When the economy is good, and people are employed and bringing home a regular paycheck, automobile and truck sales increase.
Car dealers and their sales people (no longer ‘salesmen’ since some are women) rank slightly higher than congressmen (and congresswomen) on the list of least liked and least respected professions. Finding an honest seller of cars isn’t quite as difficult as finding an honest politician.
With all the sales and pricing gimmicks imposed upon new car buyers these days, the only thing that keeps the peasants from revolting against local dealers is the good economy. When everyone has money, no one reads the fine print.
Sometimes the fine print isn’t so fine. Many Honolulu car dealers use an ancient sales trick that should be outlawed. The “adjusted market value“, or AMV. There are other names to describe the same trick, but let me stick with AMV for the moment.
The “adjusted market value” or AMV is an extra dollar amount that a dealer adds to the Manufacturer’s Suggested Retail Price of a vehicle. The MSRP. When a new car or truck hits the dealer’s lot, they add an AMV to the MSRP PDQ or ASAP.
Why? Because they can. The AMV may range from $1,000 to $5,000 on select cars and trucks. It’s an extra mark up the dealer adds to the price of the vehicle. If the MSRP is $25,000, the dealer may add another $2,500 on top of that. You’d pay $27,500 for the car.
What’s the AMV of $2,500? Profit for the dealer. Why is it there? The dealer’s sales representatives will tell you it’s because the cost of doing business in Hawaii is higher here than on the mainland, or some other nonsensical gibberish.
If a prospective buyer balks at paying an extra $2,500 the sales representative may say, “let me talk to my manager to see if I can get a discount for you.” After a trip to the water fountain or the rest room, the sales representative returns with a “hefty” discount. Perhaps $1,000.
That little act of deception may make some customers feel good. They balked, bargained, and saved $1,000. Except they also paid $1,500 more than MSRP anyway. All the dealer did was raise the price of the vehicle and then offer a small discount.
The same deal holds true if a used car trade-in is offered. Let’s say that the trade-in is worth $10,000 to the dealer on a new car deal. To sweeten the deal for a hesitant prospective buyer, the dealer can offer $12,000 for the trade, perhaps even more than if the owner were to sell the car outright.
Did the dealer actually give $2,000 more than the used car was worth? No. The dealer raised the price of the new car by $2,500, then discounted $2,000 but added it to the value of the used car. The end result is the same. The customer still paid more than MSRP.
What a great gimmick. All of us in Hawaii know that everything here costs more than on the mainland. New car buyers blindly accept an extra $2,500 (or whatever the AMV may be above the MSRP) as the cost of doing business. It’s a gimmick the dealer uses to make more money.
Not all dealers apply the extra adjusted market value to the vehicle’s sticker price. Saturn uses flat prices through the US, Hawaii included. Lexus and other quality automobile dealers do not add an AMV price to the sticker.
If you see an adjusted market value price on the sticker, ignore it. If the dealer won’t budge on the price, move on to one that will.
Yeah OK well i listened to you and refused to pay the markup. They told me they added a bit more because that car was in higher demand at that time. I got mad and walked out then i could not find that model again in the color i wanted. Thinking back, i would have just paid the extra to get that color combination.
I bought a 2000 Focus yeas ago and the AMV was 899 bucks, What a rip off!. Now I’m not happy about this! It’s just a way to sneak in charges that don’t appear on the contract! The Dealer is Earl Tindol Ford in Gastonia NC. Some salesman told me it was a Stereo feature that adjust volume, BULL!
Keep your guard up!