Profit margins at dealerships (split)

[Mitsu3000gt]

It's amazing what happens to the price when you get up and start to leave. There's at least a couple grand of wiggle room in a $21,000 car in my experience, probably more. The dealer probably paid $15K for it, possibly even less. Deals can be better at the end of the month too to top off their sales numbers, but I'm not sure that applies to used.

[Redlyne_mr2]

Originally posted by Mitsu3000gt
It's amazing what happens to the price when you get up and start to leave. There's at least a couple grand of wiggle room in a $21,000 car in my experience, probably more. The dealer probably paid $15K for it, possibly even less. Deals can be better at the end of the month too to top off their sales numbers, but I'm not sure that applies to used.

I wish I could pay $15K for an MK6 gti, owners won't give them up for that cheap. The GTI the OP is buying is certified which means any and all services have to be brought up to date, 2 keys, owners manuals, strict requirement on tire and brake level.

We're running the same 0% CPO sale and if I'm selling a car with all the CPO work done to be able to offer the customer 0% it offers me very little room to move on the price.

[SOAB]

Originally posted by Mitsu3000gt
It's amazing what happens to the price when you get up and start to leave. There's at least a couple grand of wiggle room in a $21,000 car in my experience, probably more. The dealer probably paid $15K for it, possibly even less. Deals can be better at the end of the month too to top off their sales numbers, but I'm not sure that applies to used.

its amazing how little you know about the automotive business although you try to sound like a know-it-all.

you actually believe that a dealer is making $6000 on a $21000 car? :rofl:

[Sykes]

Originally posted by Redlyne_mr2
We're running the same 0% CPO sale and if I'm selling a car with all the CPO work done to be able to offer the customer 0% it offers me very little room to move on the price.

What constitutes as 'very little room'? $500? I'm not out to nickle and dime either because people need to make a living too - I just want to know what I can leverage.

Thanks for the transparency Redlyne - if I was still living in AB, I'd definitely be talking to you.

[JohnnyHockey]

Originally posted by SOAB


its amazing how little you know about the automotive business although you try to sound like a know-it-all.

you actually believe that a dealer is making $6000 on a $21000 car? :rofl:

Why are you surprised a dealer could get that car for 15?...lots of desperate people out there who don't want to deal with kijiji or they don't care about the lost $$...and they're not making 6 because 21 is just the asking price. Don't forget were in a recession too, are you so naive to think that dealers aren't taking advantage on trade ins and people wanting to sell them cars?...a couple years ago I wanted to sell my 2007 Audi A3 to a lot, they offered me 4 and they had an exact same model on their lot for 10 which was actually slightly more than kijiji. . I said no and the said they didn't care they could easily pay that at an auction. I don't know that world you're living in but used car dealers make a killing! ...it's the new cars where they dont make as much.

You've heard of all the shady dealers in Calgary....guess what they have all been in business for 10 + years how the hell do you think they do it?

Still don't believe me? Go on auto trader, each ad tells you the price changes in its history. ..see how much fluctuation there is. I once followed an Audi TT from the Audi dealer in Edmonton, it went from 17 to 16 to 15 then to 13 then to 11...they all play games with their prices and you can bet no dealer is going to take a car in their inventory unless they are getting it CHEAP!

[bjstare]

You guys should continue to argue about car sales with the one guy who manages a dealership. Your anecdotal evidence and assumptions are super insightful.

[ExtraSlow]

Dey took arrr jahbssss!

[Mitsu3000gt]

Originally posted by SOAB


its amazing how little you know about the automotive business although you try to sound like a know-it-all.

you actually believe that a dealer is making $6000 on a $21000 car? :rofl:

I've had worse deals offered on trade-ins to my face :dunno: Just because you don't personally agree with it doesn't make it untrue.

Where did I say they would make $6K on it? After bringing up to spec and/or going through the certification process they aren't going to make $6k. You are putting words in my mouth. Nobody pays full price for a used vehicle either.

I am the furthest thing from a know-it-all, I just share my experiences here like anyone else and my comments aren't worth any more than anyone else's.

[JohnnyHockey]

Apparently cjblair thinks we should all just trust the guy who manages a dealership:rofl:

[Masked Bandit]

Originally posted by JohnnyHockey
Apparently cjblair thinks we should all just trust the guy who manages a dealership:rofl:

In this context Redlyne_mr2 is a Beyonder first, dealership guy second. He's been around long enough to have built a solid reputation as a straight shooter on this site so ya, his word carries a little more weight than normal.

[ExtraSlow]

He's 330008 users older than Mr Hockey there.

[Sorath]

Redlyne_mr2 is the most straight up sales person ever!

If you can you should see if you can get a CPO GTI through him!

[Redlyne_mr2]

Originally posted by JohnnyHockey
Apparently cjblair thinks we should all just trust the guy who manages a dealership:rofl:

What's not to trust? Selling a car is easy as long as you're up front with people. We live in an age where information is free and easily attainable. If you don't believe the new car price I quoted you is fair then price shop me or unhaggle me.

Trade value is based on current markets, if I can sell your car for $21000 I'm paying you 15 to 16 for it on trade. Average reconditioning costs $1100 to $1800, $300 for a detail, $200 for advertising and $2000 to $2500 for profit margin. Pretty simple formula.

Sykes, how much money have they put into reconditioning the GTI? I'm having to pay high teens for these 2012 GTI's, recession or not, people are not stupid and aren't going to give away cars. If the car was a trade in that means the person who traded it in bought a new car.

If they paid $17K for the car, $1500 recon, $300 detail, they're into it for $19ish. Try for $1500 off, you're a willing buyer. Good luck with the purchase and if you hit a dead end let me know, perhaps I can try making a call to get you a better deal.

[JohnnyHockey]

Fair enough redlyne but you're speaking from a reputable, honest dealer's standpoint. ..my comments apply to a place like H of C or IMC or any number of the other new car dealers in town.

