Filed under: Car Buying, Hybrids/Alternative, Sedans/Saloons, Wagons/Estates, Green, Marketing/Advertising, Volkswagen
VW and its dealers butting heads over Jetta TDI?
We recently received a note from an anonymous source indicating that there's a mildly strained relationship between VW and some of its dealers. The source of the consternation seems to be the highly anticipated Jetta TDI, which was just recently released in the U.S. market. Apparently, Volkswagen of America has gotten complaints that some dealers are adding a significant markup on the new and desirable model -- a big problem for many automakers when a new model makes its initial introduction. The dealers are eager to make some money on the new cars while VW is concerned that customers may just look elsewhere because they feel they're being treated unfairly. What's more, some VW dealers may not be all that excited by the new model as there aren't that many available quite yet.
This is a situation that's frustrating for the dealers, VW and, most importantly, prospective customers. Volkswagen promises that the situation will improve, and we hope it does. If the clean diesel engine is truly capable of returning the kind of fuel mileage that VW says it can, the Jetta TDI sedan and Sportwagen may indeed offer an ideal alternative to gasoline-sipping hybrids, that is, if customers can put up with the buying process.
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Reader Comments (Page 1 of 5)
s12dave 5:01PM (9/01/2008)
Thanks for looking out for me VW. If I can get one for msrp I'll buy it.
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BobbyBud 5:27PM (9/01/2008)
I am not so sure about these new TDIs. The EPA ratings are a lot lower than promised, a best of 34 combined w/the 6-speed manual. They are also very complex, and diesel is so much more expensive these days.
2007RC46SP2 7:43PM (9/01/2008)
as i was driving home over the weekend, i passed an exxon truckstop that had one of those really tall 200+ ft freeway signs. it had the prices at $1.09 for Reg and $.99 for diesel.
as you get near the station you could see the newer digital sign at $3.69 - $3.99
oh those were the days. funny it was less then 10yrs ago.
zamafir 11:42PM (9/01/2008)
What state are you in, everyone i know who's purchased a sportwagen tdi or tdi sedan (including two people i've referred to my dealer) have done so at MSRP. Nothing crazy or new going on here. all the autozone owned dealers are asking for a mark up as they do on any vw. Maybe some people are just living under rocks or something. VW, Toyota, Audi, I only deal with fleet/internet sales people and have never had issue purchasing any car below MSRP (if it's petrol) or at MSRP (if it's diesel).
Though i guess hearsay makes for sensational articles on here.
Epyx 8:47AM (9/02/2008)
zamafir - how is ABs hearsay any different than yours?
gary 9:05AM (9/02/2008)
i got mine on the first day. i paid list. this is really great car. i just took it on 500 mile trip running at 75 mph for the most part. 46.9 mpg average. vw should be very unhappy with the epa estimates. they are off the mark. i also own an 05 mercedes e320 cdi. it gets around 34 mpg for the same trip. i am very satisfied.
dave 2:15PM (9/02/2008)
I have a Tdi. I avoided dealing with the salesguy and the markup. I bought it thru the dealers Internet department. Most VW dealerships have them. In one move, you can see the MSRP, the dealer markup and either order/not order in one step.
mike 5:15PM (9/01/2008)
This is one of those thorny issues. On one hand greedy dealers are driving costumers right into the arms of other car manufacturers.
On the other hand VW cars have such a bad reputation in terms of quality that dealers have been waiting for some time for a car that can deliver them some extra money.
P.S. Why can’t companies sell certain cars directly to consumers avoiding the dealer altogether, I am talking about such cars as GT-R and other small scale, super cars.
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Tourian 5:57PM (9/01/2008)
If manufacturers sold direct, then you'd never be able to buy a car for below sticker - and I'm sure no one ever complains about that. People only want to cut out the dealers when the laws of supply and demand don't work in their favor.
tekdemon 11:40PM (9/01/2008)
If manufacturers sold direct they'd still have to compete with each other, so the sticker would just be lower than the current MSRPs are since there isn't a middleman.
Anyways it'd be good if the manufacturers had more control or even ownership of dealerships since they could control the customer experience better instead of letting shady car salesmen ruin their image.
tekdemon 11:53PM (9/01/2008)
What's with all the VW salespeople and their stories about how customers will just turn around and resell these? You guys realize that just to break even a regular customer would have to sell the car for the price they paid plus the sales tax they had to pay.
So if I bought a $20,000 car I'd only break even at $21750 (sales tax is 8.75 here).
Point is, it's not profitable for a regular person to go buy a car and resell it unless the mark up is much, much, higher than that.
