[Oh Captain My Captain]

I am wondering what happens when an order is canceled. While discussing my purchase of a Z4, another dealer next to me was on the phone struggling with a client who apparently was canceling or backing out of a recent deal. The dealer was upset at the end of the call and apologized to me for having to listen to him rant. He then went to speak with the sales manager.

I looked at my dealer and quipped " I hope we don't ever have that conversation." His reply, "If we did. I would hunt you down and burn your car to the ground." Nervous laughter from both of us at that. We made the deal and shook hands and I handed over a check to reaffirm my commitment in light of what we had just both witnessed.

Still, it left me wondering how in the hole a dealer is when an order is canceled. Obviously if the buyer walks away when the car is sitting on the lot, its a much bigger loss than if the car has not started production yet; but how much of a difference is there? How often does it happen? In this economy I would think that every sale is crucial to the salesperson's livelihood.

Any salespeople care to comment?

[maswastage]

As far as I'm aware, they don't suffer anything except the risk that another buyer won't want that car. Most of the time, when you order a car the dealer just changes the specs of a car that they would have received anyway.

[Spec 1]

Perhaps they had already placed an order for the car, so theyve fronted $30k into the sale, and in a down economy the buyer backs out at the last second. Dealer stuck with $30k vehicle they didn't need, buyer twiddling thumbs at home in old Volvo.

[jopa489]

The wasted time probably bothers them more than ordering an extra car. In the end, it's just another car and someone will buy it.

[Oh Captain My Captain]

Originally Posted by Spec 1

Perhaps they had already placed an order for the car, so theyve fronted $30k into the sale, and in a down economy the buyer backs out at the last second. Dealer stuck with $30k vehicle they didn't need, buyer twiddling thumbs at home in old Volvo.

So does the dealer get charged a % as soon as the order is placed and do they lose that ? If this were the case, I'd expect every dealership to ask for a large deposit on the car.

[Spec 1]

Originally Posted by jopa489

The wasted time probably bothers them more than ordering an extra car. In the end, it's just another car and someone will buy it.

Not necessarily, especially in this economy. Perhaps the vehicle has an odd combination of options as well, making it less likely to sell.

Originally Posted by Oh Captain My Captain

So does the dealer get charged a % as soon as the order is placed and do they lose that ? If this were the case, I'd expect every dealership to ask for a large deposit on the car.

I'm not 100% on if the dealer is charged when the order is placed, but I would imagine so. Most dealers DO take deposits on ordered vehicles, and again we're not sure how far along in the process this particular customer was. Another thing that would upset the salesman is his commisions. He is paid his comission after the sale has been "finalized" (papers signed, deposit down). If cancelled, the salesman you spoke to may have lost himself a large amount of money. Many people losing upwards of $1000 spending money before the holidays most likely won't be too happy. Regardless of impressions the majority of car salesman don't take home large incomes.

Having said all that, it still sounds like he could have had more tact.

[jibaholic101]

the dealer has to front the cash for the order, what you dont put down. so they paid for part of a car that was supposed to be for a customer.

in theory the customer loses their deposit, and the dealer either cancels the order, changes it, or takes delivery of it and tries to sell it depending on the point in production

[Technic]

Originally Posted by jibaholic101

the dealer has to front the cash for the order, what you dont put down. so they paid for part of a car that was supposed to be for a customer.

in theory the customer loses their deposit, and the dealer either cancels the order, changes it, or takes delivery of it and tries to sell it depending on the point in production

Depending of state laws, deposits cannot be kept and are reimbursed to customers for cancelled/not delivered goods.

At least in the BMW NC plant, all the cars made have to be paid in full before they put the first bolt in them. Thus a cancelled order for a dealer is another extra cost for that month, as they have to pay for that car in full once ordered.

[Sal@AUTOcouture]

They lose a sale which in some cases means they don't hit their bonus which can be costly depending on specific factors. Other than that...nothing really. Most dealerships don't "own" the cars on the lot anyway...they have whats called a floorplan which means they pay a daily amount on the car and once sold and funded, they pay the manufacturer.

[Oh Captain My Captain]

It truly is a heartless business model. Customers making deals with a handshake then backing out, dealers trying to jack up the cost of the car to make the most profit, everyone having a slight distrust of each others motives. Maybe Saturn had the right model in trying to put out a fixed price that was reasonable?.

While I would like to pay as little as possible for a new car, I would be totally ok with a price up to $1,000 over invoice. The dealer making 1.5%-2% profit seems reasonable to me. They have mouths to feed as well. Having said that, I will be paying less than $1,000 over invoice for my Z4.

Would people in the luxury car department be ok with a fixed price? Or does everyone want that satisfaction that they paid less for their car than the other guy next to them?

If the order is canceled before production starts, does the dealer lose money?

[Nawaaz]

If I were to back out of my M3's special order 6 months ago, I'm 110% sure that my dealer would be so much more PISSED than the average cancellation.......Because I ordered a stripped M3 with barely any options at all!

I had my heart set in it, so there would've been no way I would've cancelled. Yet I can understand that last minute SH!T happens to even the most perfect people...

[e46mpwr]

They lose nothing except a sale and the ability to order the car how they *think* someone else would order it. To be honest, a stripped M3 depending on how stripped it is, can be good for the dealer since it's a lower sticker which means more people will look at it.

Originally Posted by Nawaaz

If I were to back out of my M3's special order 6 months ago, I'm 110% sure that my dealer would be so much more PISSED than the average cancellation.......Because I ordered a stripped M3 with barely any options at all!

I had my heart set in it, so there would've been no way I would've cancelled. Yet I can understand that last minute SH!T happens to even the most perfect people...

[Peter@VMRWheels]

Originally Posted by Nawaaz

If I were to back out of my M3's special order 6 months ago, I'm 110% sure that my dealer would be so much more PISSED than the average cancellation.......Because I ordered a stripped M3 with barely any options at all!

I had my heart set in it, so there would've been no way I would've cancelled. Yet I can understand that last minute SH!T happens to even the most perfect people...

They can always install a few options/accessories to make the car better for marketing purpose. Besides, they can also advertise your particular car at invoice to bring buyers into the door, and when buyers come in, they realize they want a few more options, and get upsold a different car.

[Davin]

good info!

[Oh Captain My Captain]

When I had changed from getting the X6 to the Z4, my dealer had no issues. The order was changed about two weeks after I was given a production number. Production had not yet started on the X6 when the change was made. I was given no grief and got an even better deal on the Z4.

At no point was I asked to give a deposit. I think the most I've ever given for a deposit was $500.