your business practices, and the secrets behind dealer bonuses, rebates, etc. I'm happy that there are bonus rewards built into a retail deal for them.

But as a customer, it means very little to me. When my dealer gives me a deal that is close to the cost he paid, and I am able to see what his bottom dollar is (before he gets any potential rewards or rebate remedies, which aren't guaranteed?) then I am a happy customer. I certainly don't expect my dealer to share his bonus or commission reward with ME... That's his for being good at his job.

I think that all of us, as a customer, would appreciate this dealer practice, vs a dealer who makes you fight for a deal just so his initial commission can be higher.

 

[MORRISONSTEEL]

Correct, I don't believe it should matter to the end user either but was just trying to point out that customers do not necc receive the same price treatment and that it is not a dishonest practice. You are either happy that a fair deal is being made or not. These points are not really trade secrets its just part of the "game". I think that for the casual forum observer it is not clearly understood just how much revenue is generated by dealers after and during the sale because they do it right (not cheap) and that often times losing a sale based solely on price does not equal a net loss to their bottom line. It just means they stayed away from a potentially bad deal, if something goes haywire and there is not enough margin left over to properly correct then everyone is mad and has lost money and the relationship is probably damaged forever. For me saving big on one side only to get the shaft on the other does not constitute a good deal, I will gladly pay more upfront if I am convinced that the support will be there when I need it, especially considering what downtime can cost. Some of the most successful and long running dealers believe and prove to their customer base that they are worth the extra money and consequently don't believe that they are going to capture those purchasers who care only about the price. Price only selling from my experience does not breed customer loyalty. That said there is a middle ground to how much revenue can be garnished from a customer regardless of how good the support is, one of my favorite selling quotes is "you can fleece a sheep many times, but you can only skin it once".

 

[MessickFarmEqu]

He may not be "deceiving" you, but he sure as heck isn't making $750-$1000 on each sale.

speaking for us... this happens frequently. We have several $25-$30,000 products where a sub $1000 margin is totally normal. You'd pay more tax than we make in profit.

Profitability in the equipment business comes from parts and service, you pretty much give equipment away to make money on the long term service and support aspects.


Personally. I am not a big fan of Tractor House. For one is extremely expensive to advertise and almost all the value any more comes from their website, but they won't let you list on the website without also paying for the print issues. Their page counts go down year and year as more dealers realize you can't recoup your advertising investment in sales.

 

[Sprinklerman]

speaking for us... this happens frequently. We have several $25-$30,000 products where a sub $1000 margin is totally normal. You'd pay more tax than we make in profit.

Profitability in the equipment business comes from parts and service, you pretty much give equipment away to make money on the long term service and support aspects.


Personally. I am not a big fan of Tractor House. For one is extremely expensive to advertise and almost all the value any more comes from their website, but they won't let you list on the website without also paying for the print issues. Their page counts go down year and year as more dealers realize you can't recoup your advertising investment in sales.

Hey , great , since you are giving away equipment , I will be there in the morning .

 

[ovrszd]

I think buyers (and some people in this thread) think they know the system and get a great deal, but then when faced with the truth get upset. I'd love to start a thread highlighting how stuff is ACTUALLY priced, so people can be aware. Maybe it would save some people some money.

Again, I agree. The most common fantasy is 0% interest being free financing.

 

[DarkBlack]

Tractor, or other devices for sale. I have never ever, ever had a positive outcome from a company that lists "call for pricing ". That's all I have to say regarding the topic of this thread.

 

[ultrarunner]

I'm grasping to recognise the logic of your post.

1. Someone who knows nothing about tractors . . how would they know about TractorHouse then?

2. "Bait and Switch" . . then by your theory . . every car and truck dealer is the same because every ad they do is a call for price. And motorcycle dealers and stv and snowmobile dealers etc. etc..

3. According to your post people just "send in big chunks of money for items sight unseen" . My my your logic seems very emotional and assumptive rather than objective. . . do you have any personal awareness of you or others doing that?

All new vehicles are mandated to have the FTC sticker on the window... makes it easy to compare.

A lot of the used cars have prices on the window too...

 

[ovrszd]

I can appreciate that both if you are explaining your business practices, and the secrets behind dealer bonuses, rebates, etc. I'm happy that there are bonus rewards built into a retail deal for them.

But as a customer, it means very little to me. When my dealer gives me a deal that is close to the cost he paid, and I am able to see what his bottom dollar is (before he gets any potential rewards or rebate remedies, which aren't guaranteed?) then I am a happy customer. I certainly don't expect my dealer to share his bonus or commission reward with ME... That's his for being good at his job.

I think that all of us, as a customer, would appreciate this dealer practice, vs a dealer who makes you fight for a deal just so his initial commission can be higher.

I'd venture to say all major brands now give "rebates" or whatever you want to call it back to their dealers on sold products. It's a very clever marketing trick on their part. That frees the dealer to show his customer his "cost" on the item, knowing fully well that he's going to get a kickback from the manufacturer. It's Capitalism at it's finest. What makes this Country great!!!

Everyone is free to call it what they want and what makes them feel good. Just like 0% financing. Only thing wrong with these practices is I didn't invent em.

 

[ultrarunner]

speaking for us... this happens frequently. We have several $25-$30,000 products where a sub $1000 margin is totally normal. You'd pay more tax than we make in profit.

Profitability in the equipment business comes from parts and service, you pretty much give equipment away to make money on the long term service and support aspects.


Personally. I am not a big fan of Tractor House. For one is extremely expensive to advertise and almost all the value any more comes from their website, but they won't let you list on the website without also paying for the print issues. Their page counts go down year and year as more dealers realize you can't recoup your advertising investment in sales.

My Grandfather always said his business would be more profitable if he were to get the same cut the government does... 10% here.