New Policy at Volvo Dealerships

[Ransman]

Just something I would value other people's comments on.

It seems as though XC60's are going to be "on allocation" to dealerships. What this seems to mean is that, if they commit to selling 50 in a year, that's all they will get.

Why do this? XC60 production doesn't seem to be able to keep up with demand at the moment and this would seem to be a way of stopping the dealers who operate through "Drive The Deal" of selling the cars cheap and still making a (albeit smaller) profit. It must really pee the dealers who don't do it off when they are quoted the DTD price and asked to match it, so it will also be a way of keeping the rest of the dealer network happy.

Anybody know what margin the dealers operate on? I have been told 12% but I just cannot see how DTD could be offering 19% if 12% is all they are making. Surely they are telling porkies???

[deathrider311271]

it is quite possible they are operating on a 12% profit for each vehicle, however they also get a volume bonus ie the more new cars they shift the bigger the bonus at the end of each month.

I worked for Peugeot for several years and they worked on 15% profit at full price with a minimum of 8% back end bonus, however as we were one of the bigger sellers we were on 25% back end bonus so as you can see 19% is easily acheivable. Even if on paper it shows a loss for that particular vehicle overall they will make a profit.

[Ransman]

Thanks for the input.

The dealer I have been speaking to said the 12% included the back end bonus. I just do not believe it from the evidence I have seen.

[wimorrison]

Originally Posted by Ransman

Just something I would value other people's comments on.

It seems as though XC60's are going to be "on allocation" to dealerships. What this seems to mean is that, if they commit to selling 50 in a year, that's all they will get.

Why do this? XC60 production doesn't seem to be able to keep up with demand at the moment and this would seem to be a way of stopping the dealers who operate through "Drive The Deal" of selling the cars cheap and still making a (albeit smaller) profit. It must really pee the dealers who don't do it off when they are quoted the DTD price and asked to match it, so it will also be a way of keeping the rest of the dealer network happy.

Anybody know what margin the dealers operate on? I have been told 12% but I just cannot see how DTD could be offering 19% if 12% is all they are making. Surely they are telling porkies???

On the other hand it could be a way of getting committed demand to aid the production planning process - if dealership sells through DtD or similar then there is nothing stopping them committing to selling 100 or even more, it is simply another sales channel.

BTW, my dealer must have been crying when he sold me mine as I got more than 12% discount

p.s, he wasn't and he still talks to me asking when I am buying the next one.

[Tiger1057]

Originally Posted by wimorrison

BTW, my dealer must have been crying when he sold me mine as I got more than 12% discount

p.s, he wasn't and he still talks to me asking when I am buying the next one.

I think you will find he was ****ing himself laughing hence why he is looking for your repeat custom

[simonjedrake]

Originally Posted by wimorrison

p.s, he wasn't and he still talks to me asking when I am buying the next one.

I will tell you the real reasons why the dealer is after your "repeat" custom already:
1. To ensure your 2nd hand XC60 remains within the Volovo dealership network which means that with a limited supply of new cars they can not only make a good margin on resales, but also importantly keep the XC60's residual value higher thereby keeping up the list price up as well.
2. To make more margin on the next sale to you..............

[volvorocks]

Brokers offer discounts and source the cars from dealers, so if Volvo limit the supply to dealers, the dealers knowing they may be able to sell their allocation to their customers direct due to demand ,they command a higher price and thus resale value of second hand ones is better.

In China there is a high demand for luxury products as after all its an emerging economy. Levels of profit are higher in China than the UK as in the UK the £ against the Euro and the dollar is squeezing profits. Thus limiting supply ,controls and improves used values as well as maintaining higher new prices.

Tried getting an R8 for a discount recently??

From the horses mouth!

Regards

[wimorrison]

Originally Posted by Tiger1057

I think you will find he was ****ing himself laughing hence why he is looking for your repeat custom

The logic behind your comment escapes me

[Ransman]

Welll one dealer isn't after my repeat custom.

Comparing with what a similar vehicle is going for on Volvo Selekt at the moment there is a £6k difference between that figure and what they are offering for mine for a March change. They are having a larf.

[Matteus XC60]

Originally Posted by wimorrison

The logic behind your comment escapes me

I'm sure he simply means you're a happy-go-lucky chap with a highly developed sense of humour Iain. I mean, who wouldn't be laughing in your company....