[Redlyne_mr2]

Originally posted by JohnnyHockey
Fair enough redlyne but you're speaking from a reputable, honest dealer's standpoint. ..my comments apply to a place like H of C or IMC or any number of the other new car dealers in town.
I get where you're coming from. Part of the problem is not only the dealers but also the customers, so many people are conditioned to deal on a car in a sketchy manner. We have a few terrible dealers here in Red Deer who show people any trade value they want and then basically up the selling price of the car that person is buying. They come to shop with us and I serve up actual trade values with real numbers and they think we're crooks. Or, they have horrible credit and call us thieves when I quote them 22% interest. Do you know how much money we make from a 22% loan? The banks pay us a $500 dealer reserve, it's not worth the 10 hours worth of work you need to put in to get that person approved. I hate to do it but 80% of our customers are quoted based on payment and not on vehicle selling price because they don't understand finance, trade values, asking price etc.. I love dealing with Beyonders because everyone on here knows how to buy a car.

Asking price
Trade value
Rate
Term
Deal

[Redlyne_mr2]

Originally posted by Sykes
So I've been going back and forth with the sales rep and here's the lowdown on the car:

- It has had two small accident claims totaling under $3k in repairs with a CarFax to prove it. There was damage to the center of both the front and rear bumpers - repaints from a scrape or bump?

- Originally listed for $23,995 but it's been on the lot for over 30 days, hence the price drop.

We're still going back and forth with the details. This thread has been quite helpful with getting a how he's approaching me with this potential deal, haha.



Hypothetically speaking, if you're into it for $19k, why would they sell to make 'only' $1000? Doesn't seem like it'd be worth the effort to me...?

Also, you've already been super helpful - no need have to make a call.

Glad it's been helpful. If it's been on the lot and they've lowered the price $2000 it may make things more difficult but at the end of the day its what they're willing to sell it for.

I've sold pre-owned cars for cost, $500 over, $4000 over and I sold an infinity q50 hybrid for a $5000 loss lol. Sometimes I'll approve a deal just to make a customer and a sales person happy. If I make a little money and give a good experience then it's free advertising.

[Skyline_Addict]

Originally posted by SOAB


its amazing how little you know about the automotive business although you try to sound like a know-it-all.

you actually believe that a dealer is making $6000 on a $21000 car? :rofl:

Yeah. I'm in a partner industry and can confirm that margins on new vehicle (and to a lesser degree used vehicle) sales are thin on average. For a $21,000 car the dealer would be lucky to make 10%. More likely closer 5% after all is said and done. Trucks and SUVs have larger margins and sell for more, so they make a bit more money there. Parts and service is where the margins are in the high 40%....that's where they get you ;).

[Mitsu3000gt]

Originally posted by Skyline_Addict


Yeah. I'm in a partner industry and can confirm that margins on new vehicle (and to a lesser degree used vehicle) sales are thin on average. For a $21,000 car the dealer would be lucky to make 10%. More likely closer 5% after all is said and done. Trucks and SUVs have larger margins and sell for more, so they make a bit more money there. Parts and service is where the margins are in the high 40%....that's where they get you ;).

Nobody said the dealer was making $6000, I think he is just confused. They might pay you $6000 less than market value for it, then after maintenance, advertising, certification, buyer negotiation, etc. they might only make a grand or two but the original trade in price can be pretty awful.

[SOAB]

Originally posted by Mitsu3000gt
It's amazing what happens to the price when you get up and start to leave. There's at least a couple grand of wiggle room in a $21,000 car in my experience, probably more. The dealer probably paid $15K for it, possibly even less. Deals can be better at the end of the month too to top off their sales numbers, but I'm not sure that applies to used.

here is your original post. I'm not confused about anything. you clearly insinuate that the dealer paid about $15,000 or less and asking $6000+ more than they paid.

if by saying that there is "at least a couple grand of wiggle room" means something else, by all means explain it to me.

[Mitsu3000gt]

Originally posted by SOAB


here is your original post. I'm not confused about anything. you clearly insinuate that the dealer paid about $15,000 or less and asking $6000+ more than they paid.

if by saying that there is "at least a couple grand of wiggle room" means something else, by all means explain it to me.

Yes, that is what I said. But in response to that post, without a single word about what the dealer is making, you somehow jumped all the way to this:


Originally posted by SOAB


its amazing how little you know about the automotive business although you try to sound like a know-it-all.

you actually believe that a dealer is making $6000 on a $21000 car? :rofl:

Nobody thinks a dealer is making $6K on a $21K car, I have no idea where you got that from. You used something that was never said by anyone in the entire thread as the sole basis for an unnecessary insult. :dunno: What the dealer pays for the car and what they make on it are two different things hence why I thought you were confused about how it works.

Dealers aren't making $6K on a $21K (list) car. Several things typically eat away at that profit margin, whether it be certification, maintenance, detail, advertising, overhead, etc. and after the buyer haggles a couple grand or whatever off, they are probably left making ~$1000-$2000 on such a vehicle, roughly speaking. To the person trading in the vehicle though, it is not going to look like a very good deal.

The reason I added "There's at least a couple grand of wiggle room in a $21,000 car in my experience, probably more." is because when I bought my Civic, it was listed at $20,999 and I got 5 grand off.

Also see Redlyne's explanation which further confirms what they might pay for such a car, matching my original post:


Originally posted by Redlyne_mr2

Trade value is based on current markets, if I can sell your car for $21000 I'm paying you 15 to 16 for it on trade. Average reconditioning costs $1100 to $1800, $300 for a detail, $200 for advertising and $2000 to $2500 for profit margin. Pretty simple formula.

[blownz]

Just because someone gives an example doesn't mean that is the case 100% of the time...

Here is one example:

My brother traded a 2008 BMW 135 in to a MB dealership last year and got $16K for it. It was up on the autotrader a few days later at $22,9XX. About a month later the price was down to $19,9XX and I stopped by with my brother to take a look at it. It had an extra 1000km on it and looked like it hadn't been cleaned since they took it from him. So funny listening to the sales guy talk about the "good loyal customer that traded it in who had babied it from new, blah, blah, blah..." My brother was the second owner, drove the shit out of it (went through a set of rear tires ever summer), had it chipped for almost 40,000km. Sales guy even told us it was never winter driven. That is when my brother called him out and called him a lying sack of shit, rather fun to watch. lol

Either way, there isn't always a ton of room to move, but dealers are also greedy and will mark up a lot if they feel they can.

[Neil4Speed]

blownz - That doesn't surprise me, the number of "doctors" cars, is staggering. I think lots of people probably know they are being lied to but it gives them some comfort regardless.

