Stopped by the dealer today

[Hylton]

Originally Posted by dstairs

If the dealer sold the car at $39,999 his take would be $39,999 using your logic, LOL I think he was referring to profit when he says they make 3k

I wasn't. How the heck could you talk about profit when dealer costs are distributed over so many other revenue streams?

[dstairs]

Originally Posted by Shadowmind

Again... I call BS.

First off, lets talk about economics here....

Exactly how many vehicles does your dealership sell per month? You said you were small, so let me take a guess... 30 per month (Im thinking thats high). By what you're saying, your owner only gets 800ish per car sale. So your dealer is making ~ 24,000 per month in sales. Again, your dealership is small, so you wouldn't staff it heavy. Lets say... 1 owner salary, 1 GMS, 2 Sales, 1 cashier, 1 secretary, 2 mechanics (we'll be generous and state that finance pays their own salary). Lets avg those salaries to $2500 per month + labor overhead of 20% = 3k per labor unit. That's 24k per month in labor. Already your upside down. But now throw in lot lease @ 5k per month (very generous), and overhead bills of ~2k (lights, etc).

Im generalizing all of this, but its pretty obvious that @ ~ $800-$1200 per vehicle, your dealer is loosing their shorts on a monthly basis. WHY... would anyone ever consider starting a business with those kinds of numbers?

How exactly are many of the dealers in even the smallest towns, family ran for multiple generations, where those families tend to be filthy rich, if the mark up for a car sale is that low....

Sirs... I again, call major BS...

The holdback alone for a 40k 2SS is $1200

You actually are agreeing with what I said. The gross profit on the vehicle pays sales staff and related support, the hold back pays to keep the lights on assist in floor plan costs and lot lease, salaried staff, etc. You also neglected to realize the profits made on used car sales, wholesale, the service, parts and collision center departments . Each profit center within a dealership stands on its own and the manager of that center has to be accountable for his bottom line. The New Car Sales department is the least profitable, usally the collision center or service is the most profitable. Using the profit made by Finance the average "gross profit" before commissions and other expenses amounts for less than $1000 per new car, on the other hand, pre-own makes a larger gross per car. A dealership can be a profitable business, if it is run as a tight ship.

Is it possible to make $3,000 profit on a Camaro sold at MSRP? Sure if the customer walks in to finance and buys warranty, insurance, gap, lo-jack, paint sealant protection packages, and doesn't dicker on these products or on the rate charged, you can make more than $3,000, but I have a feeling anyone in this Forum that is shopping for the best deal on a Camaro is also shopping the financing as well. The above products all have a use and a value to some people in one degree or another, however not everyone will want all of them, some will not want any at all.

[dstairs]

Originally Posted by Hylton

I wasn't. How the heck could you talk about profit when dealer costs are distributed over so many other revenue streams?

So when you say the dealer's take is $3k on a MSRP Camaro, you are not talking about profit? I am happy that is cleared up. Thank you. Because too many think the dealers are the bad guys trying to make too much profit. As I stated before we are selling Camaros at MSRP to our customers, and I donot want members of this forum that have purchased from us to think we growing rich over the sale to them, because it is not accurate. We run a honest dealership and make an honest but not excessive profit.

[Jim Thompson]

we absolutely make more money on used cars than on new cars...no matter the price.

meaning a 5K wholesale car might have 2K in profit because we bought it right and it did not require massive reconditioning, but a new 50K tahoe may have the exact same 2K profit (not including dealer hold back and incentives from GM..will get to that), but the kicker is that nearly everyone knows what invoice is on a new vehicle because it is all over the web. no problem with this, but as sales people we basically understand that we will not make very much money when we sell a new vehicle. on a camaro I personally make about $300, which is about $200 more than most new cars because its at MSRP. when we sell a car at our stated invoice or even below that invoice then I make $100. would take an AWFUL lot of new cars to make a great living at $100 a car or even $300 a car. I have no problem with this because it is a numbers game and it is more families in my pipeline that will no questions asked be my client for life and just hopefully their neighbors will be my client for life. selling a new car also makes money for the dealer over the lifetime of that car through parts and service...which is the ultimate goal anyway...great parts and service, good money and a customer for life

