And for you consumers that want to buy a $30,000 + sales tax car with a monthly payment of only $250, pull up the calculator on your $300 phone and simply divide the purchase price by 60 (months). It's not rocket science, just simple math.
Prices are (by LAW) clearly marked on the window sticker of EVERY SINGLE NEW VEHCILE SOLD IN AMERICA. If you cannot afford what the MANUFACTURER (not the dealer) asks for the vehicle, then don't buy it. Wait for weekend or month-end sales, enjoy your car and stop whining about how salespeople are not supposed to make a good living listening to lying and abusive consumers.
There is nothing wrong with trying to help customers get a fair deal but too much of this article is inaccurate. First of all many sales people or now paid on salary or a flat fee per vehicle. While some are still paid on "commision" that is becoming more rare. Secondly your not more likely to get a deal from an "internet manager". They are paid like everyone else at most corporate dealerships. If you want to know where the dealership makes money tune into the earinings call of AutoNation (AN) Sonic (SAH) and Group1(GPI). On Averge 90 of there overhead is covered by service. Next on the list is F/I on a percentage basis (though on a gross basis, new and used cars contribute more to the bottom line). The average profit on a new vehicle is around $1,000 dollars if you listen to the earnings, and considering the average transaction price is above $25,000 that is more than fair. Due dilligance is always smart, but over the long haul if you come in with your own financing (see if the dealer can beat it) and get second and third opinions on major repairs that is where you will save the most money.
I have sold cars before and although not so lucrative at first once you get to know people and treat them right the return and referral business makes it a decent living after awhile. One thing that I have always thought about the auto sales business however, is that , the dealer is in a win win situation. Once the care is sold, whether financed or paid in cash which where I live I saw many people pay cash the deal is done and the dealer has made his money. The bank has assumed the risk. Pretty good deal on the dealers part if you ask me. Plus he and his family get to drive basically any car on the lot then turn around and sell for new. What a deal. I have to say though honestly I know car salesmen have a bad reputation but I never sold someone a car thinking how much money I could make. I always sold with the idea of trying to get the customer the best deal possible and giving God the glory for whatever I made.
Hahaha...more drivel from Edmunds. If people really believe the picture they try to paint that every car dealer is looking to take advantage of people and is making huge profits month in and out, then they deserve to go through the unnecessary stress of buying a car. If you are an informed consumer, you will get a good deal. These stories always crack me up.
I see there are quite a few comments defending dealerships and profits. I agree, they are not in a not for profit business. However, to compare them to more traditional business models is absurd. The business model for selling cars is negotiation of price. Always has been. A dealership will screw you over faster than a jackrabbit on a date. The service departments are worse! Talk about getting screwed. Yes, they deserve to make a profit, but for me, it would have to be by volume. Not by suckering me.
Car dealerships have created their own awful reputations. Why can't a dealer offer one fair price to everyone? Instead they try to suck out of you as much as they can and take advantage of people who did not do research. They lie like crazy about anything and everything. That's why I have no remorse going in and trying to get the best deal I can, even if the dealership is not making much profit. I know they will make it up on the next poor sucker who comes in and didn't do 20 hours of research. Thank you Edmunds for helping us learn to be smart consumers and save our hard earned money.
The first comments I see look like the car dealers themselves are here.
I would suggest that the F&I profit is too low. At many dealers I worked at it was in the 1600 range. You may not even hear the lowest rate as some bank offer the dealer more profit on a higher loan.
At many of the dealers I worked at there was never much real commission. Even on a car you took in for 10,000 and sold it for 14,000 the next day. Somehow there was always 3500 worth of work done on it in that 12 hour period.
There is also a lot of bonus money paid on units sold that is not included in the story,holdback or the commission paid. This is based on units sold and can be up to 1500 per car.
I think any midsize car dealer is making at least a million a year for himself and there is no reason to worry about him.
