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A mystery solved

5K views 42 replies 22 participants last post by  FTEfan 
#1 ·
I'd been puzzling over the apparent discrepancy between the FPV build numbers and the sales figures bandied about by a couple of recent articles.

A bit of a delve into the detail of the VFACTs numbers shed a little bit of light on the situation and showed that total sales to the end of August amounted to some 600 odd units while total builds were somewhere around the 1100 mark.

The intervening circa 500 units are sitting in dealer holding yards, which means that they pass the Ford definition of sold (invoiced to a dealer) but not VFACTs definition (registered).

To put those numbers in persepctive, the range has been seliing around 100 units per month (average) over the 6 months since builds commenced in earnest. Thaqt means that the present stock levels equate to about 5 months of sales assuming that the same level of activity can be maintained, which is probably unlikely given that there was some early pent up residual demand that had to be met.

Recent numbers suggest that the sales level might be closer to 70-80 units per month which then turns that stock level into a 7 month proposition.

Now for those who think (probably correctly) that the silly old fool is dribbling again , let me put this into the light of harsh reality with a little lesson on how the system works.

Ford sell the vehicle to your local dealer at an invoice price somewhat less than the RRP and the difference between the two represents their profit. Obvious.
The dealer finances the vehicles held in stock through a thing called a floor plan, which basically means that they incur interest charges on the value of the cars in the holding yard.

Eventually, the costs associated with holding a vehicle (interest, damage, etc.) reaches the point where the margin is reduced to zero and the dealer starts to actually be in a negative position - that is the car owes them more than they are going to get for it.

Sometimes, on slow moving models (like Cougar or T-Series) the manufacturer will choose to offer the dealers additional sales incentives or floor plan subsidies to minimise those potential losses but on other occasions they will just leave the dealer network holding the (dead) cat.

So what's my point?

Simply this. When dealer stock levels are high and subsidies or incentives seem unlikely, our friends in the dealer network usually opt to off load those vehicles at a price closer to invoice price than RRP. In extreme circumstances they are willing to cut their losses to move the offending items rather than continue to incur floor plan costs and then we see the discounting behaviour that was a bit of a trademark in the middle and latter portion of the AU. As a matter of business survival, once one starts, the rest tend to follow.

This situation is potentially exacerbated with the FPV range for two reasons.

Firstly, the dealer margin on the vehicle is below the level that is generally considered viable and secondly the model build mix appears to be not quite matched with the actual buying patterns especially with the ute.

Let me draw a hypothetical - the numbers aren't the real ones but they will do to show the point.

The dealer is invoiced for the Widget GTR-x (which has an RRP of $60,000) at $57,000 thus leaving a margin of $3,000 (ignoring the GST implications at this point). The dealer has a recommended delivery charge of $1,200 for a total potential margin of $4,200 which is reduced by the commission paid to Sammy Salesman (say $100) to $4,100.
The dealers floor plan is financed at the very kind rate of 6.5% and thus the interest charge on the Widget GTR-x amounts to $308.75 per month. In the real world there are other costs that are applied to the vehicle whilst held such as showroom running cost, minor damage, salesperson retainers etc. but we will ignore these for this simplified exercise.
Now for the simple maths.
At $308.75 per month, the floor plan will eat up the entire margin in a little over 9 months - in the real world that is likely to be far less - but before that happens the DP, sales manager, bean counter or the cleaning lady will make the decision to discount the thing to get rid of the liability.

So here is my crystal ball gaze into the not too distant future, assuming that nothing is done to remedy the situation.

1. GT and GT-p's will be on the market at between 5-7 % off RRP. Pursuits a bit more.
2. Demand will further slow as new product in the rest of the Ford range cannibalises some sales.
3. Resale values of GT/GT-p will suffer accordingly. 2nd hand Pursuit buyers will have to choose between a Pursuit and a Big Mac with their loose change.

Of course, I'll be happy to be proven wrong but I have history on my side. All we can do is prepare ourselves for the inevitable shock at trade in time and enjoy the great vehicles we have in the mean time.

Cheers
Russ
 
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#28 ·
AT LAST THE PENNY HAS DROPED!!!! WAS BITCHING ABOUT THIS 12 MONTH AGO!! I got a T3 for X amount no discounts were offered I went to all 4 FTE dealers I could not get a cent off ,All the bullshit like," no one can get one" I will have to wait 3 month if I orded one"" they cant get them" all that crap, so I got a demo with 1300 ks on it, then to my horror 2 months later FORD gave the dealers bonus to get rid of them, my car was now worth $15000 less all because the gts were coming, so it was screw the T3 owners there are a new bunch of suckers that will want the GTs so lets get them! so all I can say is Ford will never learn the lesson there are always a new lot of victoms out there
GTP193 said:
Just a short thought, Has anyone tried to trade in a T3 TS50. 30000 Ks 12 months old. Cost new $80,000 .Offered trade on a GTP cost $90,000 on road.
Trade offered $40,000 I sure hope this is not the case with the BA
 
