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?

[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?

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?

I've had worse deals offered on trade-ins to my face 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

[Masked Bandit]

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

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

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?

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?

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. 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.