the dealer hold back is typically about 3% of the MSRP of the car, not including the destination charge...or on a 30,000 car...are you ready...$900. here is a great read on that from an unbiased source http://www.edmunds.com/advice/incent...ack/index.html

all of the crazy ads you see out there are usually including every POSSIBLE rebate or discount available FROM GM and any discounts that the dealer is willing to give on the car including possibly going into his holdback. you dont always qualify for those discounts. had a dealer here in town a few weeks back advertising a car with all rebates and military discounts. well guess what? not everybody is in the military and not everyone owns a GM vehicle now, so no owner loyalty either. deceptive practices dont help the image for sure.





I can fully understand how our business got to the point where no one wants to believe you and everyone wants to try and beat you silly for price. it goes back to the old days (and not so old days) of car sales.


what I cant fully understand is that why folks dont complain or argue or negotiate a bit when they buy a product with MASSIVE profit in it such as groceries, clothing, shoes, hair cuts, tanning memberships, eating out, movie theaters...the list goes on. many of these products contain 50% markup. how many times have you seen jewelry advertised for 75% off and not wondered how much profit is really there?

btw I am not complaining a bit. I chose my line of work and have done it for a long long long time and am happy with it (wouldnt mind saturdays off) and I make a great living doing it, but can definitely live without the constant struggle of people thinking we are ALL ripping them off or even trying to. those folks (sales people, managers, owners) that do try and rip people off come and go in every service oriented business, but they typically never last long doing so.

[Adam]

a. the reason people don't complain about groceries etc is - I JUST SPENT MORE MONEY ON A CAR THAN I WILL ON ANYTHING ELSE THE ENTIRE YEAR! DURRRRR

b. if a dealership gets 3k net revenue off a sale of an SS then that's good money, it's not our fault if they can't distribute it or manage it well.

c. since people have already admitted on here that dealership money is usually from used cars and service, then why worry about profit margin on a new car? Just break even and it will pay dividends.

d. don't talk to me about stuff you have to do after the car arrives, cause you don't have to do jack. People regularly take them right off the truck.

[Dr Jkel]

2ss, from what the dealer pays to what you pay is roughly 2156.00 not including hold back, PDI, doc fees etc... I have seen the paperwork on my car from what the dealer paid to what I paid, and I am paying MSRP. There is no advertising on the Camaro at least for 14500.00 that were pre-ordered. Funny thing is that there is not a car on the lot that any dealer would be Happy to sell for Sticker, EVen a 2500HD Duramax, or a Corvette. While it is true they make More money on used, because they rape you on your trade. But it boils down to this they try yo make as much money and we try to pay the least amount of money, As the dealer told me, If you pay too much for a car it's your own fault. There is too much information out there now for you to get ripped off.

[Jim Thompson]

Originally Posted by Adam

a. the reason people don't complain about groceries etc is - I JUST SPENT MORE MONEY ON A CAR THAN I WILL ON ANYTHING ELSE THE ENTIRE YEAR! DURRRRR

b. if a dealership gets 3k net revenue off a sale of an SS then that's good money, it's not our fault if they can't distribute it or manage it well.

c. since people have already admitted on here that dealership money is usually from used cars and service, then why worry about profit margin on a new car? Just break even and it will pay dividends.

d. don't talk to me about stuff you have to do after the car arrives, cause you don't have to do jack. People regularly take them right off the truck.

a. add up your grocery bill and then add in eating out...guaranteed to be close or over what most will spend monthly on the car

b. someone here said the dealer is getting 3K on an SS...thats a stretch (meaning would have to include every dime that could possibly come back to him) but even if its 4k then that is how much of a profit percentage?

c. we almost always do break even on new cars...or at least close. and this is done on the premise that we make a customer for life.

d. take what off the truck? the little decal on the back? we are talking about checking the car for defects and ordered options through PDI and detailing. we can leave the decals off at request.


again I understand your frustrations, but just know that the money is not nearly as strong PER sale as most would believe. go to the link I provided and read an unbiased source telling the same.