#29 ·
The worst thing about the trade in values is that Ford dealers are offering the worst trade in value of all for their used T series. I just traded mine (not to a Ford dealer) and lost out big time, although I think I would have lost more in a few more months time when the piece of trash had finally fallen to bits around me. I have figured out to have owned the lemon for one year has cost me $25,000. That adds up to $68 a day to drive a poorly engineered and shoddily built vehicle.
To those who still have theirs, you better make the most of it because if they suffer from the same build quality as mine did you will probably get $25 per ton from a metal recycler after they have shaken themselves to bits in a year or so.
And Ford will expect you to re-purchase one of their latest creations so you can throw away a lot more of your hard earn't dollars.
You'd get better value buying a used taxi.
 
#30 ·
This is just how it is. We cannot do anything about it unfortunately. And as flappist mentioned earlier, why not buy your dream car? In our case here it is a XR6T/XR8/GT etc. If the funds would allow it of course.
I am considering a xr6t or xr8 myself now. Yes I know that once demand for this car slows the value will drop considerably. But atleast I will enjoy my car while I have it.
 
#31 ·
Laminge, my experience when selling our 7 mth old XR6T was disappointing, it was a very hard car to sell. We got 44k for it, replacement was $52k+ORC, so it didnt prove to have good resale. l expected to do better considering the demand for this car and the long waiting lists. In 3 years time when these cars are out of warranty a s/h turbo may look to be a risky proposition for many and resale may refelct that.

l hope Ford/FPV get it right and dont make the same mistakes they did with the T series as Russ is pointing out. The GT is a sacred nameplate with much history; they cant afford to de-value it as they did the T series. Otherwise where to from here, what hope will they ever have of taking it upto HSV?

Its my understanding that when a dealer signs up to be an FPV outlet they have to meet a few requirements one of which is to accept their allocation from FPV each month. So regardless of what sales they have on the books, they must accept their say 3 cars per month regardless. If demand isnt keeping up then stockpiling starts and then the circumstances Russ describes start to lead to discounting.

l got burnt on a TS-50 and as much as l love the GT and think its a brilliant package, l wont get done a third time if Russ is proved correct. l agree its only money but when youre spending a huge chunk of money on a car you have to take into account resale. l am not rich enough to ignore it!!
 
#32 ·
russ

you make some very good points in your post and only time will tell how much they are doctoring the figures, and its possible effect on retail margins.
just a few things that still work in the dealers favour are offset and holdback.
offset is the reduction in floorplan charges from auto finance sold by the dealer...(floorplan and retail finance are provided by the same institution), and holdback is the payment by the factory to the dealer after delivery.
as for resale, customers should realise that on road costs such as pre delivery, stamps etc and taxes such as GST and LCT must be taken from their initial price before even considering a resale value..... that'll take 10k out of a gt before you start.... you never win on that one....

doesnt matter tho, we will all line up again wont we

r/peter
 
#33 ·
Mondie:
You prove the point.

Minge:
$55k down to $42k?
You:
$52k down to $44k

That's $13k versus $8k. XR8 versus XRTQE-T.
 
#34 ·
Aussie Pete said:
Mondie:
You prove the point.

Minge:
$55k down to $42k?
You:
$52k down to $44k

That's $13k versus $8k. XR8 versus XRTQE-T.
Yes a good point based on that example, but I feel this may be not a common scenario that can be depended upon.

I have spent some time talking to local dealers here in SA about this issue and they all claim that they would only offer between $37 -$40k trade-in on a 6 to 12 month XR6T based on a original purchase price of $50k- $52k on road. If they paid much more than that it would be cheaper for them to purchase a new one wholesale from FORD.

At $44k for Mondie they would have taken into account the money they would make on the GT and use to offset the extra $2-3k.

These dealers claim the biggest problems with these cars are everyone goes option mad with them, which boosts up the final cost. As you know when it comes to trade in time these options help a little in obtaining a good trade in price, but relative to their initial purchase price it’s a large loss just waiting to happen.
 
#35 ·
l should have noted in my original post that l sold my car by private sale, as l always have. Trade would have been in the 38-40k range, making me about as bad off as Laminge. l still think in 3 years a s/h XR8 may be a better proposition than a XR6T, l know if l was buying l would be very cautious if buying a secondhand turbo that may had the ring flogged out of it.

Extras dont add much to the value of a car unfortunately, l was lucky to find a buyer that wanted exactly the options l had. Some buyers that called wondered why l had premium brakes and what they were, others didnt understand about the sports steeering wheel and the fact it was factory and thought the car was modified etc. Based on my last selling experience l would say that leather and sunroof would be the two options that you would most likely get a good return on and attract buyers with. The fact that my car had around 7K of options was lost on most buyers.
 
#36 · (Edited)
mondie said:
l should have noted in my original post that l sold my car by private sale, as l always have. Trade would have been in the 38-40k range, making me about as bad off as Laminge.

