Pricing

[Hyundai Genesis]

Thanks, Duaine! I'm glad you decided to stick around.

[gentau]

Originally Posted by Hyundai Genesis

Keep in mind the fact that they have 41,334 members to discuss this - we have 248. There's bound to be more interest there.

A good point. I guess I was just expecting more reaction from the 248 members of the Hyundai Genesis Forum.

[unknown_owner]

Originally Posted by mkaresh

A larger factor is the bonus the dealer can earn with high CSI scores. My understanding is that many dealers rely on this bonus to turn a profit, since cars often sell for around invoice.

Can you elaborate more on the CSI thing? Does the bonus help me the consumer or the dealer overall?

[mkaresh]

Originally Posted by GenFan

Hey EdVoylesHyundai, are we going to have to pay full MSRP or more when the Genesis arrives? I've never bought a Hyundai or dealt with a Hyundai dealer so I don't know what their position on this new product will be.

They'll wait and see how strong the initial demand is, and price accordingly.

I suspect most Hyundais sell for around invoice minus rebates.

[mkaresh]

Originally Posted by unknown_owner

Can you elaborate more on the CSI thing? Does the bonus help me the consumer or the dealer overall?

It'll probably mean that the salesman will explicitly ask you to give him perfect scores. They'll use most of the bonus to pay the bills, as their earnings on the sale itself will be minimal unless demand for the Genesis is strong.

[Genesis X]

Hyundai car at Lexus prices. I think not.

[GrandPrix08]

btw, are these prices official? cause, if it is, Hyundai is making a big mistake. If it isn't, well, we never know. With the projected arriving date so close, I just hope these $40K+ loaded price is not true, since, as Korean myself, I want to see Hyundai succeed, not failing as they did before, though I am not a fan of any of their products.

[EdVoylesHyundai]

Originally Posted by GenFan

Hey EdVoylesHyundai, are we going to have to pay full MSRP or more when the Genesis arrives? I've never bought a Hyundai or dealt with a Hyundai dealer so I don't know what their position on this new product will be.

Understandably, we are extremely excited about this new product. As with most new, groundbreaking models, I am sure there will be dealer addendums and markups to the vehicles initially. This is going to be a fairly low-volume car, so don't expect to see dealers with 20 Genesis sedans that are about to have a birthday that just need to get sold. I would suspect that initially, discounts are going to be hard to come by, but as the model ages, rebates will come and the "newness" of a new model will wear off and they discount them more readily.

On a side note, I am reading a lot of posts here with people talking about both huge discounts off the new Genesis and its anticipated "low" resale value. Most people don't seem to understand or actively recognize that the resale value of a vehicle is based in large part on how much discount is being given off of the new version of the same vehicle. Everyone wants to pay $2000 behind invoice for a new car and then expects the car to be worth all the money when they go to trade it. Unfortunately, not only does it not work that way, it can't work that way. Case in point, I worked at a Toyota store back in 2000-2001 and I had a customer with a 2000 Suburban that paid $40k for his truck about a year prior to his visit. It was still basically new, with only 10k or so on it. He wanted at least $30k for his trade. Seems reasonable, right? Gas prices aren't sky-high, truck is still like-new, etc... Except for the fact that Chevy was discounting their new, aging Suburbans $10,000 on the lot!! I couldn't seem to get him to understand that we weren't trying to rip him off. Rather it was GM who had pulled the rug out from under his feet by so heavily discounting the new models that the resale of the newer used models nose-dives. There was simply no way we could make a business case for paying him $30k for his used Suburban when a customer can walk into a Chevy store and buy the same thing brand new for $30k.

My point is, if dealers can keep from whoring these things out, they are nice enough that they may actually retain a decent amount of value a couple years down the road.

[EdVoylesHyundai]

Originally Posted by GrandPrix08

btw, are these prices official? cause, if it is, Hyundai is making a big mistake. If it isn't, well, we never know. With the projected arriving date so close, I just hope these $40K+ loaded price is not true, since, as Korean myself, I want to see Hyundai succeed, not failing as they did before, though I am not a fan of any of their products.

As far as being "official", what you read on the first page is basically a copy/paste of the press release from Hyundai. That said, Hyundai reserves the right to change pricing and equipment at any time.

[EdVoylesHyundai]

This is just a personal observation. It seems that a lot of people are bent out of shape about the pricing of the Genesis. How many of you have actually experienced the Genesis? Driven it, touched it, smelled it, heard it, etc... Until you do, all you are doing is buying a number. And that is no fun. I see this play out day after day after day. The people that are the happiest with their purchases and are the happiest customers and refer you business, etc.. are the people who pay all the money for the car. The people who are a pain to deal with, are always grumpy, won't refer you anyone and slam you on your CSI survey when you bent over backwards for them are the ones who felt it was necessary to haggle down to the last penny. I think it is because the people who paid all the money for the car bought the car. The people who haggled for four hours and went lunch twice and drove all over town to six dealerships and spent three weeks of their lives negotiating the absolute "best price" bought the price. There is a difference. I have seen it in all 5 of the dealerships in which I have worked. There is a different mentality there. The management team here discuss this phenomenon all the time. How do we change the "Grrr, I have to go to the dealership to buy a car so I am going to be a dick and make the experience miserable for everyone" mentality? We aren't here to take advantage of anyone. We provide a service. Just like any other service, it has a cost associated with it and the renderer should expect some sort of profit. Otherwise, what's the point?

