Where Does the Car Dealer Make Money?

Edmunds.comEdmunds.com Member, Administrator, Moderator Posts: 10,138
edited September 2014 in General

imageWhere Does the Car Dealer Make Money?

Where does the majority of a dealership's profit come from? It's not from car sales — at least not directly.

Read the full story here


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Comments

  • azgmazgm Member Posts: 1
    There are too many blanket statements in this article. Everyone wants a good deal, but there's too much attention on where the dealer makes money. Dealers have huge overhead in their facilities and are not non profit orginazations. If you like the service and feel good about it then you should move forward... that sounds like a much less stressful experience that trying to figure out where the dealer makes money. It's laughable that the previous Ford GSM is making it sound like it's bad to work on commission. Maybe he worked for a dealer that liked to take advantage of people (takes one to know one kind of a thing) but my experience is that people still buy from people they like. I'm paid on commission too, and sometimes my store goes into the red for a month or two, but using the logic in this article I should raise my prices if this happens? Edmunds has make lots of money by spreading false propaganda about dealers and asking shoppers to find out how dealers make money? So stupipd!
  • pryorpatpryorpat Member Posts: 1
    The author talks about profit as if it is evil. If you own a business with millions of dollars in inventory and millions in payroll, you need to make a profit, and compare to many other businesses that require such large dollars, selling cars does not have a great rate of return all the time. If your financial adviser told you that you may make somewhere between $500 to $1500 on your $20,000 investment, and it may take a week or 10 months, and you would have to pay overhead the longer you have it, would you invest? No. The largest profit center for a dealership is the service dept. Service is where the long term relationship is built. You only buy the car 1 time and even if you only return for warranty repairs, it is still profitable. Salespersons commissions are not always based on a tier system by profit, or at all. Financing is offered to buys via the dealership and they have a buy rate which is lower than what you can get and they mark it up, just like the guy/gal at the bank, they get a piece of the action. There is much much more but Edmunds needs to keep that quiet to preserve their relationship with the manufacturers.
  • erzuahsiamerzuahsiam Member Posts: 1
    Even though you guys have some insight into the car business, the picture you have portrayed in this write-up is a gross representation of the car business.

    Anybody reading this post will automatically cultivate a carricatured image of these hard-working sales persons.
    Here are people toiling daily not only to feed their families but also helping the economy to move along being depicted as cut-throat vermins bent on wrecking the pocket books of Americans.

    To help beef up your outdated knowledge, I will like to point out to you that NOT EVERY CAR SALES PERSON IS ON COMMISSION. For example, sales persons working for the Sheehy Auto group are paid salaries, plus FLAT AMOUNTS on every car sold. The arrangment allowed the Sheehy company to usher in the concept of Sheehy Markdown where every single car is marked down below average market price.

    For your information, Sheehy arrives at markdown prices uses sources like Edmunds.com, Cars.com, KBB.com, etc. Thus, for Edmunds to turn around and castigate dealers (which, of course, include Sheehy Auto company) is tantamount to saying that car buyers should not trust Edmunds.com. Talk about shooting oneself on the foot!

    Also, what is so heinous about dealerships making profit ? Is Edmunds surviving on hand-outs and donations from philantropic organizations ? This drum-beat of car dealerships making profit is getting old, stale, annoying, and stupifying. Why won't Edmunds contributers write about Walmart making profit, or Exxon Mobil making profit ? PLease, if you have nothing to write about, start finding something else to do and stop painting this gargoyle-like picture of harworking and sincere sales people.




    Siam Erzuah
    Sheehy Honda
    Alexandria, Virginia
  • earlgrayhotearlgrayhot Member Posts: 2
    It's true dealers have overhead that they need to make, including paying the guys in service so they can stay open. But it's always a good idea to know as much as you can so the unscrupulous saleman can't dupe you into paying way more than you should. Me thinks someone is a car salesman or dealership owner to comment that buyers should buy according to how they "feel" about the deal. Forewarned and all that.
  • margarianmargarian Member Posts: 2
    The number of fraudulent dealer practices is astonishing. Just look at http://www.DealerFraud.org - Franchise dealerships lie, small dealerships lie... So, yes do your homework and go prepared!

    Yes some are hones and care about the consumer. I have not met those yet!