The fact that my car had around 7K of options was lost on most buyers.

HaaaHA!!!! Game , Set and Match!... :whip: :wnc:

lol.....

In all seriousness, just remember people the 22% rule as the basis of your vehicle value over 6 to 12 months (RRP + On Roads - 22% = approx. trade in value from dealers)

If you plan to buy a new Falcon/Commodore or their variants (XR, FPV, HSV, SS etc.) and wish to sell it during the first 12 months, this is what you need keep in mind before your purchase. If you don't like the figure, best not to do it.
 
#37 ·
Colville,

Yep l am aware of the 22% rule and the price l got for my car fits pretty well to it. l guess when l first had the idea of selling the T for a GT l had hoped to get more based on waiting lists & strong demand. Oh well l am happy, love the GT!!

l see sales figures for Sept were released today and Falcon outsold Commodore for the first time in 70 months. This is a great result for Ford and hopefully will see Ford no longer looked on as the underdog, and perhaps it may help resale in the long term.
 
#38 · (Edited)
mondie said:
Colville,

Yep l am aware of the 22% rule and the price l got for my car fits pretty well to it. l guess when l first had the idea of selling the T for a GT l had hoped to get more based on waiting lists & strong demand. Oh well l am happy, love the GT!!
.
I hear you Mondie and would to if I was in your position. I think the best place to sell is in the private market for sure, however that is not always convenient. Not for me anyway.

I personally think many of the XR options should be standard, as this would help the resale loss situation. I also agree with you regarding your theory on the XR8 being worth more in the long term than the 'T'. I guess the message; is hold on to your Boss V8's fella's as long as you can.

On the VY SS vs BA XR8 front in a few years the current SS may devalue faster IMO as the Gen 4 will be out and the Gen3 would be good, but considered dated technology. However on the BA XR8 front, it may be considered to best way to get your butt into one of the first High Tech Quad Cam V8's.
 
#39 ·
flappist,

sorry to hear. you have the right attitude. After travelling overseas last year I realised that money isn't everything... instead of putting a deposit on a house I bought the car I always wanted.... a new Falcon V8 ute. Money sure aint everything...
 
#40 ·
Flappist, my heart felt condolencies to you. A loving and loved partner is the most precious thing in this world. While I enjoy my car, and bitch and moan how much money the thing costs me, at the end of the day life is way too short, we never know how long we are here for, when we are going, and we certainly cant take any money with us, SO ENJOY LIFE, we are here but once. I know i have Blue Blood too, but to be honest, dont you think there are guys over on LS1 bitching about the same things?
Anyway guys and girls, get perspective in your life, if you can afford it, do the things you want to do, buy the cars and toys you want, if you cant afoord it, dont stop dreaming.
 
#41 ·
I think the biggest problem with buying a car is over capitalization by adding optional extras to your RRP. For example - BA XR8 - with extras like Leather, Premium Sound, Reverse Parking Sensors, 5 x 18 inch rims, and Momo Wheel. To be honest I think this is where alot of people come unstuck, because when it comes to trade in time your optoinal extras that cost you around 5 k extra at purchase date arent going to be worth SHIT to you at trade in date.

I also think you are better off buying a car at the start of a Series rather then the end. For example if you buy a Falcon at the start of the series, Eg. BA August 02, atleast the car is going to be current except for minor changes for atleast 3 - 4 years. Therefore you arent going to have the distraction of a newer model, and also your resale value is going to be marginally better.

Many people will say that a Series II is alot better finished off then then a Series I, but when you think about it in most cases (AU for example) the changes made are mostly only cosmetic anyways or un noticable.

By the way, theres one simple solution to the problem, spend $500 on an XD Falcon and park it on the side of the road when it dies, it works out alot cheaper.
 
#42 ·
XTS220

i couldnt agree more with your comments on over optioning your car and the unfortunate fiscal value at trade in time. in the used car market accessories/extras may make an item more saleable but usually results in little monetary reward to the owner. unfortunately i still had to have cow hide and premium sound for the terrine machine...ouch.
but...
one thing this thread has highlighted is "it is only money" and as long as you are comfortable with what you spend what the heck.

r/peter
 
#43 ·
I never buy a car with the view that I will only keep it for 12 months, despite needing a new car every 18. Between the purchase price and the cost of the extras that I fit, I loose so much money it's not funny. A case in point is my Mazda. Bought new, 1997, I paid just under $18,000 for it. I then spent another $2,500 on it to bring it to a point where I was happy. After 12 months it had a tradein value of $11,000 BEFORE they looked at it, I was offered $9,000 trade after they saw it. It was in exellent condition with higher then average km. The $2,500 I spent on it meant zip for it's resale, but would help the dealer sell it anyway. When I rolled it the insurance payout was $16,700. This was in 1999. If I didn't roll it I reckon I would have spent close to $40,000 all up. Any regrets? None, aprt from rolling it.
 
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