http://www.calgaryherald.com/cars/Year+clearout+Northland+Volkswagen/2391244/story.html
Summary
With the holiday discounts stacking up, Northland Volkswagen is not far behind in launching some outrageous savings for the New Years. The dealership is now offering cash discounts on remaining 2009 and selected 2010 models. This includes $5,000 off cash purchase or no interest financing for a maximum of 3 years on a 2009 Jetta TDI Sedan. Furthermore, customers can enjoy $8,000 deduction for cash payments on 2009 Routon, resulting in the total cost of only $34,999. Other promotions for this vehicle include special packages with no down payment and monthly installments as low as $497. Consumers can also consider Volkswagen's trade-in and rebate programs on new and pre-owned top quality cars.
Connections
In order to reduce the inventory for 2009 vehicles, Volkswagen's year-end clearout sale is a very appealing deal for both the company and car buyers. Relating to the terms of sales and cash discounts as discussed in Chapter 12, customers must abide by the terms of paying in cash in order to benefit from the discount. In truth, customers are only getting a 7% discount from the dealership, due to the 12% sales tax. For Volkswagen, the advantage from this deal is that they can instantly cash in the vehicle, which increases their cash flow and their earnings before the fiscal year ends. Although the company's profit has been reduce due to cash discounts, the amount is less than paying the costly handling fee of credit card purchases. Looking in the books of Volkswagen, a cilent's purchase involves a transaction of debiting the Discounts Allowed and Bank accounts, while the Sales Tax Payable and Sales Account are credited.
Reflection
Discounts off cash purchases are definitely an effective way to boost up the company's sales. Over the Christmas holidays, almost every store offered a discount. I recall getting a 12% discount from a clothing store manager who offered me tax exemption of my merchandise if I paid in cash. However, some cilents cannot take advantage of the savings due to not having generated sufficient cash, particularly when it is a vehicle. Even though there are huge savings at a dealership, the soaring price of fuel may even cost more than the vehicle overtime. It is like purchasing a proficient, yet inexpensive printer. Companies, such as hp, do not make revenue from the sale of printers, but from the more profitable ink cartridges and toners. Thus, customers have to differentiate whether the retailer's discounts are actually worthwhile. I am not implying that discounted merchandises are not good, but as consumers, we need to look and plan ahead. Otherwise, our inventory of discounted goods may end up being stored in the basement or sold at a yard sale.
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I also noticed that there has been many discounts in the last few months and unfortunately i am one of those people who probably has stored goods in my basement. I don't remember what i bought exactly but in the last couple of months i spend more than i did in the last year. Everywhere i go, there are discounts and i assume that in the business of cars it is definitely not an exception. Especially since the prices were originally so high, now that people have run out of money and dug so many debts for themselves a good discount on cars would probably get some people purchasing cars because if an 8000$ discount isn't worth it, i don't know what is.
ReplyDeleteJennifer Wong Acc 12