    Also, I used LeaseSmart iPhone app and caught them cheating me on the lease money factor/interest!
  • jmer3810jmer3810 Member Posts: 1
    Well said, azgm. Where in the world did the term "commisson" become so negative. Does a Lawyer work on a salary, do doctors make the same salary when they perform operations. Why don't we negotiate the price of these services.
    Commisson-based service provides a high level of attentiveness, and a commisson-based salesman provides great customer service. A commisson-based sales person has a vested interest in satisfying his/her customer, he/she is interested in repeat and referral business. If the salesman was simply collecting a salary, then he/she might not have the same level of vesting.
    Do other sales people work on commisson, you bet. Keep this in mind, no sale means zero commisson. Wake up.
  • pin_sekrpin_sekr Member Posts: 1
    The fact of the matter is that most new car departments lose money. The dealership today makes most of profit its from parts and service, along with manufacturer incentives for things like customer satisfaction and sales programs.
  • strafautostrafauto Member Posts: 1
    Anyone that buys their cars from dealerships are fools. not much more can be said about that, You get tajen,m and you deserve it.
  • soonerdewsoonerdew Member Posts: 26
    Its always amusing to see people rise in indignation over an article like this.

    No one said that working on commission was inherently wrong, nor was the notion that a dealership works for profit. The economic realities are that the amounts earned over fixed expenses are the region for bargaining between any customer and supplier. Given that dealerships work long and hard to conceal that information from the consumer and seek to extract maximum profit from him, it is perfectly reasonable that the consumer work to *his* own best interests as well - and that's to *minimize* the expense from his own pocketbook.

    That's the beauty of the free market - no one is compelled to purchase, no one is compelled to sell. Dealerships are at a nearly incalulable advantage over average consumers with regard to the "take price" for a given vehicle, and educating those consumers is their first, best defense against spending too much. Dealerships loathe educated consumers. Always have, always will. Up-front research will give you good information about what constitutes a good deal.

    I am delighted to have learned how this dance works many years ago, and have been very satisfied in having done my research up-front, and knowing I've been able to strike new vehicle deals under *my* control, not that of the dealer. The result is one wherein they pursue my business, rather than one wherein I beg them to sell me a car.
  • rapidfiremattrapidfirematt Member Posts: 1
    Profit must be a dirty word to you and your readers. Maybe you should write an article on how to negotiate the price of bacon and eggs at Bob Evans. There is no way that an order of 3 slices of bacon costs $3 to make, so that must be highway robbery.

    The above claim that "In my experience...$5,500 markup on a used car would be considered a nice profit.".....NO KIDDING. If I had profit like that on just a couple of the cars that I sell each month, I would be much farther on my way to retirement.

    Apparently you have not worked at a dealership lately. The dealership I work for makes money in volume. You fail to mention that a customer can find GREAT deals at places like mine....but instead, you write garbage like this....causing everyone to think that if they shop for a car, EVERYONE is looking to rip them off, and they need to negotiate THOUSANDS of dollars off used cars. Why not write an article about how people should expect to pay for great service. Why not write an article supporting the hard working salespeople at the dealership that are out to earn an honest living. We work 11-12 hours a day, 6 days a week. I guess you just feel that we should work for minimum wage. On a personal note....I have no problem selling a car for what the dealership has in it...but I don't work for free. I still deserve to get paid for the service I provide. Your article would have been relevant in the 1990's and before, but not in the internet age.
  • p0p02p0p02 Member Posts: 1
    This article has to be written by a 3 year old.
    First off everything you buy has a profit in it. That does not make the product a bad choice. Secondly for a website that is geared towards cars and the "information" people seek. Your articles constantly bashing the car business is the reason why people are so guarded. When in fact if these "commissioned" sales people sold no cars you would have no job. I believe it is time for your company to write articles that dont paint a entire industry as scoundrels who are just looking to make a buck. But rather a place where services are offered to those who wish to use them and are accepting the terms of that service.
    All the things you mention above no one is pushing it on the consumer.

    If you dont want to pay a mark up in the service department. Solution: Fix your own car. Why should anyone show up for work and do it for free. How would the dealership afford to provide a service for free?

    The dreaded "Finance Office" Solution. Arrange your own financing, there are banks on every corner. But to ask someone to once again work for free makes no sense. I think you should work for free while typing this article since the quality of it is more like a copy paste from several articles written in past times.

    The salesman is entitled to get paid for assisting the customer find the right car that fits their customers needs. Any knowledgable customer appreciates this service. Which does not result in any commission getting paid until the customer agrees that the vehicle selected meets their needs.

    For a company that is about cars you guys always seem to have some "inside" information from crooks themselves. These guys dont represent the entire industry. But rather crooks who have probally done time for doing illegal activities and can not find any other work. Other than "protecting" consumers from individuals that think like they do. Ask any average consumer and you will find that their experience was good and they are pleased with their decision on which car they selected regardless of who got paid. Dont sell out the industry that pays your bills. We are not in the 70's the industry is regulated and there is protection from dealerships that look to take advantage of consumers.

