How to convince dealer to lower price

[Hylton]

Somebody help me out here -

Assume that dealers sell every Camaro at invoice so that the only profit they make on every Camaro is exactly $800 (average holdback). How would you split that $800 gross profit up and what would the dealers net profit be per Camaro?

Break it down for me. Remember part of the gross profit goes to salesman salaries, admin staff salaries, insurance, property tax, carrying costs if the car is a lot car, mortgage, etc. Come up with a number of unit sales for a dealer before your breakdown because obviously, most of these costs are spread across all unit sales.

Anyone willing to take a stab?

[trm0002]

Originally Posted by Hylton

Somebody help me out here -

Assume that dealers sell every Camaro at invoice so that the only profit they make on every Camaro is exactly $800 (average holdback). How would you split that $800 gross profit up and what would the dealers net profit be per Camaro?

Break it down for me. Remember part of the gross profit goes to salesman salaries, admin staff salaries, insurance, property tax, carrying costs if the car is a lot car, mortgage, etc. Come up with a number of unit sales for a dealer before your breakdown because obviously, most of these costs are spread across all unit sales.

Anyone willing to take a stab?

Truth be told- holdback is supposed to cover floor plan; i.e. the cost of inventory for a car. If a car comes in and is immediately sold, effectively dealer gets the entire holdback. If it sits for 30 days, he ends up with 2% since the other 1% is roughly the finance charge from whomever they borrow the money to buy the cars from GM.

As far as what it costs to actually sell a car, any car, on average, my best guess is that the salesman gets a couple hundred bucks, overhead including advertising is probably 50% of the average sale (60% for a small dealer, 40% for a large dealer) which leaves the dealer about $700 per car profit on average.

[Hylton]

Originally Posted by trm0002

As far as what it costs to actually sell a car, any car, on average, my best guess is that the salesman gets a couple hundred bucks, overhead including advertising is probably 50% of the average sale (60% for a small dealer, 40% for a large dealer) which leaves the dealer about $700 per car profit on average.

So by your own calculations above, it would be impossible for a dealership to make any money if they sold every car at dealer invoice correct?

[trm0002]

Originally Posted by Hylton

So by your own calculations above, it would be impossible for a dealership to make any money if they sold every car at dealer invoice correct?

No, not if they move them right out the door - i.e. VOLUME. The holdbacks on the top dealership that sells 4500 units a year adds up really quick. Average car price, 23k x 4500 units x .03= $3.1 million

$200 commission a vehicle= $900k
40% overhead costs = $1.24 million

still leaves $960,000

Obviously the longer they sit on the lot, the less that number is. The less cars a dealership sells, the less that number is. However, we also know that not all deals, I'd be surprised if more than half, are generally as low as invoice. Most are probably in the invoice +($500-$1000) range I would guess.

[Hylton]

Originally Posted by trm0002

No, not if they move them right out the door - i.e. VOLUME. The holdbacks on the top dealership that sells 4500 units a year adds up really quick. Average car price, 23k x 4500 units x .03= $3.1 million

$200 commission a vehicle= $900k
40% overhead costs = $1.24 million

still leaves $960,000

Obviously the longer they sit on the lot, the less that number is. The less cars a dealership sells, the less that number is. However, we also know that not all deals, I'd be surprised if more than half, are generally as low as invoice. Most are probably in the invoice +($500-$1000) range I would guess.

Maybe a dealer can chime in here but I can assure you that overhead is much more than 50% for an average dealer. I think the average GM dealer sells 2,500 units and thus overhead costs must be distributed amongst less cars which drives up unit cost. The big dealers may be doing okay but for the little guys, it's not the gravy train everyone thinks it is.

[joes3rdcamaro82/91/2010]

All I will say is if you want a good salesman let him make money. Most new cars include 1000-1800 hold pack and a 500+ pack, leaving your salesman with gross profit "money he can get commission on" If he sells at invioce it always or supplier or whatever, just a 100 buck that is it. This is the reason for high turn over rate, and salesman that have no clue what they are doing, simply no one wants to sale cars and only make 100 bucks on a new 50k Suburban, hell I have seen 100 com. on a new Z06.