I'm always a bit weary of 0% interest. The dealer would lose out on giving "free money", so I'd see how much cheaper it would be if you went in with your own financing (presuming you can pull at a good rate) - and do the math.

[lasimmon]

Originally posted by Neil4Speed
blownz - That doesn't surprise me, the number of "doctors" cars, is staggering. I think lots of people probably know they are being lied to but it gives them some comfort regardless.

I'm always a bit weary of 0% interest. The dealer would lose out on giving "free money", so I'd see how much cheaper it would be if you went in with your own financing (presuming you can pull at a good rate) - and do the math.

But the dealer isn't doing the financing. So would it really change the price?

[Neil4Speed]

Originally posted by lasimmon


But the dealer isn't doing the financing. So would it really change the price?

Someone on their side is doing the financing, it might.

[JohnnyHockey]

I gotta laugh at the reconditioning costs. . Of course there's always exceptions but are you guys seriously believing that the typical dealer in this city replaces everything with qualityOEM parts and makes sure the car is in tip top shape before they sell it? Its actually the complete opposite, they will replace as little as the can get away with. ..Wow...next time I check out a used car at a dealer I won't even bother checking anything forget the test drive. ...and advertising costs? Haha wtf, seriously? What dealer doesnt use kijiji? Detailing costs??? ...they got a guy on their payroll already that they pay $10 an hour to do that. Reconditioning costs are bullshit because they always try and factor them in when they haven't even identified any issues with the car. ..

[Mitsu3000gt]

Originally posted by JohnnyHockey
I gotta laugh at the reconditioning costs. . Of course there's always exceptions but are you guys seriously believing that the typical dealer in this city replaces everything with qualityOEM parts and makes sure the car is in tip top shape before they sell it? Its actually the complete opposite, they will replace as little as the can get away with. ..Wow...next time I check out a used car at a dealer I won't even bother checking anything forget the test drive. ...and advertising costs? Haha wtf, seriously? What dealer doesnt use kijiji? Detailing costs??? ...they got a guy on their payroll already that they pay $10 an hour to do that.

With regards to the "detail", 9/10 used cars I look at from dealers are absolutely filthy inside & out. Or the sales person will tell me "sorry we haven't had a chance to detail it yet" and a month later it's in the same state. Also some of the delivery "details" I have seen have been nothing more than a quick full-body paint scratch with a broom in a wash bay, car still dripping when when the customer is getting the final delivery/walk through. This seems to vary greatly though dealer-to-dealer. Some of them do it right, usually the higher end ones.

[JohnnyHockey]

Like I said earlier I just want to clarify, this is a typical used car dealer in Caglary. ..I can't speak to CPO car as I have no experience with those but honestly, sounds more like a gimmick too...anyone actually have experience getting a CPO car fixed for something? I'm going to venture a guess that it's a painful process.

[94boosted]

Originally posted by JohnnyHockey
Like I said earlier I just want to clarify, this is a typical used car dealer in Caglary. ..I can't speak to CPO car as I have no experience with those but honestly, sounds more like a gimmick too...anyone actually have experience getting a CPO car fixed for something? I'm going to venture a guess that it's a painful process.

I've purchased two CPO cars in the past and it is most definitely not a typical used car. Not only are the cars properly inspected and parts replaced they also usually carry extended warranty.

[carson blocks]

Originally posted by JohnnyHockey
I gotta laugh at the reconditioning costs. . Of course there's always exceptions but are you guys seriously believing that the typical dealer in this city replaces everything with qualityOEM parts and makes sure the car is in tip top shape before they sell it? Its actually the complete opposite, they will replace as little as the can get away with. ..Wow...next time I check out a used car at a dealer I won't even bother checking anything forget the test drive. ...and advertising costs? Haha wtf, seriously? What dealer doesnt use kijiji? Detailing costs??? ...they got a guy on their payroll already that they pay $10 an hour to do that. Reconditioning costs are bullshit because they always try and factor them in when they haven't even identified any issues with the car. ..

It's really obvious you have no idea how the car business works. The dealership has separate business units like preowned, new sales, service, and even detail is sometimes separate.

So, Joe buys a new car and trades in his beater. The new sales makes the deal, but the trade price is often set by the used car manager or his delegate. The car then goes to service where the service department treats it like a normal car and recommends 9000 things that the car needs just like when you bring your car in. Not every little thing will get done, but all major systems have to be operational and there can be no safety defects as no-one wants the liability. The used car manager is usually convinced that service is bending him over, but he isn't going to say no to a safety related item for said liability reasons. [Sidenote: If the car is too bad, it gets sent to auction, sometimes at a loss, and this has to be factored in to the low trade in prices they offer.] After the car is mechanically fine, it gets sent to detail and even if the detail jobs you've seen aren't that impressive looking, you can bet the service manager or detail manager is still sending a $200-$500 bill to the used car manager for it.

Now, the car is ready for sale and on the front lines. They do use kijiji, but a paid service, not the free one you use. Also, they advertise in the trade magazines, auto trader, and all those other places no-one actually looks for a car. It sits there, holding up dealership money, needing periodic rewashing etc. until you show up, and now the dealership has to have a commission structure generous enough to keep decent talent on the floor, and motivated to babysit you for 2-4 hours , holding your hand while you humm and haww and kick the tires on this beater. If you buy, they need to pay a finance or business manager to do up the contract, arrange financing, etc, and these fees are often passed on in the form of a 'doc fee', a practice which I personally despise, but that's neither here nor there.

You see how the costs on the used car are adding up already? And we haven't even talked about the massive overhead of the actual business operations of a dealership. An easy $2000 hit for a curber is often a break-even car for a dealer, as the curber pays 0 advertising, spends $20 at the car wash making it look good enough, and only fixes what is glaringly wrong. The curber either fixes things himself, or has a guy, using cheap parts. The dealership has to pay a tech at a decent rate, and usually uses OEM parts if the trade is the same brand. You see the difference and how a dealer can easily piss away a couple thousand bucks on your trade now?

I don't work in the car business anymore, so some of my numbers might be dated, but hopefully this gives you some insight in to the fact that it's more than a $10/hr detail, a handful of rockauto parts, and on the front lines ready to sell. It might work this way at some of the tiniest fly-by-night shops, but any reputable dealership has an overhead that would make you laugh and shake your head.

