Mark Giammalvo specializes in driveability diagnostics at his family business, Sam Giammalvo's Auto Sales & Service, Inc. in New Bedford, MA.
Mark, who has been with the business for
over 20 years, is an ASE Master
Technician and Parts Specialist. He also holds the ASE L1
certification, and has an associates degree in business
Whatever The Traffic Will Bear
(Printed in the Journal
of The Alliance of Automotive Service Providers, AASP)
"Whatever the traffic will bear." A wise business statement also sometimes stated as: "Whatever the market will bear."
My father first educated me on the meaning of these statements years ago when the Honda Odyssey was first introduced. Back then, in the late 90's, we had gotten word that many dealers were charging 2,000 over the list sticker price. The Odyssey was new on the block and was a knock out seller for dealers. As a result, dealers had started asking over the sticker price and were getting it. Then it was the PT Cruiser when that made its first debut. We even had a customer that asked us if we could find one. In specific, he wanted the limited edition and in a specific color. We found it at a Chrysler dealer in NY. They would not part with it unless we came up with sticker plus 2,200. We called the customer and he came up with the money so we had the car shipped up to Mass. I remember thinking . . . "2,200 over sticker, what a loss he is going to take some day when he trades that car." Makes sense to me, a new car purchase at sticker price is a loss as soon as you drive it off the lot, let alone paying 2,000 more too boot.
Anyway, back then I could not understand two things: 1). Why would some people be foolish enough to pay more than sticker? and 2). How can the dealer charge more than the actual posted sticker price?
In answer to question number one, my father explained to me that price is often set at ‘Whatever the market, (or traffic), will bear. In other words, if supply is limited and/or the item is extremely popular, the public will pay more to acquire such products.
In answer to question number 2, the posted price on a vehicle is simply a ‘MSRP' (Manufacturers Suggested Retail Price). Simply stated, this price is merely a suggestion for the vender or dealer to go by. This price is by no means the price that the dealer must charge.
Back in the 1970's when Toyota was just beginning to blossom, we had a Toyota franchise. At that time it was not uncommon for Toyota dealers to add an extra sticker along side the window sticker. This sticker was known as an ADMU (Additional Dealer Mark-Up). The ADMU was printed to look like it was part of the factory window sticker. This ADMU listed extra items that the dealer had installed. Back then a typical ADMU might read: ‘Pinstripe 150.00, Rustprofing 90.00, winter mats 35.00. A few extras that added 275.00 to the car's price.
Although I had not seen these add-on stickers in years, this past week I again became aware of another use of the ADMU sticker. One of our customers had just come in showing us the new 2006 Z06 Corvette his wife had just purchased for him. The Z06 Corvette is a special rare model Corvette that lists for over 70,000. The customer then pulled out the window sticker with attached ADMU sticker from the dealer. The dealer had added on a 20,000 fee for the rarity of the Z06. Our customer claimed that he haggled on the extra 20,000 markup although he did not state what price that they finally agreed to. I guess in the end both the customer and the dealer left the table smiling.