    Find something else to discuss this is not journalism.
  • joepiccasojoepiccaso Member Posts: 1
    It is amazing that when anyone tries to explain something or inform people the trolls come out. Noe where was it said making a profit was bad or evil. No one said they lie to you, though most seem to, just from my experience, especially the Service Centers, which by the way is a HUGE profit center for these dealerships. It's just good practice to have as much information as you can get before going into the Lion's den. I've had some good experiences at dealerships, but I knew that because I was informed going in. How many people understand the Rule of 78's for a loan interest calculation. Do you know how the leasing operation works? Most don't and dealers are trained to take advantage of it. Everyone one has to make a profit or they don't survive, except the Government, and that's another problem. Do your homework, get approved for a loan at a credit union before you go in. Know what your trade in is worth. Then talk Cash with them. Then look at their Trade in deal, and credit deals separately. They maybe be fine, or they may be bad, but you won't know if you are not informed, because the dealer won't tell you. Last, but not least, be careful of Extended warranties. They are 80% profit/commission, and I'm being kind to that. Don't buy a 3rd party warranty, and do buy one if you are looking at Hybrids, turbo or supercharged motors and the like. Dealer service centers are the biggest cheats ever! I'm sure there are some that are good, but I can't afford to find them. The manufacturer won't even tell you the truth about their cars' problems, etc., what incentive does a dealer's service center have? If yo find a good one, stay with them. They are worth their weight in Gold! And, yes, always buy through the internet if you can. Avoid the "Rubber room" interrogation and dog & Pony act (aka "let me ask my man anger if I can do something that crazy") routine. Know what you can buy and for how much, before you talk to anyone at a dealer, or elsewhere for that matter. Just don't trust them and Know your stuff going in, and you'll be OK. And a little prayer that you find a good dealer won't hurt, either. Good Luck!
  • jcinwijcinwi Member Posts: 1
    Warning to car buyers, this is a crooked manuever many dealers now use that makes them a bundle of money! You negotiate a price but if you arrange financing at the dealer, they write the loan for more than you agreed to, then start by drawing your attention to the monthly payments so that you do NOT notice that the total loan amount is wrong! They have tried to pull that on me and my daughter and I know many people that did NOT catch it and were burned with a bug loan! You see, once you sign the loan, you have agreed to pay the amount ON the loan and it does not matter what was said before! It is a legal document and you signed it!
    It used to be only real shady dealers would try this, but I have seen it almost everywhere now!
    Remember, check the total loan amount and make sure it is right!
  • carguy166carguy166 Member Posts: 1
    here is the question , why in the world would someone invest millions of dollars in a car dealership(they are ver expensive to operate) and not try to make money. you guys ad edmonds are ridiculous, you open a business and i mean any business to make as much profit as possible. and why do you make it appear that its some kind of sin to make money. i dont see any exposes on mcdonalds or coca cola , i wonder what it really cost to make a big mac and how dare they sell it for one penny over their cost.
  • wmjarskiwmjarski Member Posts: 1
    I have a friend who was a car salesman who told me that dealers make a lot of money stealing rebates.
    The dealers simply do not inform customers of rebates, and on the back of the contract there would be a statement that "dealer retains all rebates and factory incentives".
    And then there's the infamous "dealer fees" preprinted on the contract, added after the deal was agreed to.
  • shawnfostershawnfoster Member Posts: 1
    I find it very ironic that Edmonds, the very company that survives by dealers selling cars would print this article. Even more ironic is a former car salesman spilling his beans on the subject. I wonder how he would have reacted to this article had he still been in the business. That old saying holds true, "those that can, do. those that can't teach." Far more customers lie to dealers than the other way around. Ever tell a salesman what the least amount for your trade in was acceptable? If you are like all other customers, you started $3000 above that number. Was that lying?
  • craigwbryantcraigwbryant Member Posts: 1
    The post by AZGM clearly comes from an auto dealer. No one is saying that the car dealership shouldn't make money, what folks are saying though is that the practices employed at many car dealerships are plain out immoral and predatory. I recommend never going to the dealership without knowing that you have financing already secured through your own financial institution, or even better have cash to spend. Also, don't let them know anything more than they need to know at any point. Planning to trade in your car, great, don't tell them this until after you've agreed on the sales price of the new vehicle and have a signed agreement on the price. Planning to pay in cash, good plan as well, don't tell them until you have signed agreement on the sales price. I did this to a dealership in Houston, TX a few years ago, walked in, negotiated a price for a truck (got it for over $8,000 less than sticker, and at a price i felt was definitely fair), got in the F&I room, pulled out my checkbook stroked them a check for amount and asked for my keys and title. Needless to say they haven't really reached out to me since then. You're never going to stop them from making a profit (and you shouldn't try to, its part of the economic circle), but keeping as much of your money in your pocket isn't a crime. Smart, prepared buyers will be able to do this.
  • jzal35jzal35 Member Posts: 1