[cyberdelic]

I'm curious how this turns out. I may not be eligible for a GM discount, or anything special like that, but I wasn't impressed with the few dealerships in middle TN I contacted online about a Camaro. That included the one in my hometown of Springfield.

I finally settled on Walker Chevrolet in Franklin. Even though I only placed an order recently, I've got nothing but good things to say about my experience so far.

[Dr Jkel]

The thing that hurt the car dealers is about 3 yrs ago they offered employee pricing and everyone saw the real deal.

[Jim Thompson]

Originally Posted by Dr Jekel

The thing that hurt the car dealers is about 3 yrs ago they offered employee pricing and everyone saw the real deal.

the head banging has been going on since way before then, but yeah that dont help.

however employee pricing (GMS) is basically the car at my invoice minus the hold back, which again on a 30,000 chevy the hold back is only about $900

[Dr Jkel]

Remember I also believe there was a rebate because I bought a 2500 HD Duramax Crewcab 4X4 Loaded, sticker at that time was 47000.00 something and I walked out the door for 37500.00 tax and all with tinted windows and spray in bedliner. Bit basically it comes down to one simple, very simple thing. Each individual has a number in his head that they are willing to pay, the dealer has a number that they are willing to accept, if the 2 sides meet then a new car/truck is purchased, if not then each goes there seperate ways. The only issue I have EVER had with a dealer is what they offered on my trade, of course a lowball offer, but after the first time that I felt that I got shorted I just sold the vehicle myself before I purchased a new one, and in my lifetime I have purchased about 22 new GM Vehicles, funny thing is the dealer told me to sell my vehicle outright.. And I took his advise. This is the only thing I do not like about the dealer closings, most around my area were small dealers, real personable people that you go to church with, see at the football game on Friday night. You know what I am talking about, maybe one day this country can get back to that where a mans word is his bond, oh well enough rambling, LOL

[hb-rocks]

Originally Posted by Jim Thompson

the head banging has been going on since way before then, but yeah that dont help.

however employee pricing (GMS) is basically the car at my invoice minus the hold back, which again on a 30,000 chevy the hold back is only about $900

I can't figure it out......what's up with that Avatar? Looks like one of those Airhorns or some type of inhaler?

[Jim Thompson]

Originally Posted by Dr Jekel

Remember I also believe there was a rebate because I bought a 2500 HD Duramax Crewcab 4X4 Loaded, sticker at that time was 47000.00 something and I walked out the door for 37500.00 tax and all with tinted windows and spray in bedliner. Bit basically it comes down to one simple, very simple thing. Each individual has a number in his head that they are willing to pay, the dealer has a number that they are willing to accept, if the 2 sides meet then a new car/truck is purchased, if not then each goes there seperate ways. The only issue I have EVER had with a dealer is what they offered on my trade, of course a lowball offer, but after the first time that I felt that I got shorted I just sold the vehicle myself before I purchased a new one, and in my lifetime I have purchased about 22 new GM Vehicles, funny thing is the dealer told me to sell my vehicle outright.. And I took his advise. This is the only thing I do not like about the dealer closings, most around my area were small dealers, real personable people that you go to church with, see at the football game on Friday night. You know what I am talking about, maybe one day this country can get back to that where a mans word is his bond, oh well enough rambling, LOL

all very good stuff.

Originally Posted by hb-rocks

I can't figure it out......what's up with that Avatar? Looks like one of those Airhorns or some type of inhaler?

yep its an airhorn...was entertaining to say the least

[hb-rocks]

new meaning to the term..."LOUDMOUTH"....