I understand people don't like to pay more than they have to for things they need. It makes it harder to buy something for retail when you know what it cost the reseller. It gets harder still when it is a big ticket item b/c people see the dollar value of the markup, not the percentage of the markup. I worked for Walmart in high school. I got a peek at their little pricing scanning gun once. The items I saw on the screen were marked up anywhere from around 50%-150%. Fifty to one hundred-fifty percent! So that tube of toothpaste you buy for $3.97 just made Wally World a 100% return on their investment! They doubled their money. For comparison, a $25k Sonata will typically have an invoice of around $23k and a hold-back of around $600. Leaving out rebates for the time being, if the dealer sells the vehicle at full MSRP, $25k, they make roughly 11% return on their $22,400 investment in the car. AND that is before they pay any salespeople, managers, etc... The mark-up on a $13,000 Accent is all of about $200. Go figure that. If hold-back was $300, that makes for about a 1% return on your $12,500 investment, sir. Would you like to renew your contract with our money manager? You'd likely give your stockbroker the finger if that hapened. Dollar for dollar, if Walmart invests $1,000,000 in store inventory and they sell it all, they likely make a gross profit of $1,000,000 of YOUR money. If a dealer invests $1,000,000 in inventory and sells it all, IF they sell it all at full retail, they likely make roughly 8-10%, based on what sold. $80,000-$100,000 of gross profit for the same investment as Wally World. People don't mind paying Walmart 100% markup for basically zero service and just product, but for some reason they are not ok with paying a dealer from 1% to 11% markup for a full walk-around presentation, vehicle wash and detail, full tank of gas, full delivery including demonstration of features and training on how to work the knobs and buttons, a contact (a real person) they can call if they have a problem, etc...PLUS the product.

Sorry to vent. I am an incurable optimist. I, for some reason, feel that if people understood the dynamics, they might change their behavior. Who knows... Anyway, I appreciate all the questions and responses from everyone here. I will do my best to continue to answer in a timely manner.

[mkaresh]

Nicely put.

I personally think the pricing is very good. But the problem I think people are having is that Hyundai implied that the prices were going to come in about $3,000 lower. They created an expectation.

If Hyundai had said the car was going to start in the mid-thirties rather than under thirty, then came in at $33,000, people would be happy with the price.

[Genesis X]

I appreciate your cander and inside information for all us interested in this new vehicle. You participation in these discussions is extremely valuable. I hope that when I do purchase a new vehicle my salesperson is similar to you as you seem like a reasonable, fair, and honest person. But...

1. How much does the dealer make on inhouse financing? 1 pt.?
2. What's the ROI on extended warranties? Rust proofing? Fabric protection? etc.
3. Gap ins.?
4. Window etching?

I'm of the understanding that there is little profit in new cars. The money is made on the back side of the deal with the trade and those items mentioned above. Then the service dept.

I guess I can only say that if most of our collective experience was with sales people such as your self we might not be out the get the dealer so to speak. I don't have a problem with dealers making money. Just protecting my personal finances.

It kinda boils down to one thing. This new internet thingy. It has changed the world and how we all do business and how much info buyers have access to.

[gentau]

EdVoylesHyundai,

I appreciate your contributions to this forum so please don't think my comments are directed at you personally...they are not. Rather, they are strictly my thoughts based on more than fifty years of observations as an incurable car nut.

Originally Posted by EdVoylesHyundai

Understandably, we are extremely excited about this new product. As with most new, groundbreaking models, I am sure there will be dealer addendums and markups to the vehicles initially. This is going to be a fairly low-volume car, so don't expect to see dealers with 20 Genesis sedans that are about to have a birthday that just need to get sold. I would suspect that initially, discounts are going to be hard to come by, but as the model ages, rebates will come and the "newness" of a new model will wear off and they discount them more readily.

That is exactly the philosophy that Pontiac dealers followed when the GTO was reintroduced in 2004. I think we are all familiar with how that worked out. The GTO was also a low volume car with only 40+ thousand shipped to the States over three model years. The last model year for the GTO was 2006 and there are still a few of those languishing on showroom floors as I write this.

Frankly, I am not nearly as excited about the Genesis now that I have seen the pricing. Hyundai advertisements led us to believe that the base pricing would be lower. I believe that Hyundai (Corporate) is making a serious mistake by not following through with what the ads implied. I also believe that if the dealerships fail to recognize that fact, and follow the sales philosophy you outlined, it will magnify the corporate mistake many times over.