    While you have some valid points I stongly disagree with most of your blanket statements in this article. I work as a Used Car Manager at a multiline New and Used Car Dealership in Gardner Ma. I would consider the profits you suggest to be obscene and take issue that we run a dishonest business. I would be very happy to extend an offer to you to come to our Dealership, train to be a Salesperson and then work here for a month and see how you feel about our business at that point.. Come and live only on the normal pay structure for that time and then write an article about your true to life exeriences. Speak from personal knowledge of the business and not what some disgruntled ex employee has related to you. Do all this and I will consider your article at that time to be valid.
  • jeffrey23jeffrey23 Member Posts: 1
    The author of this article paints the dealer, the sales person and the very concept of making a profit in a bad light. Furthermore, he insinuates the dealer makes and excessive or even an unfair profit on pre-owned vehicles and products which are sold in the finance office. While he does mention the high expense of operating a dealership, in order to make an assessment of exactly what is a fair profit one must first consider how much does it cost to operate a car dealership?
    Most customers want to have an enjoyable shopping and buying experience in a nice facility, this means the dealer has to invest in realestate and erect a premium structure. If he is selling new vehicles the franchise (ie Ford, Toyota, Honda) will have stringent, specific guidelines for how this facility must look. Often times the franchise agreemnent requires the dealer to purchase even the fixtures (desks, kiosk displays, picture frames and the enclosed pictures) from the manufacturer. all together this requires an investment in most cases well over a million dollars many times into the tens of millions! not to mention the franchise itself which costs millions.
    Next, car shoppers usually want a variety of options to choose from, in other words the new car dealer has to inventory not only several of each model offered by the manufacturer but several of each model in variuous colors with various trim levels this means he must inventory humdreds of vehicles to give his customers a variety of choices. With the average cost of a new vehicle over $20,000 inventory expense is in the tens of millions and that is not including used cars. Also most people don't want to wait for a sales person so you need to have staff, in most states there are laws which govern paperwork and procedures someone needs to handle that, more staff! the manufacturer saus you have to have a certain ammount of parts on hand for customers and the service deparetment this equalls in most cases another million dollars in inventory expense.
    Now lets look at the service department, millions of dollars are spent on tools and equipment to set that up plus it is another staff intensive department!
    All together this equalls, in most metropollitan markets severla hundred thousand dollard per month fixed and variable expenses!
    So I ask again, how much is a fair profit margin on a vehicle?
    Studies have shown people are far less likely to shop in a run down facility where the dealer offers few choises, in a bad part of town where real estate values are low. Studies have shown people do not want to wait three hours for their car to be worked on in the service department because the dealer cannot afford to have a full staff of technicians or support personel, or several days because the dealer needed to order parts!
    Think about it
  • consumeradvo3consumeradvo3 Member Posts: 1
    I'm sorry to all those dealers and salesmen commenting on here but I look at it this way. Your predecessors have set the bar low on dealer expectations. I hear a lot of dealers now advertising clear, transparent, no haggling sales. They are trying to change that. But like with any sales oriented industry, there are too many bad eggs out there to sway people's opinion or expectations of your industry. Kudos to those of you who are honest. Please pressure your managers to instill honesty, integrity, and professionalism into your culture. And this goes for all sales industries. I buy only private sales for cars because of the "dealership culture" that besets you.
  • rdonerrdoner Member Posts: 1
    looks like there are only two comments - both from dealers/salespeople (go figure!). Their 'pay no attention to the man behind the curtain' comments with regard to profit vs. service are ridiculous. Of course you should know where they're making money. They want to know exactly where you make your money don't they? ...How much can you afford?, how much do you make? Maybe I should ignore the fact that fabric/paint 'guarantees' are bogus money makers (for them)? Shouldn't those things be warranted NOT to stain/chip? What about exorbitant 'extended' warranties (beyond 3yr/36K)? Do you guarantee the car or not!? The manufacturer will offer you an extension later on if you're really interested (actually, they won't leave you alone as you approach 36K or 3yrs) The most egregious practice is making you sit with the 'finance' guy who is the gatekeeper of your financing approval...all the while he's trying to upsell you! These guys should be ashamed of themselves! They don't get away with it with me; don't let them do it to you.
  • eric142eric142 Member Posts: 1
    @ azgm well put. I work for a car lot and people like you guys floor me. I mean would you work up and ad for me on edmunds and then sell it to me at triple net?
  • realdealfoolrealdealfool Member Posts: 1
    Bottom line if you let the deal service anything they are screwing you! Find a trusted quality mechanic with a nice shop for a 1/3rd of the price! These dealer guys commenting on here are pissed because customers are becoming smarter. Years of playing games by oil slicked salesman has caught up! It's a new age and the computer and internet are helping a lot!
  • zjoneszjones Member Posts: 1
    I work in wholesale distribution, have for 33 years...I find it hilarious when we have our annual EBITA reports meetings and how our poor lil ole $6B dollar company only made 1.2% profit last year. Year before was worse so YOY we actually did better.