[FullFledgedYYC]

I believe I can speak fairly on this as I worked in the industry for almost 3 years and have zero interest in "protecting" it anymore.

6k profit on a 21k new car? HA! Give your fucken head a shake, not a chance in hell! Hell even 2k would be a stretch. On a base model entry level car for 20k we maybe had 1,200.... I think it was even less. Now, dealers are not stupid and they know this. So how do they make up money? Fees and other BS. We had a "protection package" that included floor mats, trunk liner, anti theft stickers or whatever, and something else. It retailed for about 795 and we sold it for about 1,295. Now.... on the base cars we didn't include that because we knew someone buying a weener trim level car was very budget sensitive. If someone grinded hard enough we took it off on occasion.

There is also admin fee..... I think ours was 595. I still don't know to this day where this goes. They always say it pays the guys in finance to do your paper work and stuff... I don't buy that. My belief is it goes straight into the dealer owners pocket, but I have no proof of that. Regardless, it's BS and I would never pay it. (They will say everyone charges it... I am certain I can find someone that won't).

Profit margins on used cars are hard to predict... sometimes you buy it in cheap but then find out it needs tires, brakes, front shocks, a windshield (oh that windshield is 700 by the way), and spark plugs. Well now that 4,000 margin you gave yourself on the trade is down to 1800. Now, everyone wants a deal right? So 1k off. Now I have 800 dollars. If you made a 25,000 dollar investment would you be happy with a 3.2% return? I can't remember the last time I made that little on an investment, so my answer is no. Oh, don't forget to factor in your detail, advertising (yes kijiji and autotrader cost money for dealers), your carproof report fee, and CPO fee to the manufacturer. Yep... it gets damn skinny damn quick.

That being said, sometimes you get gold. You get a trade, you have 5k profit, and it needs nothing. Perfect. But guess what? Those ones usually sell for good money, BECAUSE THEY NEED NOTHING! Why would I take 4k off that car when I know I have an outstanding vehicle? Someone will pay at or near full price for it, because it is that damn good!

Overall the market dictates selling prices. For us 90 days was kind of our limit. At 90 days we put it to under 1,000 profit usually, GET RID OF IT! (carrying inventory costs money... I won't get into that, hopefully you have some sort of accounting knowledge).

Now, new cars? Profit margins are slim. 45k suv? Ok... MAYBE 4-5k. Every car is different, so that's not a rule for any car from any brand. The best deals are indeed usually at the end of the month when a dealer needs to hit target, but if they are already at target they may tell you to pound sand at your stupid offer. But hey, if you have time to burn, go for it.

Obviously best deals are also at the end of the model year. Manufacturers throw tons of incentives out to get rid of last years stuff... 0%, 4,000 cash, etc. One thing you should know, these cost the dealer NOTHING (at least they didn't for us). So remember that 45k SUV that had 4-5k profit? Well now it has 8-9k with 4k coming from the manufacturer. If the dealer has 4k cash on a vehicle and they do not pass on that cash incentive to the customer, they keep it.

So basically... used car profits are not huge. As someone else said access to information is just too easy now. I can compare cars within 5 seconds via the internet. If I am not priced competitively for what I have IT WILL NOT SELL. Market dictates selling prices, period. You may think it's priced too high, but it will sell. If it doesn't the price will eventually come down to reflect that.

New cars? As I said people saying there is 6k in a 20k car are just plain stupid and have no idea what they are talking about. MAYBE, and I mean MAYBE if a manufacturer is SUPER desperate to clear out last year's models they may throw out some INSANE cash discount... that's the only way.

If anyone has any other questions I would be more than willing to answer them. As I said, I worked in the industry but I don't anymore, so I will be completely open and transparent. No reason not to be.

[FullFledgedYYC]

I will add that CPO vehicles are actually good (certified pre owned). They go through a pretty serious inspection and you can be certain that the tech will want to find SOMETHING wrong with it so he can make some damn money. I know techs that would look for a TINY leak on a diverter valve just so they could do it. (i am talking one drop every month).

They also qualify for lower rates if you are financing. I actually trust CPO vehicles quite a bit.

[corsvette]

Lot's of good info here from folks in the business, none of it is BS.

The other HUGE misconception from the public is this magical place called the "dealer auction" where dealers buy $25,000 cars for say, 16,000$. HA! I can honestly say MANY times I find a vehicle can be bought for the same or even less on Kijiji than I can buy it for a the dealer sale. Picture this, the auction here sells ~1000 units per week, there are usually a few hundred dealers present at the sale itself, they are a mix of franchised new car dealers looking for newer low mileage units, used car lot owners/managers looking for a deal on pretty much anything, and wholesalers, these are the guys with a "wholesaler" licence. Guess what? Many wholesale guys are basically curbers that sell to the public anyway, they'll bid things up really high because they know they can make an easy grand, they have no overhead, need no inspections done, and generally don't car what shape the vehicle is in.

Now, add the THOUSANDS of dealers watching the sale online, from coast to coast, the US and Canada. These guys obviously can't physically see the vehicles, they rely on the auctions really crappy pictures and condition reports. Often, I'll see online bidders as the only bids a vehicle gets.

All these people are looking for a deal, looking to build their inventory, many are buying from south of the border. After a late model crew cab truck? So is every new/used car dealer in Alberta, Canada, and the US. What do you think that does for prices at the dealer sale? I think that dealerships are far better taking their used trades to the sale than bothering with the hassles of retail sales.

There are no magical deals at dealer auction. I've brokered deals for Family and Friends looking for late model vehicles (ex rental/corporate leasebacks) I can save them usually 3-4 grand over what deal they could do at a dealership, but there's no mechanical inspection, financing, or detailing, vehicle comes as you see it.

So yeah, dealers don't get a pass for easy money buying at the auctions.

[JohnnyHockey]

I think we need to make a clear distinction between a place like the VW dealership in Red Deer versus a place like H.O.C or I.M.C here....my comments are only in regards to that of the typical, strictly used car lot in Calgary. I apologize if I offended anyone in regards to the places you guys seem to be talking about.

[Calgaryscot]

I'm not in the car business, but I do find it amusing how certain business are frowned upon for trying to make a decent profit.
How much do you think your $100 jeans, your $150 runners, your $5000 mountain bike or any other consumer item you care to mention costs to make? Guaranteed it's a fraction of what they are selling it to you for.