If there really was a customer who bought it and then resold it for an extra $3000 they most likely just wanted to get rid of the car since they're definitely not making anything near $3000 after eating the sales taxes.
JEziquiel 9:32AM (9/02/2008)
I've been wondering the same thing, as the "added value" of the dealership experience often ends up being negative anyway.
I had a VW, and the dealers were easily the most frustrating part of owning the car. If a car is going to need constant service, I'd expect a little respect for how often I was in and out of there.
I'm guessing the real problem is up-front costs. I remember being told on the tour of the BMW Spartanburg plant that all cars built at BMW factories had already been paid for by either dealers or customers. BMW didn't actually build any car without a build order.
Basically, its the only way they can run the business without taking on a massive amount of debt. If the manufacturer had to own the car until it was sold, then they would be paying their suppliers and distribution out of pocket -- and waiting to recoup their investment on the sale. Imagine how disastrous that would be today, with sales slumping so low?
The only way out is offer a direct-buy network with pretty much 0 stock of cars, with cars built-to-order only after a customer has initiated the transaction.
Andy 5:17PM (9/01/2008)
All VW need to do to solve this problem is actually ship them.
Econ 101: You can have price control or you can have availability. You can't have both.
I ordered one in SF Bay Area. Several dealers are selling at MSRP without markup. Their allotment, I'm told, is determined by lot time. The longer it sits on the lot before sale, the fewer the dealership will get.
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zamafir 12:09AM (9/02/2008)
Yup, all the successful dealers will sell at MSRP if not to bring in more tdis, than simply to receive a higher kick back from VW. There are many obvious reasons some dealers mark up all their cars with market adjustments, and others, who don't, move higher volumes.
sfast 5:19PM (9/01/2008)
Yeah, I'm hearing there is a mandatory two grand mark up. VW just needs to pump out more of them. Then again, that is just more to recall when they have problems.
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montoym 11:25PM (9/01/2008)
I think you are confusing a markup with the cost of the diesel option. A TDI Jetta costs about $2000 more than a comparable gas Jetta.
That has nothing to do with the how much the dealer adds on to the cost if they choose to add an additional fee, that's just the cost of the engine option basically.
There is no way you are ever going to see every dealership band together to determine that a mandatory $2000 markup should be applied to each TDI sold. If that's not where you were going with the "mandatory mark up" comment, I apologize, but that's the only way I could see to read into that.
Additionally, at least for a while, the Feds are going to throw in a $1300 tax credit, so that difference actually drops to $700 which will be erased fairly quickly with the savings you'll see with the diesel even despite a higher per gallon cost.
Some quick calculations to show the savings:
54% better mileage with the TDI vs. the 2.5L gas Jetta(34mpg vs. 22mpg combined figures). That's even usign the horribly conservative EPA figures for the TDI, expect closer to 40+MPG combined.
20% higher per gallon fuel cost($3.53 vs. $4.25 for me locally), your calculations will vary due to local fuel costs etc.
According to the fueleconomy.gov site, using those fuel prices, they estimate that the savings in fuel cost will be slightly more than $500/yr. That's using their estimate of 15K miles/yr and 55% hwy,45% city driving. So, you'll recover the $700 higher cost(net of the tax rebate) in less than a year and a half with average driving.
sfast 12:59AM (9/02/2008)
thanks for telling me a bunch of crap i already know. sorry i was not specific. this was at a local dealer
montoym 1:49AM (9/02/2008)
Don't get mad at me beacuase you don't know what you're talking about. One dealer's opinion hardly makes it mandatory. Perhaps that's just their BS line to make potential(uninformed) buyers swallow it without even a question. Plus, I even apologized in my comment but I guess not being right must have made you angry anyhow.
Additionally, the rest of my comment was still valid in explaining the $2K cost for the TDI option and how it actually affects anybody who might choose to purchase the vehicle.
Falcom 5:31PM (10/20/2008)
Now now children, arguing on the intrawebs is like running in the Special Olympics, even if you win you're still retarded.
TKE 5:29PM (9/01/2008)
It's interesting to see this happen to real-world everyday type of cars. We see the complaints all the time from Corvette ZR1 people, or Challenger SRT8 buyers, or maybe even the PT Cruiser or New Beetle years ago, but this is a Volkswagen Jetta, for goodness sake. As a mainstream brand, Volkswagen'll have to deal with this as a mainstream automaker like Honda or Toyota, masters of supply/demand/production, would do so. I don't know how exactly that is, but surely somebody will supply the fix.
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