    BULL!...You can put your money in the bank and make more with little risk compared to running a business with 2200 employees and 70 warehouses World Wide....

    There is more than one set of books that track profit folks...I would say Edmond's story has truth in it but there are other complex truth's that show if a company is making money or not....Hint: If they have been in business 3 yrs or more, they are doing something right...I bought 3 pickups in a row from the same dealer and same Sales Rep. I made good deals on the new truck and they made their profit on the trade.

    It's when they get greedy or are not sincere that I get bowed up.

    3B
  • janetmd105janetmd105 Member Posts: 1
    Geez, you guys are defensive. I did not detect the "tone" in the article that you did. The author is stating the facts (as he knows them). Information is power, and anyone purchasing a car should be as informed as they can be. I do not begrudge salespeople for trying to make a living, but at the same time I am going to try to get the best deal possible when I go to buy my next car. I am living in the same situation the salespeople are -- I buy food, gas and pay taxes, too. I did not realize that the service manager worked on commission. That is VERY helpful information to me and explains why the service manager recommended both front and rear brakes be replaced, while a week or two later the express service guy said my brakes were fine. How's that for integrity? For women especially, find out all you can before you buy a car. Thanks, Edmunds, for the information.
  • garagemonkeygaragemonkey Member Posts: 1
    Does anyone really think that the dealer makes any profit on a $29.00 or even $39.00 oil change and filter? labor rates average more than $100 per hour in my region, and a dealer's 'cost" per hour after including wages, benefits, and overhead often exceed $50 per hour. Take $39.00, subtract the price of the filter, oil, and hazardous waste, and the dealer collects a mere $12 to $18 in labor per oil change. Yet the dealerships operating costs for that oil change easily exceed $25 to $30.00.
    BY the way, when did being a for profit business become so hideously unacceptable? The same customer's that demand a free loaner car, or a free shuttle ride down to the mall have no problem whatsoever spending $180 on some designer jeans that were sewn by children in some 3rd world country for a tremendous profit, but all in the name of fashion, so I guess it's more socially acceptable...?
  • rsmithfnrsmithfn Member Posts: 1
    These guys are obiviously car sales people trying to protect their turf. I have no problem with dealers making profit. Just tell me the truth and give up all of the information up front. Just purchased a new vehicle with several dealer and manufacturer incentives. After arriving at price I started to write the check and was told. Oh! You have to finance to get the discounts, and you have to make at least 4 payments, you have to finance at least $10,000. This is dishonesty. SHould have been disclosed when price was quoted. Then the finance starts the sales pitch about how you really need that extended warranty and he can only give you this price that day before you leave the dealership. What Bull! First of all I bought the particular car based on the reliability of the brand and previous experience with this particular manufacturer. I would hope the quality would negate the need for extended warranties. As far as hard working sales people go? I have known alot of car sales people in my life. Would not describe any of them as hard working. As far as the sallaried person that gets a flat rate for every car sold. Guess what. That is called a comission!
  • babba61babba61 Member Posts: 1
    Years ago, I had great success buying a used car. I went on a Friday evening in late summer with a stack of $100 bills in my purse. I found a car I liked, then the salesman and I went for a drive. Of course I played dumb, letting him think that I didn't know what I was doing. But, I had owned a similar car before.
    When we went into his office, I offered him a third less than the dealers price. We played the game of his going to his manager with my offers several times. After nearly two hours, I hadn't budged an inch, and he had only come down a little.
    It was nearly 9pm and we all wanted to go home. So I reached in my purse and laid out only enough $100 bills to cover my offer. Then I said, "I'm tired and hungry and want to go home. Take it or leave it."
    He asked, "Does that have to include taxes?"
    I went home with my car and lots of money left over.
  • xanderv_xanderv_ Member Posts: 2
    So much venom from the dealership employees in this topic. Tells me they do not really have a professional culture but only some sort of brotherhood code.
  • jrockfordjrockford Member Posts: 1
    Nice to see a bunch of CAR SALESMAN chiming in here.

    You guys add NOTHING to the value of new or used cars anymore because few of you know anything more than a "typical" car buyer who has done a little internet research.

    The last 3 cars I bought none of the salesman could answer very basic questions about the vehicle without looking at the manual or on-line.

