Interesting is it true??

[Phail]

Jack the price of these cars in the states then! I'd be driving a 2SS/RS for what I paid on this 2LT/RS up here in Canada.

[fbodfather]

Originally Posted by Miraclewhip

As a sales manager at a car delership, I see the statements each month, and I can assure you that the margins are what NADA has claimed. Though I am also aware that many people walk in misinformed, and certain we make this 20 to 50% margin that has NEVER existed.

If another sales manager or salesperson is watching, im sure they will back me up on this. but the cost between MSRP, and Invoice on a camaro is one of the smallest margins I have ever seen, the margin has been shrinking for years, and in my 45,000 dollar 2012 convertible I only anticipate about 1,000 dollars of above invoice profit and about 900 bucks of holdback.

you can cut those numbers in half on an LS coupe, so feel free to continue to think dealers have margins of even close to 5% much less the 40, or 50% some people think is there. I won't change any minds with this, but its simply the way it is.

Thank you -

The figures I gave in this post come from NADA. That said, each manufacturer requires that each dealer submit a financial statement (Operating Report) MONTHLY. This allows for composite comparison and thus when I see the NADA number, I believe it because I know it's true.

Whether some want to believe me or not is up to the individual, but I don't make a policy to come onto this site (or any other) and lie. (when you lie, it catches up to you.....)

[fbodfather]

Originally Posted by MiracleAces

I can believe that number. Our dealership probably did a little bit more, but remember that most of our profit does not come from the car itself. To give you a good idea of how much of it works (no industry secrets here):

Front end - not much profit if any at all

Back end (finance, warranty, etc...) can be somewhat profitable after the initial 6 months.

trade ins/ used cars - most take a loss. An occasional winner here and there

Parts department - almost always a loss for the dealerships

Service - if you have knowledgable service managers you will make a decent profit

We also get volume and sales bonuses from GM which is a huge part of a dealership's profitability these days.

Most likely, if your sales person is selling you a new car they aren't going make more than $100 on the sale.

Dealerships still have a chance to make good money, but these days it's all about reputation and customer service that's going to get it done.

If some of what you're saying above is, indeed, true of your dealership, then the dealership is unique.

Used cars are especially profitable.............as is the parts department -- especially with accessory sales and wholesale parts sales..........

[cruznls]

Dealerships offer up to $6000 in rebates on their vehicles,
and they're are Still Making Millions of Dollars !!!
Camaros have up to $23000 in options...
Somebody is making money somewhere....

There are thousands of dollars difference between
Trade in and Retail values...
We got $1700 over book value for our trade in.
They just added the difference to the retail price...

[MiracleAces]

Originally Posted by cruznls

Dealerships offer up to $6000 in rebates on their vehicles,
and they're are Still Making Millions of Dollars !!!
Camaros have up to $23000 in options...
Somebody is making money somewhere....

Most do not have $6000 in rebates. Of course GM is going to make money - they sell directly to the dealerships. Their money is made immediately.

[Urthman]

Any dealer I have ever dealt with (GM, Ford, Dodge) have all relied heavily on used cars and service/parts to stay alive. I try to develop a personal relationship with the salesperson and service manager at the dealer when I purchase a vehicle. When you do that, you'd be surprised at how honest they are about the situation the dealer is in.

Why do you think salespeople move around so much from dealer to dealer? Money. Not the sales person trying to up their salary, but the dealer not having the money to keep them on staff. They move out the "experienced" (higher priced) salespeople and move in the green, young, go-getters...who unfortunately tend to not know anything about the vehicles.

I agree with an earlier poster...I'd rather pay a set price on each vehicle directly to the manufacturer than deal with haggling over a price. If not that, at least make it so they can't mark it up some crazy amount. Also, have the salespeople be knowledgable enough about their vehicles to answer questions.

[f5journal]

Like Fbod said...most people have no clue as to the overhead in operating a business

I manage several buildings for our engineering firm. We have 250 people and we lease two 29,000 ft office buildings. We are in a very economical locale and just the monthly rent and electric bill is $49K/mo time 2 buildings. This includes no maintenance whatsoever, no janitors, no lawnservice, no water, no water coolers, no window cleaning, no property taxes, insurance, nor my salary or my 3 people who are dedicated to just making it run......ladies and gentlemen that is well over $1.5M/yr per building in the long run. That's 1500 $30K cars a year at $1000 gross before you pay anybody in sales or service or parts or the owners if this was a car dealership. (29,000 ft is reasonable relevant)

[MrandMrsNinja]

i've have a buddy who is a car salesman..he actually sold us our Camaro. Said on new cars he generally only makes between $100 and $200 per sale. He says that he makes most of his money on the trade in. Get a certain percentage of whatever he sales it over what they have invested.

[formare]

Soooo, what I am hearing is - dealerships need to go "big volume" or go bankrupt.

These numbers presented are unthinkable for a viable business model. The volume just is not there.

My deal included a trade. I saw the trade on the lot a few days later marked up about 2,000 so that is in line with the facts presented.

If you went to the dealer, any dealer and sat for an entire day - how many closings would you see? 3 maybe 5... That's only 6,000 bucks for the day. 3,200 after taxes.

5 sales guys and admin staff - about 1,500 a day maybe. Guess that leaves about 1,500 for facilities and such.

Guess that might work....It's not a business I would ever consider being in.

[camaroaarp]

Thats interesting info and sort of explains why the service department charges $120/hr. If they didn't, they couldn't exist.

[flyby]

Obviously GM pays too much to get a unit out the door.

[CrabbyDaddy]

I fully understand the sentiment that Dealers are shady characters rolling in dough, not to be trusted and certainly – don’t let them near your family!
But time and experience has changed my opinion. There are some arrogant dealers that still fit that mold, but many do not. Most Dealers realize that they need to take care of their customers and know that they cannot survive on a single transaction with a customer. I believe that we need the Dealers as well. Without them; we won’t have service departments, we won’t have a place to window shop (which I do a lot of), plus we would lose local jobs. I don’t begrudge them a profit on a sale; I want a great value but understand that they need to make money too. I want them to still be in business when I go back for service or another purchase. In the past few years dealers that I have bought from have matched the on-line delivered prices that I’ve been quoted – so it’s been a no brainer.

BTW – I’ve never noticed the “secret code” on a car or truck

[Berean]

I don't believe for a second that dealers have an average LOSS of $180 per vehicle and have had an average LOSS per vehicle since 2006.

I understand it may look that way on paper, but that's nothing more than accounting tricks for tax purposes. They probably shift expenses (loss) against new car inventory because there's a tax advantage for paying taxes against service profits vs merchandise profits I would guess.

If it were a true loss, dealerships would be closing every day until either the profits increased or everyone was out of business.

Again, there's no way 4 million cars are sold in the US each year resulting in and actual LOSS of $720,000,000. It doesn't work that way.

[mhood]

I once had the owner of three hugely successful dealerships tell me the purpose of a corporation was to end the year with a "zero". No profits, no losses, expenses balance everything. This person owned a 3.5 million dollar yacht among many other things...