Example Time

New Car Com.= 100.00
Referral Fee Taken From salesman= -50.00
Salesman out sick or has another guest= split deal 1/2
New Car Com at the end of the day= 25.00 oh wait here come taxes

[Hylton]

Originally Posted by joes3rdcamaro82/91/2010

All I will say is if you want a good salesman let him make money. Most new cars include 1000-1800 hold pack and a 500+ pack, leaving your salesman with gross profit "money he can get commission on" If he sells at invioce it always or supplier or whatever, just a 100 buck that is it. This is the reason for high turn over rate, and salesman that have no clue what they are doing, simply no one wants to sale cars and only make 100 bucks on a new 50k Suburban, hell I have seen 100 com. on a new Z06.

Example Time

New Car Com.= 100.00
Referral Fee Taken From salesman= -50.00
Salesman out sick or has another guest= split deal 1/2
New Car Com at the end of the day= 25.00 oh wait here come taxes

There's a couple of dealers here that have salesman on salary with no commission. I am sure they have quota or they are gone. I know another dealer who regularily takes the worst selling salesman and shows them the door. He thinks it's motivation for the others.

I believe there are currently 6375 GM dealers in the U.S. Last year, GM sold 2,980,688 vehicles in the U.S. That would mean the average dealer sells 468 vehicles a year. Not a whole hell of a lot and a far cry from 2,500 or 4,500 units. The average Chrysler dealer sells 375 vehicles a year.

[Edrock]

My head hurts...:bangdesk:

[bruins004]

I would say a more realistic case would be dealers selling vehicles at the Employee and Supplier discounts.
It is usually hard to get invoice (except in this day and age when the economy is really bad).

Also, dont forget that there are usually a good amount of dealer incentives and rebates which will help the dealer get more profit on cars that they usually sell at invoice.

[noe]

Originally Posted by chadrcr

Good luck... MOST of us are on your side.

Thanks. Oh and I have some questions. I got my 2nd letter from GM with my order # on the picture. So if I cancel my order, do I cancel at the dealer or call GM, and will the dealer still receive my car? Also, are the Camaros going to be produced in the order the orders where received by GM? Because I ordered on October 13th, so will placing a new order on this coming Monday make the Camaro come in later?

[trm0002]

Originally Posted by noe

Thanks. Oh and I have some questions. I got my 2nd letter from GM with my order # on the picture. So if I cancel my order, do I cancel at the dealer or call GM, and will the dealer still receive my car? Also, are the Camaros going to be produced in the order the orders where received by GM? Because I ordered on October 13th, so will placing a new order on this coming Monday make the Camaro come in later?

So far as we've been told (that I know) there is no relevance to when the pre-order was actually placed. If you were at dealer "A" on October 13th and have spot #1 for example, and tomorrow you place an entire new order at dealer "B", and are in their #1 spot, your car would come in around the same time: assuming total allocation numbers are similar. If dealer "A" has 35 cars coming and dealer "B" has 12, you would most likely (definitely IMO) get your car from dealer "A" first.

Your order must be cancelled by the dealership as far as I'm concerned. Yes, I'm one of the guys on your side.

[muskie]

send a note to chevrolet. I had the same experience at a dealer near our home. Contacted Chevrolet and the dealer called to apologize.

[noe]

Originally Posted by muskie

send a note to chevrolet. I had the same experience at a dealer near our home. Contacted Chevrolet and the dealer called to apologize.

Are you serious!!!!???? Never thought of that. Because I'm going to the dealer Monday. If I called Chevy, what exactly do I tell them, and would the dealer hold a grudge because I ratted them out? Oh and how do I contact Chevrolet? By email or phone?

[trm0002]

Originally Posted by noe

Are you serious!!!!???? Never thought of that. Because I'm going to the dealer Monday. If I called Chevy, what exactly do I tell them, and would the dealer hold a grudge because I ratted them out? Oh and how do I contact Chevrolet? By email or phone?

Who cares? You inviting them to dinner sometime soon?