    Back in the 70s and 80s ALL salesman were required to "know their products" before ever hitting the sales floor, now most dealers hire anybody they can get, ESPECIALLY so-called "Internet Managers" those people are a JOKE.
  • rdt444rdt444 Member Posts: 1
    It is amazing to me how all these websites, who depend on the car business for thier very survival, never miss a chance to demean the very hand that feeds it. Prifit is NOT a dirty word. I buy a car, I recondition it, advertise it, and should sell it at a price that makes me $500? Why? Because Edmunds thinks thats enough of a mrgin? Please.
  • anyadvantageanyadvantage Member Posts: 1
    This is quite helpful - my last car I thought I got a great deal but walked away spending way more money than I wanted to - I wasn't even sure how it happened. Now I know - the F&I guy cleaned up on me. The fact that there's some sales people complaining about this article means it's at least heading in the right direction.

    Making a living is not immoral or unethical - but with a high ticket item like a car - it can get to that point really fast - without being armed with some knowledge - the scales get tipped in favor of the seller much too easily.
  • azbuyer2azbuyer2 Member Posts: 1
    I have bought many, many cars in my life and almost ALL of them from a dealer. I prefer to work with dealers, especially for used vehicles because they generally have more negotiating room than a private seller. State laws might also be in effect that ensure a used car sold to the public meets certain safety and smog standards that may not normally be attended to by the private seller.

    If you are a first or even second time buyer or buy a car only every few years, you are a novice. The dealer and his staff do this every hour of EVERY DAY. They are professionals trained in a finely honed process to sell the products and services of the dealership. You would be amazed at just how sophisticated the process can be.

    Dealers and their staffs are just like you or me. They ARE terrifically hard working and committed to their families. Having worked in the business for a while, I have come to have great respect for them in general...even those I didn't particularly like personally.

    I have also been exposed to a broad array of "shenanigans" and pressure tactics, especially in the beginning. It can make a buyer feel downright uncomfortable. It's nothing personal, but it is calculated to earn as much money from you as possible. I used the term "earn" intentionally.

    I want it understood that making a profit is not evil, but the manner in which many dealers go about trying to extract it can make it feel that way. An unsuspecting buyer will be giving up much more than a more seasoned or more alert and informed buyer to buy the exact same vehicle.

    I think the Edmunds article is appropriate. They are informing the buying public of the process. The dealer responses here are defending it. If there is something here that the dealers at large feel isn't true, they should specifically state the issue. The so-called "blanket statements" have merit. If Edmunds has made any mis-statement, it would be appropriate to ask them to correct it. So far, it all seems good.

    As a buyer, you need to know what you want, how to take control and assert yourself. Refrain from being impulsive. You will likely have to give up the keys to your trade for it to be appraised. You might have to show/surrender/allow a copy of your driver's license before test driving. BE SURE TO GET THEM BACK BEFORE YOU START NEGOTIATING, otherwise the dealer decides when you can leave.

    Whether it's new or used, decide what you think is fair, but keep an open mind. Be prepared for any offer or counter-offer that you make to be "bumped". The dealer will ultimately decide if it's fair enough to make the deal at that moment. As the process proceeds, decline the services and add-ons you don't want. If the pressure gets to be too much or you need more time to think, leave and come back another time. If he can't do the deal that day, he might do it another.

    Be aware that there IS such a thing as a deal being good for only that day (can depend on time of the month, season, etc.). They will do some really wild things to make a quota. If he won't do your deal at all, you have a reference point for trying another dealer or for readjusting your sights.

    It will be a sad day if car buying becomes a no-haggle process. If you are uncomfortable with the process or negotiating with a dealer, take advantage of some of the surrogate services available or take an experienced friend.
  • drizdriz Member Posts: 0
    Dealers are complaining about this article, calling it "garbage."

    Which, ironically, just confirms the premise of the article.

    Dealers are not your friends. When the price of a product or service is negotiable, buyer's need to understand how to negotiate. And in the case of new cars, the days of "negotiating" are effectively over. Buying a new car today is done ONLINE. If you go into a car dealer to "negotiate" -- you've made the #1 stupid mistake.