[HiTempguy1]

I find it equally amusing that a business so actively tries to continuously pull the "oh woe is me we make no money" card when they have a couple million worth of inventory kicking around, a big dealership that really isn't necessary, and a ton of salespeople waiting to pounce.

1st rule of being a business owner, cry poor, because if people know how much you really make, they'll either come for your money, or try and muscle in on the job and undercut you. :dunno:

Dealerships deserve all the shit they get. Thats not to say there aren't reasonable ones to deal with, but overall... I feel zero pity for them. As I do any business that bitches about earning money. Either do a better job, or quit the business you are in if you can't make a go of it.

Also of note, when discussing departments being "seperate", sure, they charge each other, but it all works out in the end as profit for the dealership. Its just not as much of that is shown as "sales" on the books. Once again, SOP in any multi-faceted business, I still don't feel bad.

Redline's job is to take my money, my job is to keep it. That's the game :dunno:

[rage2]

Dealerships don't make a lot of money on car sales. They make a bit in financing and print money on the service side.

[Redlyne_mr2]

Originally posted by HiTempguy1
I find it equally amusing that a business so actively tries to continuously pull the "oh woe is me we make no money" card when they have a couple million worth of inventory kicking around, a big dealership that really isn't necessary, and a ton of salespeople waiting to pounce.

1st rule of being a business owner, cry poor, because if people know how much you really make, they'll either come for your money, or try and muscle in on the job and undercut you. :dunno:

Dealerships deserve all the shit they get. Thats not to say there aren't reasonable ones to deal with, but overall... I feel zero pity for them. As I do any business that bitches about earning money. Either do a better job, or quit the business you are in if you can't make a go of it.

Also of note, when discussing departments being "seperate", sure, they charge each other, but it all works out in the end as profit for the dealership. Its just not as much of that is shown as "sales" on the books. Once again, SOP in any multi-faceted business, I still don't feel bad.

Redline's job is to take my money, my job is to keep it. That's the game :dunno:
Of course my job is to make money, isn't that the purpose of a job? :) If you're talking with me then you're looking to spend money but want to do it in an easy, professional and fun way. If you come in wanting to play games with me then I'll tell you to have a nice day because I don't have the time to play the "customer vs dealer" game. I open my books up to people all the time who want to see my costs on a vehicle, I don't care, there isn't anything wrong with making a little profit and earning a living. Have a look at your cell bill or cell phone for that matter, how much profit is Rogers and Apple making off you?

On the flip side I want people to have a no BS experience when buying a vehicle. I know what types of idiots are out there in this industry so I try and do everything they don't do. There are dealers out there who literally just check off all the boxes in an Amvic inspection without looking at the car. Im trying to help a buddy buy a used land rover and it's a nightmare, the dealer wont provide any inspection nor records of recent work completed. When shopping used always ask for the following:
1. Carproof
2. Reconditioning report and inspection

If they can't provide you either document don't buy!

I have reconditioning bills with almost all oem parts that I show to our customer on used. My windshield bills are $300 to $500 and my detail bill is at least $300/car done at an actual detail shop. I have at least 6 beyonders reading this thread who have traded in their cars with me in the last 4 months and what I told them I'd sell their car for is what I'm asking for their vehicles on our lot.

The worst thing about this industry are all the idiots out there making big money that don't deserve a Mcdonalds wage. Amvic is gaining lots of power and momentum in this province so these sketchbags wont be around forever.

[corsvette]

Originally posted by HiTempguy1
I find it equally amusing that a business so actively tries to continuously pull the "oh woe is me we make no money" card when they have a couple million worth of inventory kicking around, a big dealership that really isn't necessary, and a ton of salespeople waiting to pounce.

1st rule of being a business owner, cry poor, because if people know how much you really make, they'll either come for your money, or try and muscle in on the job and undercut you. :dunno:

Dealerships deserve all the shit they get. Thats not to say there aren't reasonable ones to deal with, but overall... I feel zero pity for them. As I do any business that bitches about earning money. Either do a better job, or quit the business you are in if you can't make a go of it.

Also of note, when discussing departments being "seperate", sure, they charge each other, but it all works out in the end as profit for the dealership. Its just not as much of that is shown as "sales" on the books. Once again, SOP in any multi-faceted business, I still don't feel bad.

Redline's job is to take my money, my job is to keep it. That's the game :dunno:


Not sure any are bitching about not making money, just trying to make it clear that they usually don't make $6,000+ profit on a car sale. So many consumers arm themselves with the wisdom of how much movement a dealer has in their pricing, only to waste a bunch of everybody's time negotiating on the belief that they have huge markups.

I do agree with your thoughts on the departments. Each dealer dept is it's own separate business trying to make money, even off each other. It's like many heads of a hydra trying to gobble food, in the end it all goes into one belly....the dealer owner!

[Redlyne_mr2]

I should add, my experience has been all luxury car and import stores, any domestic dealers here want to chime in? I know that if a Dodge dealer sells a truck at full price they make a huge amount of money not only in front end gross but in holdback (profit the manufacturer pays the dealer to sell the truck).

[max_boost]

Redlyne is a good guy to deal with. Everything is simple and straightforward.

The other small lot shady places, no thanks! haha

:werd: to dealers making a killing in service.

[corsvette]

Originally posted by Redlyne_mr2
I should add, my experience has been all luxury car and import stores, any domestic dealers here want to chime in? I know that if a Dodge dealer sells a truck at full price they make a huge amount of money not only in front end gross but in holdback (profit the manufacturer pays the dealer to sell the truck).


They do make pretty good on HD trucks, when I was at Ford the markup on a loaded Super Duty was ~$7,000 and holdback was around $2,250 (we're going way back to 99- 2000 here) When that body style was new and supply was limited we we're getting MSRP and then some. As they became more common and demand died down we'd take between 2-3K over. Dodge was usually about the same (not sure of their holdback though) We made very little on F150's, usually 5-800$ over, maybe more for a absolute full load unit.

Wish there were more guys like you Redline_mr2 in the business, would make it better for both buyers and dealership employees.

