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Thread: Article: Subcompact car sales collapsing in Canada... except for Nissan

  1. #11
    Senior Member Howie's Avatar
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    Carmakers make cheap, base level vehicles, but if you want a few options like air, auto and cruise. The MSRP skyrockets because you either have to go up a trim level, or buy it as a "Package" just like nissan. If you buy a base model, its the same as the next one that rolls off the line- Its what goes into it that makes the difference. Each part has a profit margin. You buy a $300 stereo. It costs them $250 to make. A meager $50 profit. You buy the fancy one at $750, it costs them $350 to make they make a nice $400 profit off that radio.

    At the end of the day when you end up a dealership.. You add the options you want. Then the dealer will almost always tell you. ."Well, if you are willing to spend an extra $130 a month...." and upsel the CUV which has a much larger profit margin. How do they do this? Im not sure. I think its because subcompacts typically have higher interest rates in the financing, making the bigger vehicle much more attractive.

    Your typical subcompact might cost the manufacturer $5000 in material to produce, they sell it to the dealer for $8500, then they sell it to you for $9998. They make $3500, the dealer makes about $500.

    Same car.. more uplevel might cost them $8000 to make. They sell it to the dealer for $12999, the dealer sells it to you for 14500. Manufacturer makes $5000. Dealer makes $1500.

    I have tears for the demise of subcompacts. But I think its because they are engineered to be cheaper but to give the dealers a bit more leverage to push consumers to buy the CUV. And from my wallet, would I pay $130 more a month for "twice the vehicle"? Well.. No. Im a bit more frugal then that.

    Also, planned shortages. For example, I walked into a Chevy dealership here while picking up new vehicles for work. I wanted to look at a new Spark. Surprise, none on the lot. What about a base model Sonic then. Oh no. We only have the luxury top of the line ones.

    When I bought my micra, I wanted a 5 speed. Shocker. None. And Nissan underestimated the demand for manual S models. I don't really believe that. Well. I want a 5 speed S model with air.

    That doesn't exist. You have to buy the S Auto at a difference of 3k to get air. But I want manual, with air. Well then you have to step up to an SV for $3600 more.

    The micra SV intrest rate.. .99% or $197 per month.
    The micra S intrest rate.. 1.99% or $166 per month.

    Well, that doesn't seem so bad. Does it?

    Why the difference? You'd have to know the numbers really. Profit margin to the dealer is about $600 on a micra S, where as an sv is $1200. Nissan finance doesn't care if they loose money on the finance charges. But the dealer wants a bigger profit margin. So is the dealer going to carry a lot of S models? No. One or two so they can advertise the $9998 price point. But if they can make double the profit on one sale, they will.

    So its not just Nissan doing this, its all of them doing a lot of clever marketing, and a lot of careful financial planning. A good example of marketing genius is at Hyundai. "You pay what we pay." is thier big campaign each year. Do you play invoice pricing. You do. You pay what the dealership purchases the vehicle for from the manufacturer. What they don't tell you is the incentive they get from the manufacturer for selling it. An example is the santa fe. Might cost them 30k for the suv. You pay 30k for the suv. Good deal? You think so. What you don't see is the dealer getting a $1500 incentive for selling it.

    There is a slight possibility that I may or may not have signed a gag order with a certain dealership I worked at once upon a time, but there is a lot that they don't and won't tell you. And if you don't believe me. Consider this. How long does it take for you to price out a vehicle online using the calculators provided. Think it takes the financial person longer? No. But it's their job to make the maximum amount of money and keep it within the budget you provide them with.


    Last edited by Howie; 11-21-2015 at 02:28 PM.

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        click to view fuel log View my fuel log 2015 Micra S automatic: 7.9 L/100 km ... 35.7 mpg (Imp) ... 12.6 km/L ... 29.7 mpg (US) ...


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    LilGeckos (11-21-2015),MetroMPG (11-23-2015),micrapolis (11-22-2015),ptbo micra (11-21-2015)

  3. #12
    Senior Member LilGeckos's Avatar
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    As I have said before, I'm always learning more from the members on here. Anonymous, thank you for a great post.

  4. #13
    Senior Member micrapolis's Avatar
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    yet another great post by Anon.

    ""Well, if you are willing to spend an extra $130 a month...." and upsel the CUV which has a much larger profit margin. How do they do this? Im not sure. I think its because subcompacts typically have higher interest rates in the financing, making the bigger vehicle much more attractive. "

    dealers succeed because too many north americans, ignorant as we are, and accustomed to accepting dealers despite their, um, characteristics, only think of monthly payments and not enough of total payments.

    want proof? why are leases getting longer and longer? it used to be that 2 year is the norm, 4 yr is very long, now we have 8 yrs????? wtf???

    in contrast, the euro consumer thinks in terms of "what is my budget" instead of "how much can my monthly paycheck handle". The euro thinks of debit, the North AM thinks of credit.

    this isnt just cars btw, there is a reason that Germans, the financially astute mofos that they are, are predominnantly renters and not house owners. I heard France is similar.
    Last edited by micrapolis; 11-22-2015 at 02:11 AM.

  5. #14
    Senior Member Howie's Avatar
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    ^True true. When I visited Frankfurt for a while back in '05, I remember talking to a few people in the coffee shops. The way they handle their debt is.. Well. Honestly quite good. And yes, the bulk of them rent it seems. You don't really hear about bankruptcy there as much, or credit at all. Not like here when your spammed with credit card ads and such.

    When I visited Japan it was the similar to the EU, people know how much cash they have in their account, and purchase from there. Saving money for what you want there seems to be the big to-do, but renting your apartment or home is what happens. You really don't buy a house there and if you do its through years of saving and a very minimal mortgage after.