    Get your best deal online, get your financing online, sell your car on Craigslist, if you want an extended manufacturer's warranty get in online.... THEN go to the dealer to sign the papers and take delivery. And be careful they don't try to sell you a "new" car with actual demo miles on it. Specify in advance that you want your car with less than 50 miles on the odometer.
  • quietstormxquietstormx Member Posts: 2
    Hey just remember you are the boss in purchacing a automobile. They want your sell period. If you don't like the salesman, get up and leave for the next dealer who wants the sale. Don't get what you don't want to pay for. Do you're homework first, knowing what other have paid for that model in your area. Don't spend hours in the dealership. Get the deal and go... Just do your homework online first.
  • prius_envyprius_envy Member Posts: 2
    I read the comments below and I have to agree with nearly all of them. Everyone complains about buying a car and they blame the dealers. The real problem is all of the misinformation on the internet. A good deal is in the mind of the buyer. I have seen people buy a car for less the sales manager paid for his, and still feel like they got ripped off. Who's fault is that? Nearly everyone is way too worked up over getting the best deal. They should be more concerned about buying a great car.
  • pete2721pete2721 Member Posts: 3
    I've worked as a service advisor for half my life ( I'm 30 btw) in a Toyota dealer in the Chicago region. I truly love helping people and would do it for free if I could. As reality has it I have responsibilities just like most of my customers and can not work for free. Now do service department keep dealers alive? Yes they do. Are they profitable? Yes but Barely! What this article fails to address is that the technicians have to constantly go to school to be able to work on the newest vehicle. They have 20,30,40 and even 80, 90 thousand dollars worth of tools they must purchase to be able to work on modern day cars. The service advisors work 50-70 hours a week and have to take the constant barrage of complaints and pissed off people because their car broke. They try to do this with a smile because they have the manufacture breathing down their necks for good customer satisfaction rating. I can't tell you how often I tell someone the price of a repair and they freak and ask for a discount. If I don't agree with whatever they request it's instantly " LET ME SPEAK TO THE MANAGER" with tons of attitude. The sad part is that it's getting worse and people are getting meaner. Society has thought us to complain ( even when there is no need to) to get what we want and maybe something else free as compensation for our inconvenience. Sorry, I got off topic. I believe in a fair price for good service, and will continue to provide that to the people I service.
  • pete2721pete2721 Member Posts: 3
    Also, how come nobody writes a article about the grocery stores for the crazy amount of markup they put on the food you buy weekly. How about clothing stores that mark items up 500-1000% and would gladly let you pay that if you didn't have a coupon. It's ok for a corproration to do that to you, but if its a commission based salesperson they become the devil.
  • pete2721pete2721 Member Posts: 3
    @thrstonlovi1

    Who but the dealer can service or repair new vehicles. As far as Toyotas are concerned they require to many special tools, fluids, and training for independent shops to take on. And in the Chicago area the average visit to a independent sh
  • xhawkxxhawkx Member Posts: 2
    I have no problem with dealerships and salesmen making a paycheck just as you fellas explain,my issue is with HOW, they do it. Most are wax figures which their only intent is to talk you into their sales babble about how you need this and how you need that. And each "chapter" of the sale is structured such if they can not get the buyer on price of the auto,they will try the next chapter, being on the "extras" that they need. All the way to the financing of the auto,which the perp behind the desk acts like your new buddy,all while trying to squeek out higher percentage on the loan or added Gap or extended insurances. To those of us
    who research, it is quite laughable, while very unfortunate to those who are clueless. Now,even me, being 53 and have bought new vehicals every 3 years since I was 18, some good salesmen have even gotten me, which only means that next year I will have to start researching a few months earlier than the past.
  • xhawkxxhawkx Member Posts: 2
    I have no problem with dealerships and salesmen making a paycheck just as you fellas explain,my issue is with HOW, they do it. Most are wax figures which their only intent is to talk you into their sales babble about how you need this and how you need that. And each "chapter" of the sale is structured such if they can not get the buyer on price of the auto,they will try the next chapter, being on the "extras" that they need. All the way to the financing of the auto,which the perp behind the desk acts like your new buddy,all while trying to squeek out higher percentage on the loan or added Gap or extended insurances. To those of us
    who research, it is quite laughable, while very unfortunate to those who are clueless. Now,even me, being 53 and have bought new vehicals every 3 years since I was 18, some good salesmen have even gotten me, which only means that next year I will have to start researching a few months earlier than the past.
  • marger1marger1 Member Posts: 1
    Why do you constantly make dealerships out to be bandits? I'm sure that you do not work for free. Dealerships are not non-profits and if you want that maybe you could have your church start selling vehicles. You should remind people that there are many, many employees that have to be paid out of that sale: bookeepers, accountants, managers, service writers, machines to buy and government records to keep and store for many years. The lights are not free, nor is the heat, airconditioning or franchise fees and mortgage payments. There are lots to clean/pave, gas to put into those vehicles for test drives, dealer plates to pay for, interest payments on vehicles, floor plans, and on and on. When you tell people to go in and look at the invoice, add a little bit (which most people consider $50 to be enough). where do you get the idea that amount will cover expenses? and that doesn't even mention the cost of furniture, office equipment, phone bills, etc. Those people writing those books and articles are also just trying to make a buck. "Confessions" my you know what! You make yourself anything but creditable when you do stuff like this!
  • cavenacavena Member Posts: 1
    Give me a break! Why is there never an article about clothes, furniture, jewelry or any other rip off. Auto dealers take a lot of risk and should be profitable! People like you whom write articles likes this should seek, well lets just say, viagra wont cut it!!!
  • lrg51_lrg51_ Member Posts: 1
    I am a car guy. Buy new or used every 2-3 years. I can't always pay cash. So I will finance some of the deal.