[xrayvsn]

Dealt with Redlyne on purchasing a Golf R, and it was the most refreshing car purchase experience I have ever had. I did it all by e-mail. He was honest up front and gave me the numbers, no games. I have no problem with him making some money on my trade in. He saves me the hassle of trying to sell my car privately and his trade in value was more than fair, and higher than I anticipated. It was so good, that I wanted to make sure he got the best price for the car in resale, so I had the car fully detailed with a single stage polish before I traded it in. From one Beyonder to another, even though I knew I didn't have to do it.

In the end, look over all the numbers, shop around and if you don't like the deal, then simply don't buy the car.

[Jonathanl10]

I remembered seeing a sheet when I worked at Chrysler. Like $6,000 markup on 1500s more or less depending on trim. Not sure about holdback but you constantly see Ram giving $8500 in consumer cash. Usually another $2500 if you qualify (if you work a trade or something) 0% for 72 months, first few payments waived. Tons of stuff on those. But then again, I drive Honda so I'd consider that lots because Honda doesn't do jack.

Jeep GCs don't need incentives and have about 3-7k from Laredo to SRT.

Chrysler 200s and Darts didn't care because they just whored them out on rentals.


I was lot guy though so take my shit with a grain of salt.

[blownz]

Originally posted by corsvette



They do make pretty good on HD trucks, when I was at Ford the markup on a loaded Super Duty was ~$7,000 and holdback was around $2,250 (we're going way back to 99- 2000 here) When that body style was new and supply was limited we we're getting MSRP and then some. As they became more common and demand died down we'd take between 2-3K over. Dodge was usually about the same (not sure of their holdback though) We made very little on F150's, usually 5-800$ over, maybe more for a absolute full load unit.

Wish there were more guys like you Redline_mr2 in the business, would make it better for both buyers and dealership employees.

Holdback with Ford is exactly 2% on every vehicle they sell (although it has been a while so I don't recall if it was 2% of MSRP or 2% of dealer invoice). I can confirm though. They also had a few other volume discounts that I assume most manufacturers have.

Last new Ford I bought they actually gave me dealer invoice, less holdback plus $500. And they still made more than $500.

[civic_stylez]

Originally posted by SOAB


its amazing how little you know about the automotive business although you try to sound like a know-it-all.

you actually believe that a dealer is making $6000 on a $21000 car? :rofl:

THIS.

Most dealers are lucky to make 300 - 500.00 on an entry level car. Used cars are where the money is at but from my days in sales, a $1000.00 profit is RARE. Manufacturers are ruthless on dealerships as well. You pay the house first and then you have to pay the salesman (200/400.00 spiff). Most entry level cars, accents, versa, focus etc have almost no margin in them at all and are most sold to get people in them with the hopes that the come back in a few years and trade up to a more premium model. You can ask most dealers to show you the invoice pricing and most will show you. You would be very surprised how little there is to be made. Volume is the only thing that keeps dealers going.

[civic_stylez]

double post

[Strider]

Just had to laugh when I saw this article 5 minutes after reading all about how much used car dealers pour into reconditioning cars in this thread

Jalopnik - Car Dealer Reportedly Sold BMW With Duct Tape Covering Check Engine Light (http://jalopnik.com/car-dealer-reportedly-sold-bmw-with-duct-tape-covering-1778680389)

[Mitsu3000gt]

Why are so many people are responding to the "$6000 profit" idea when not once in the entire thread was it ever mentioned. There seems to be a lot of confusion surrounding what the dealer pays (I.e. maybe $5-6K less on a car they eventually list for $21K), and what they make on the car after it sells (profit) which would be a lot less in most cases.

SOAB misread something and everyone is jumping all over it haha.

[FullFledgedYYC]

Originally posted by Strider
Just had to laugh when I saw this article 5 minutes after reading all about how much used car dealers pour into reconditioning cars in this thread

Jalopnik - Car Dealer Reportedly Sold BMW With Duct Tape Covering Check Engine Light (http://jalopnik.com/car-dealer-reportedly-sold-bmw-with-duct-tape-covering-1778680389)

And this is exactly why I said I believe in Certified Pre Owned through a dealer so strongly. If a brand dealership pulled this stunt they would be in some deep shit.

What do you expect from a shady ass used car lot?

[962 kid]

Originally posted by Mitsu3000gt
Why are so many people are responding to the "$6000 profit" idea when not once in the entire thread was it ever mentioned. There seems to be a lot of confusion surrounding what the dealer pays (I.e. maybe $5-6K less on a car they eventually list for $21K), and what they make on the car after it sells (profit) which would be a lot less in most cases.

SOAB misread something and everyone is jumping all over it haha.

Perhaps you should clarify your post. I don't think anyone misread what you said:

"There's at least a couple grand of wiggle room in a $21,000 car in my experience, probably more. The dealer probably paid $15K for it, possibly even less."

That pretty implicitly states that you believe there are huge margins on used cars

[SKR]

Originally posted by Mitsu3000gt
Why are so many people are responding to the "$6000 profit" idea when not once in the entire thread was it ever mentioned. There seems to be a lot of confusion surrounding what the dealer pays (I.e. maybe $5-6K less on a car they eventually list for $21K), and what they make on the car after it sells (profit) which would be a lot less in most cases.

SOAB misread something and everyone is jumping all over it haha.

I understood what you meant. I don't know why everyone else is struggling with it.

[Maxt]

Originally posted by blownz

My brother traded a 2008 BMW 135 in to a MB dealership last year and got $16K for it. It was up on the autotrader a few days later at $22,9XX. About a month later the price was down to $19,9XX and I stopped by with my brother to take a look at it. It had an extra 1000km on it and looked like it hadn't been cleaned since they took it from him. So funny listening to the sales guy talk about the "good loyal customer that traded it in who had babied it from new, blah, blah, blah..." My brother was the second owner, drove the shit out of it (went through a set of rear tires ever summer), had it chipped for almost 40,000km. Sales guy even told us it was never winter driven. That is when my brother called him out and called him a lying sack of shit, rather fun to watch. lol



I've had the loyal elderly return customer trade in story on every used car I have looked at. They should change it from sales tactic #2 to #12 and give it a break for a while, its worn out.

[JohnnyHockey]

Lol sales bros gon' sales bro.

[HiTempguy1]

Originally posted by SKR


I understood what you meant. I don't know why everyone else is struggling with it.

How are you going to win internet points without twisting someone's words to suit your unrelated counterpoint? Duh! Actually talking about what someone acrually said is for chumps!