Originally Posted by EdVoylesHyundai

This is just a personal observation. It seems that a lot of people are bent out of shape about the pricing of the Genesis. How many of you have actually experienced the Genesis? Driven it, touched it, smelled it, heard it, etc... Until you do, all you are doing is buying a number. And that is no fun. I see this play out day after day after day. The people that are the happiest with their purchases and are the happiest customers and refer you business, etc.. are the people who pay all the money for the car. The people who are a pain to deal with, are always grumpy, won't refer you anyone and slam you on your CSI survey when you bent over backwards for them are the ones who felt it was necessary to haggle down to the last penny. I think it is because the people who paid all the money for the car bought the car. The people who haggled for four hours and went lunch twice and drove all over town to six dealerships and spent three weeks of their lives negotiating the absolute "best price" bought the price. There is a difference. I have seen it in all 5 of the dealerships in which I have worked. There is a different mentality there. The management team here discuss this phenomenon all the time. How do we change the "Grrr, I have to go to the dealership to buy a car so I am going to be a dick and make the experience miserable for everyone" mentality? We aren't here to take advantage of anyone. We provide a service. Just like any other service, it has a cost associated with it and the renderer should expect some sort of profit. Otherwise, what's the point?

I understand people don't like to pay more than they have to for things they need. It makes it harder to buy something for retail when you know what it cost the reseller. It gets harder still when it is a big ticket item b/c people see the dollar value of the markup, not the percentage of the markup. I worked for Walmart in high school. I got a peek at their little pricing scanning gun once. The items I saw on the screen were marked up anywhere from around 50%-150%. Fifty to one hundred-fifty percent! So that tube of toothpaste you buy for $3.97 just made Wally World a 100% return on their investment! They doubled their money. For comparison, a $25k Sonata will typically have an invoice of around $23k and a hold-back of around $600. Leaving out rebates for the time being, if the dealer sells the vehicle at full MSRP, $25k, they make roughly 11% return on their $22,400 investment in the car. AND that is before they pay any salespeople, managers, etc... The mark-up on a $13,000 Accent is all of about $200. Go figure that. If hold-back was $300, that makes for about a 1% return on your $12,500 investment, sir. Would you like to renew your contract with our money manager? You'd likely give your stockbroker the finger if that hapened. Dollar for dollar, if Walmart invests $1,000,000 in store inventory and they sell it all, they likely make a gross profit of $1,000,000 of YOUR money. If a dealer invests $1,000,000 in inventory and sells it all, IF they sell it all at full retail, they likely make roughly 8-10%, based on what sold. $80,000-$100,000 of gross profit for the same investment as Wally World. People don't mind paying Walmart 100% markup for basically zero service and just product, but for some reason they are not ok with paying a dealer from 1% to 11% markup for a full walk-around presentation, vehicle wash and detail, full tank of gas, full delivery including demonstration of features and training on how to work the knobs and buttons, a contact (a real person) they can call if they have a problem, etc...PLUS the product.

Sorry to vent. I am an incurable optimist. I, for some reason, feel that if people understood the dynamics, they might change their behavior. Who knows... Anyway, I appreciate all the questions and responses from everyone here. I will do my best to continue to answer in a timely manner.

I cannot argue with anything you said in this post. The mentality that you described among car buyers in the United States certainly is factual. It has been so deeply ingrained in us that it is, for lack of a better term, "the American way". I am 71 years of age and have never paid full retail for any new car I purchased. To the best of my knowledge, the only time my father ever paid full retail was for a 1946 Dodge shortly after WWII when all autos were in extremely short supply. Perhaps, it goes back to the old days of "horse swapping"; but haggling over the final price of an automobile is something that we have all been taught from birth.

Shopping at a retail store (Walmart) is another case altogether. We have been taught from childhood that the marked price is the final price...take it or leave it. Again, it's "the American way". Other than searching for sales or clearance prices, we have no options at a department store, grocery, or the gas pump.

Interestingly, this is not true all over the world. I spent three years in Germany during the seventies and found automobile shopping to be quite different. The price of a new car was set by the manufacturer and all dealers sold the cars for that price. The dealer could not discount the new car...nor could they charge dealer addendums.

When I visited Hong Kong in the sixties, I was surprised to learn that everything there was subject to haggling. The counter clerks in the large department stores were even authorized to negotiate the price of items sold. I'm pretty sure their authorization had limitations; but the point is that everything sold could be negotiated.

Thanks again, EdVoylesHyundai, for your participation here. IMO, you add a lot to this forum.

[Viking]

I can see both sides of this issue. When Hyundai made the "starting price of well under $30k" comment, it was based on offering a 3.3L as the base. I am sure they had good reason to change course (and not offer the 3.3L here), but I think there is a significant psychological distinction between "well under $30k" and $33k -- especially in the minds of buyers that will be in the market for a vehicle like this (large, premium vehicle at a reasonable price). I put myself in that category.

Based on the under $30k comment, I had the expectation that I would be able to get a fully loaded V-6 for around $36k. $40k is a big difference in my mind so my decision will have to be based on whether the package at $36k still appeals to me - without all the bells and whistles - compared to other vehicles in that price range. The Genesis is larger than most in that price range (G35, etc), and I like the look a lot more than my current Avalon.

[Viking]

EdVoylesHyundai: When do you expect Genesis lease pricing packages to be available from Hyundai?