    In my opinion, once you get your "best deal"... the real savings is in financing the car. Buyers should ALWAYS look for their own financing as a preliminary task BEFORE going to the dealership to buy. Financing is negotiable...
  • mttomb33mttomb33 Member Posts: 1
    If buyers paid the price on the window sticker, like we all do for just about everything else on the planet, then the automobile industry and it's workers would be respected. As a salesperson you can work on average between 50-60 hours a week, managers work more. Sundays, holidays, scheduled 12 hour shifts, dealing with people all the time who can't even finance yesterdays newspaper and it goes on and on. So please keep in mind whenever you hear the opinion of a 9-5er, reality does not exist.
  • kayjay0286kayjay0286 Member Posts: 1
    What a crap infested article... car dealers- just like Wal-Mart, gas stations, donut shops, Waffle-House's, SEARS, etc- are in "business" to make a profit. You're spending $30,000 on a new car; why do you feel it's a crime for the retailer to be compensated $2300?? Do you negotiate the price of a gallon of milk at the grocery store? There's 37% mark-up on dairy products, while on vehicles, the mark up is under 8%. Stop hating on business owner's for making a profit; are you paid to write ignorant articles: your employer makes a profit.
  • patriot111patriot111 Member Posts: 1
    What this guy is saying is true and you should thank him for that. I bought my $61,000 truck at $4,000 below invoice and it was because I educated myself before entering the dealership. Some of you are talking about profit for the BIG dealership but none of you saving thousands for the little guy. No dealer takes a loss on a car he sells! Don't post comments on here like the poor little dealiship has overhead to pay for. If they were not extremly profitable they would not be there. Dealers lie to customers in every transaction to increase profit. Ask a dealer next time if they will sell you a car at the same price as a close relative of the owner? Hell No! is what you will hear. If you ask dealers if they would opt for a system where all prices are the same in all dealerships with the same profit margin of $1,000 per car and they will not want it. They make more money lying and selling at higher prices to uneducated buyers than to sell at or below invoice. The service dept. is the biggest money maker for them and they will hound you to bring in that car for service when you don't need to.
  • batmanjokerbatmanjoker Member Posts: 0
    Those "car salespeople" who are commenting on this article and slamming the author should put their diapers back on and grab the kleenex. The car salespeople at dealerships are looking out for themselves. They care very little for the car buyer who is trying to buy a car at the best price. Its just amazing that these salespeople are surprised that car buyers want to haggle for the best price. Meanwhile, these salespeople want to charge the highest premium and don't want to explain everything involved in the car deal. These salespeople have NO souls. You would sell your mother to make more money. Car buyers do want the salespeople to make money, but how much is too much? And if the salespeople don't like it, hey, there's always Wal-Mart!!! Car buyers are tired of being swindled, fooled, and short-changed. There's a reason that car salespeople have the worst reputations!! If you didn't work on commissions, and were paid salaries, and there was no haggling, car buying would be simple and most likely, more affordable. For those car salespeople on here who are whining: Grow a Pair!
  • batmanjokerbatmanjoker Member Posts: 0
    Car Salespeople: Someone else on here posted a really good question: Can you walk into a dealership and get the same price on a car that the Dealer's brother got? And were talking about the same car, same build, accessories, etc? No, you can't. Two people walking into a dealership at the same time, looking at the same exact car, can end of spending two different prices!!! When you salespeople comment on this article and ask such a rediculous question such as, "Do you haggle/complain for the price of milk?" No, we don't, obviously. But, if two people walk in to Costco at the same time, and buy that same milk, they WILL pay the same price. This is what pisses us off!!! You salespeople with no souls do not give everyone the same information when buying a car. You hide certain facts just to make more money off a car. So, you basically "steal" money from unsuspecting people just to make more money. That's why you have no souls. And you can sleep at night? Worst profession in the world - car sales!
  • batmanjokerbatmanjoker Member Posts: 0
    One more thing: Again, I don't mind that car salespeople make money. That's fine. But you should make the same money. I make money as long as I work all the hours I'm allowed. And I make the same money. Give the car buyers the same information that you would give your family. What's wrong with that??? We're not asking for different treatment. We're asking for the same treatment. Is that so bad? I don't think so.
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