[FullFledgedYYC]

Originally posted by Maxt


I've had the loyal elderly return customer trade in story on every used car I have looked at. They should change it from sales tactic #2 to #12 and give it a break for a while, its worn out.

Sigh...... I don't know where you people go, but I never used that crap. If someone asked "do you know who traded it in?" If I didn't I would straight up say "No clue unfortunately, but it's been inspected"

Sometimes they would get mad... "you have NO idea?"

That's probably why so many guys bullshit about it.

[zhao]

Originally posted by carson blocks


It's really obvious you have no idea how the car business works. The dealership has separate business units like preowned, new sales, service, and even detail is sometimes separate.

So, Joe buys a new car and trades in his beater. The new sales makes the deal, but the trade price is often set by the used car manager or his delegate. The car then goes to service where the service department treats it like a normal car and recommends 9000 things that the car needs just like when you bring your car in. Not every little thing will get done, but all major systems have to be operational and there can be no safety defects as no-one wants the liability. The used car manager is usually convinced that service is bending him over, but he isn't going to say no to a safety related item for said liability reasons. [Sidenote: If the car is too bad, it gets sent to auction, sometimes at a loss, and this has to be factored in to the low trade in prices they offer.] After the car is mechanically fine, it gets sent to detail and even if the detail jobs you've seen aren't that impressive looking, you can bet the service manager or detail manager is still sending a $200-$500 bill to the used car manager for it.

Now, the car is ready for sale and on the front lines. They do use kijiji, but a paid service, not the free one you use. Also, they advertise in the trade magazines, auto trader, and all those other places no-one actually looks for a car. It sits there, holding up dealership money, needing periodic rewashing etc. until you show up, and now the dealership has to have a commission structure generous enough to keep decent talent on the floor, and motivated to babysit you for 2-4 hours , holding your hand while you humm and haww and kick the tires on this beater. If you buy, they need to pay a finance or business manager to do up the contract, arrange financing, etc, and these fees are often passed on in the form of a 'doc fee', a practice which I personally despise, but that's neither here nor there.

You see how the costs on the used car are adding up already? And we haven't even talked about the massive overhead of the actual business operations of a dealership. An easy $2000 hit for a curber is often a break-even car for a dealer, as the curber pays 0 advertising, spends $20 at the car wash making it look good enough, and only fixes what is glaringly wrong. The curber either fixes things himself, or has a guy, using cheap parts. The dealership has to pay a tech at a decent rate, and usually uses OEM parts if the trade is the same brand. You see the difference and how a dealer can easily piss away a couple thousand bucks on your trade now?

I don't work in the car business anymore, so some of my numbers might be dated, but hopefully this gives you some insight in to the fact that it's more than a $10/hr detail, a handful of rockauto parts, and on the front lines ready to sell. It might work this way at some of the tiniest fly-by-night shops, but any reputable dealership has an overhead that would make you laugh and shake your head.

I've skimmed this thread and this is the only post I fully agree with.

As someone who was in the dealership game (Worked for dealerships and owned my own) here is my experience:

First off, 6g profit on a 21g car is possible. The biggest profit I personally have seen on 'your average used car' was 17g on a car that sold 3 days after it was traded in. Traded in for 19xxx, sold for 36xxx. zero in the shop. One dealership I worked at unofficially called itself the home of the 10 pay, because we had so many cars that sold for 10g+ profit, and pretty much everything on that dealership's lot was in the 20-40g range. I remember an a6 we got once from auction that originally was from PEI, and we paid 20g when it should of went for high 20s because for some damn reason no one was bidding on cars that day; a car that at the time retailed for mid to high 30s.

Now when I owned a dealership, I pretty much stuck to selling cars in the 10-15g category, and yes, I literally doubled my money on some of them, so the odd car i was into for 7g i'd be selling for 13-14. Now those weren't the norm by any means, but they did exist. I also reconditioned them better than the big dealerships I worked at. filters/oil changes/brake jobs, good brand name tires, not hacking body repairs with spot repairs at maaco, proper details not hack shows, etc.

Now I've personally taken a bath on cars selling them at a loss, but it's extremely rare to see that at a big dealership. Usually selling a car at a loss at a big dealership involves a call to the owner who tells the sales manager 9/10 times that he can't sell it for a loss. That's my experience anyway.

As someone who has worked in a dealership, I laugh at the guy who says there is always thousands to negotiate on cars. Used cars routinely gets fucked by every other department. One dealership I worked at we would get charged retail + 25% at service, so the average guy walking into the dealreship for a brake job was paying far less then the actual used car department was lol. CPO's depend on the manufacturer but they generally require certain things that are $$$. Oem parts can be rape, services too. heck, if it's something high end even tires could be thousands. I just bought a CPO BMW (cheaper than private btw oddly, wtf is wrong with private sellers when a dealership can sell one cheaper lol) and i had to delay picking it up because they HAD to replace the runflats. I was willing to say F that noise i can deal with tires myself, but it wasn't even an option.

Also, my advice is if you're not getting a back and forth price from the salesmanager you are likely paying too much. If the salesman is negotiating by himself with you, it is probably because he inflated the price (can't believe that still works and I couldn't believe it still worked 5+ yaers ago, but I know it's still attempted and catches people). One of the best salesman I ever worked with would routinely up the price by 3g and do all the negotiating himself because even if he came down 3g he was still selling at full pop.

Now it's been a long time since i've been in the game, but I doubt too much has changed. Honestly, no one, not even the salesman knows wtf they're making off a car. They are all completely different, and usually the worst deals are the ones that have been on the lot the longest, because of depreciation, so sometimes you negotiate 500 off and the dealership is taking a bath, and sometimes u negotiate 5000 off, and the dealership is still laughing all the way to the bank. It's a complete crapshoot, so anyone that says they 'know' a dealership can discount a used car for XXXX just told the salesman he doesn't know wtf he's talking about and can be taken advantage of, or should be blown out the door.

New cars are completely different though. they are a bit more predictable, and IMO it's easier to negotiate on because there is unlimited stock. The worst i've ever negotiated off was 7% on a 60g bmw. the best I ever negotiated off was $4500 on a 29300msrp acura. I just negotiated on my mom's rdx a couple years ago and out the door after tax and everything she ended up paying over 2g under MSRP. I don't buy demos either...