    And financing and leasing over 84 months to reduce the monthly payment. Yes. I remember not too long ago that 60 months for financing was long. So by the time you pay your car off in 8 years, you might get another 2-4 years of payment free motoring then you are in the cross-hairs again. Realistically though you'll likely refinance or replace it soon as its paid off.

    Here's some more food for thought: Go price out a nissan micra here. http://www.nissan.com.au/Cars-Vehicles/Micra/Offers

    Yep. Thats the aussie cousin of ours. Their promotional offers are over 3 years. The max you can finance it over is 5.

    I guess as further proof of this. Go ask your neighbor what they pay for their car. I can almost bet a coffee on them saying $XX a month instead of the total price they paid for it.
    Last edited by Howie; 11-22-2015 at 01:06 PM.

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    Senior Member AlphaMicra's Avatar
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    General Motors already demonstrated to the world that they couldn't make a profit on small cars; each and every Chevette was sold at a loss in an attempt to gain market share. Fact is, once a company gets the parasites commonly known as shareholders, they need to continually figure out how to get more for less until they are no longer "Economically viable." At that point, they go after taxpayer dollars, because they've become more like government by becoming increasingly useless.

    In our culture obsessed with absurd excess, the Nissan Micra is my counterculture car of choice.
    Be sure to visit my blog at mymicra.com!

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        click to view fuel log View my fuel log 2015 Micra SV manual: 6.4 L/100 km ... 44.3 mpg (Imp) ... 15.7 km/L ... 36.9 mpg (US) ...


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  9. #16
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    Quote Originally Posted by Howie View Post
    Actually I noticed something. Maybe this is just an issue of want vs. need. What a lot of people need is something like what we have, the micra. But what people want can be very different. If they have the money, good on em. A lot of CUV's have very extensive option lists to configure them to how sparse and how luxuirous as you would want them.

    I live a very.. Hmm... Economic lifestyle. I try to get the most out of the least amount. Even in my hobbies of Amateur radio, I make great efforts to try to get my signals out as far as I can with the least amount of power. I dont get it personally. Why spend twice the price for a vehicle that is only a smidge bigger. Most small SUV's start a 20k. Or the price of 2 Micra S manuals.

    I guess its a matter of to each their own, but the small car guy has always made fun of the guy with the big pickup truck or fancy sports car, just like they make fun of out practical, economic cute adorable cars.
    Yup, this is the main problem with North Americans: we have totally divorced ourselves from the reality of what we need and can afford, both financially and in terms of long-term sustainability. My wife and I have friends that live in Denmark and every time they come here to visit they look around at the 2500-square-foot houses and the 6000 lb. SUVs and they think we are insane. They can't understand why anyone would even want that. Where they are from everyone lives in a tiny house, with a tiny car, modest expectations, and are likely more content than the average Canadian (or American) will ever be.

    Further, my wife is a paralegal who works largely in bankruptcies. Over and over again she tells me how she can't understand why there are so many people with $60,000 trucks, ATVs and boats who have their house in foreclosure. It boggles the mind.

  10. #17
    Senior Member Howie's Avatar
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    I think credit is too easily had to get. Someone has to lend the money. And because it's easily had- its easy to fail if you don't know what you're doing.

    Myself, I used to suffer from severe shiny syndrome. Now I'm trying my best to do with the least amount I can. Part of the reason why I bought the micra in the first place. You wouldnt believe when I go to work how many pickup trucks and SUV's litter the parking lot.

    And how many of these people are in financial troubles.

    Story time (grab your helmets).
    Before we bought the micra, the 2006 Dodge Grand Caravan we had was on her way out the door. We paid almost 500 a month for it. Plus about 100 in insurance. 77 litre tank, and about 18mpg (about 3-400 a month) So grand total about $1000 a month.

    We got rid of that thing and bought the micra and the wifes jetta. Whats the difference? $500 a month for 2 cars. 200 in insurance, but fuel is down. Less then $200 a month for fuel in both cars a month. So now we have 2 cars, fully insured and warranties for $100 less then what we paid for one minivan. And the extra $100 we got back from the difference? Straight onto a credit card to pay it down. Now that credit card is gone. No interest, so now the extra $50 in interest goes into paying off a small loan we have. Once thats done, that money goes on another debt until its zeroed.

    Now.. I have been bankrupt before. Because I wanted a shiny. A 2006 monte carlo to be precise. To anyone out there that is young. If you want to buy something shiny- Save the money for it. Dont pay someone else for the privilege of getting it faster. If you cant afford it right now, figure out how long it will take you to save that money. When you have the money saved, you might find yourself not wanting it anyway and you will have a pocket full of savings.

        __________________________________________

        click to view fuel log View my fuel log 2015 Micra S automatic: 7.9 L/100 km ... 35.7 mpg (Imp) ... 12.6 km/L ... 29.7 mpg (US) ...


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  12. #18
    Administrator MetroMPG's Avatar
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    I know people (families) making $100k or $200k+ a year who are literally living paycheque to paycheque. More cashflow = bigger loans. It's ridiculous!

    A wise friend (ironically, the first of my friends to graduate from university & get a good paying job) once said: "there's no level of income you can't out-spend!"

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        click to view fuel log View my fuel log 2015 Micra S manual: 5.0 L/100 km ... 56.5 mpg (Imp) ... 20.0 km/L ... 47.0 mpg (US) ...


  13. #19
    Senior Member Howie's Avatar
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    ^ I like this quote very much.

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        click to view fuel log View my fuel log 2015 Micra S automatic: 7.9 L/100 km ... 35.7 mpg (Imp) ... 12.6 km/L ... 29.7 mpg (US) ...


  14. #20
    Moderator ptbo micra's Avatar
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    Just ask MC Hammer...


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