A rule of thumb is german cars are hard as shit to negotiate on unless that model year has been out for awhile or is selling like shit, and if it's been out for a while if you get anywhere near 6-7% off you're probably near their limit is my guess in this day and age. I was working at VW when the MK6 GTI's came out, and the best I could do for one of my brothers friends was $500 off, and even that was a stretch. I personally love negotiating on acura's (not for myself, I find them boring, but for other people) because while Honda doesn't like to budge, acura will slash prices like crazy, and even at full price they're better value than a honda imo).

Anyway, that's some of the stuff I know, and I have no dog in this fight anymore so I have no cause for deceiving.

... still loling at the guy saying he 'knows' what they paid

[r3ccOs]

my co-worker is a BA Economics Hons grad and did the "business office" job for a few years, until he just found the hours onerous and the "upsales" unscrupulous.
The margins aren't in each unit, its about the "number" of units moved and the long term financing.

Its not volume based pricing neither, its the fact the better you perform, the more incentives you receive, and the better allocation you get.

He told me that go buy a car towards the end of the month, as they have year based monthly calendars, and if they are trying to hit a target of say (250 units) they can easily afford to give you a substantial below "invoice" discount in order to get to that bracket of sales/kickbacks.

So long story short, its like a commission based sales at the dealer level, and the Manufacturer is the one paying the comp.

[HiTempguy1]

Originally posted by zhao


I've skimmed this thread and this is the only post I fully agree with.

Even though you then go on to agree with everything everyone else is saying. :nut:

While I haven't owned a dealership, I've sold privately over 50 cars in my life. Its not "hard" to make money selling cars, and as you even demonstrated, there is a f*&kton of cash in it at times. :dunno:

[Canmorite]

Originally posted by xrayvsn
Dealt with Redlyne on purchasing a Golf R, and it was the most refreshing car purchase experience I have ever had. I did it all by e-mail. He was honest up front and gave me the numbers, no games. I have no problem with him making some money on my trade in. He saves me the hassle of trying to sell my car privately and his trade in value was more than fair, and higher than I anticipated. It was so good, that I wanted to make sure he got the best price for the car in resale, so I had the car fully detailed with a single stage polish before I traded it in. From one Beyonder to another, even though I knew I didn't have to do it.

In the end, look over all the numbers, shop around and if you don't like the deal, then simply don't buy the car.

I agree, I think it matters more who you deal with than which dealership it is. Some sales people are straight up and to the point, some like to bullshit and mess around. I've dealt with both.

I bought a used GTi from Redlyne just recently, sight unseen. All over the phone as well. He was upfront about everything and still answers any questions I have.

Cole's notes: find a trusted sales person with a great reputation!

[Zhao Kan]

Originally posted by HiTempguy1


Even though you then go on to agree with everything everyone else is saying. :nut:

While I haven't owned a dealership, I've sold privately over 50 cars in my life. Its not "hard" to make money selling cars, and as you even demonstrated, there is a f*&kton of cash in it at times. :dunno:

Correct me if I'm wrong but Pretty much everyone is saying 6g profit on a 20g car doesn't exist. I disagree with anyone saying that

[Redlyne_mr2]

Originally posted by Canmorite


I agree, I think it matters more who you deal with than which dealership it is. Some sales people are straight up and to the point, some like to bullshit and mess around. I've dealt with both.

I bought a used GTi from Redlyne just recently, sight unseen. All over the phone as well. He was upfront about everything and still answers any questions I have.

Cole's notes: find a trusted sales person with a great reputation!

Except the AC didn't work and you got owned yesterday in the hot sun ;) Still feel bad about that, glad it all got fixed. Special thanks to Phuqu at Screamin for his ac repair skillz!

[Bladeh]

Do dealers look at the Canadian Black Book trade in values? I bought a 2016 WRX in January and the wife wasn't happy driving a manual so thought about trading it in, I purchased winter and summer tires from the dealer and other odd bits. I'm looking at a $5000 loss just on the purchase of the car alone after only 4 months, looking at the Canadian Black Book they offered me less than a 2015 of the same model.

Accessories are worthless apparently, so I said I'll take a set of wheels back..... no price is for everything, with only 2000kms on the tread they have lost more than 70% of there value. Can't win! Well least he was honest at making $700 - $900 profit on worse case scenario.

[Canmorite]

Originally posted by Redlyne_mr2


Except the AC didn't work and you got owned yesterday in the hot sun ;) Still feel bad about that, glad it all got fixed. Special thanks to Phuqu at Screamin for his ac repair skillz!

Haha, just needed a recharge! My hair is blowing in the cold now.

[Aleks]

Originally posted by Bladeh
Do dealers look at the Canadian Black Book trade in values? I bought a 2016 WRX in January and the wife wasn't happy driving a manual so thought about trading it in, I purchased winter and summer tires from the dealer and other odd bits. I'm looking at a $5000 loss just on the purchase of the car alone after only 4 months, looking at the Canadian Black Book they offered me less than a 2015 of the same model.

Accessories are worthless apparently, so I said I'll take a set of wheels back..... no price is for everything, with only 2000kms on the tread they have lost more than 70% of there value. Can't win! Well least he was honest at making $700 - $900 profit on worse case scenario.

These situations is where leasing works out better, especially Subaru. I was able to get rid of an STI after 3 months and a WRX after 6 or so with just the monthly payments sunk.

[Redlyne_mr2]

Originally posted by Bladeh
Do dealers look at the Canadian Black Book trade in values? I bought a 2016 WRX in January and the wife wasn't happy driving a manual so thought about trading it in, I purchased winter and summer tires from the dealer and other odd bits. I'm looking at a $5000 loss just on the purchase of the car alone after only 4 months, looking at the Canadian Black Book they offered me less than a 2015 of the same model.

Accessories are worthless apparently, so I said I'll take a set of wheels back..... no price is for everything, with only 2000kms on the tread they have lost more than 70% of there value. Can't win! Well least he was honest at making $700 - $900 profit on worse case scenario.

The problem with trading in a new car almost immediately is that you never get costs back. Freight and PDI is lost as is air tax, tire tax, admin plus any accessories. Pm me with what you're trying to achieve and I'll see if I can help.

thanks
Ryan