obviously all the thumbs down are people on here with bad credit that got mad because we didn't replace their battery when it went dead 2 years after they bought the car!!! i have been in the auto business for 20 years now, it has changed a lot. where is edmunds getting that we get $2000 dealer cash... i am a ford\dodge combo store and ford VERY rarely gives dealer cash,,Chrysler has an objective based cash, but it might get you $500 per car, IF you meet the objective,,,,
TO the thumbs down people that think $1000 profit is enough, lets break that down,,, salesman gets apprx $200 floorplan $200 << thats if it sells quickly and not a 50k diesel fuel fill up $100<< no, ford/chrysler doesn't reimburse us that i am stopping here for a reason: first at our store, avg price of a new truck is say $35000 that's less than a 3% return assume we sell 40 new vehicles a month 40x$500= $20000 ($500 remaining from above) out of that the dealer has to pay the following himself,title clerk,sales mgr,acct. payable,secretary,detail,light,water,gas bill,pens,paper,copier,computer software,building cleaning,insurance, DO I NEED KEEP GOING????? IF YOU WANT TO BE A HAPPY CUSTOMER, PAY ME ABOUT $3000 PROFIT, WHY? because when you have a problem, i can help you.. need someone to figure out the garage door programmer or the radio? my salesman will happily help you, same with picking up your car at work for service etc. I can do this because i made some money to afford it....
USED CARS I find it hilarious that people want to argue over a few hundred dollars.. when i am at the auction, the same car may bring $1000 more one week than the next or it may bring more in one auction lane than the other.. you tell me you found one down the road for $500 cheaper and i say go buy it, why? because i probably replaced the air filter, serviced the transmission, and put plugs in mine.... did they?? will they help you after the sale???
my whole point here is that YOU the customer and edmunds do not look at this side of the business. a $1000 swing on a used car is nothing due to a lot of factors.... a car dealers happiest customers are the ones we make money on.....
Ignore the other comments below. My guess is they are written by dealership employees. Everyone does deserve to make a fair living, but most car dealership take advantage of 90% of their customers. That is not an exaggeration.
I have used Edmunds advice to negotiate cars and have always gotten a good deal. It is not easy, but it can be done. In the end, I got a good deal and the dealership still made money. That is the real win, win.
As a retail automobile salesman, I absolutely cringed as I read this, "expose". I felt like a crook; like I should be ashamed of myself! What a horribly overstated, generalized bunch of statements. Because of gross mischaracterizations like this, I suggest that the buyer no longer needs to beware, instead it's the seller who needs to beware. Automobile dealerships (I hate that word, "dealership", because of articles like this the word has too many negative connotations) are ligitimate businesses who employee hard working individuals to assist and service our customers. As you go to almost any car business, I can assure you that if you have a conversation with anyone who is in sales management, that person has a very high IQ and a lot of humanity. It takes a very unique individual to do that type of work. Salemen are unique people to; I don't know any salesmen who are unkind, stupid persons who want to give someone a hard time. We are lied to constantly and we just have to absorb all the indignities of being lied too. There's an axiom among us in the business: CUSTOMERS MAKE US WHO WE ARE. For gosh sakes, all we want to do is help someone buy a car. Why is the car business a place not worthy to make a profit?! Want something for "cost"? Try that at the grocery store. For crying out loud, the tone of this crappy article is hard to take for me: an honest, hard working person who happens to sell cars instead of shirts, jewelry or groceries. I'm offended.
Every time I have been on a dealer lot in the past 3 months (4 different times at 4 different dealers) I have seen "sales personnel" sitting/standing around doing zip. I wanted to test drive a specific vehicle. I told the fellow before we started that I had previously tested the manual transmission version and, since the automatic version of the same car had recently been upgraded to more HP, I wanted to see what difference it made. The manual tranny vehicle was definitely underpowered. I also stated that I was not going to be buying anything until at least the fall since several new cars were due out. Well at the end of the test drive he literally was PO'd at me for not buying that car right there, right then. This is a person doing nothing, absolutely nothing when I arrived. I am retired (at age 54) and busted my butt for many years with hard work and long hours. I really resent being told how "hard working" these people are. They sit there like eagles about to eat up all the little rodents coming in. I hardly think being a car salesperson is much of a job. Frankly the dealerships would be better off without them.
I love these folks who stand up for car sales commissions. We don't need to negotiate the price of eggs. The price is on line at every area store. Ditto for meat, pasta, canned tomatoes, etc. But try and compare used car prices or even what new ones should be selling for. Lotsa luck. The car makers and their dealers are trained to keep all that hidden so the average consumer walks in and gets shafted. If it weren't for pioneers such as Consumer Reports researching the true costs of vehicles, we would all be overspending like mad. It is no wonder car salesmen are rated right down there with rattle snakes and Congress.
To salespeople: Dealerships are ripping people off. When dealers say that the invoice price is what they paid for the car, they are lying. And when they profit from that lie, they are ripping people off.
The rules of the game were created by dealerships, for the benefit of dealerships. If the simple fact of both parties understanding the rules makes it difficult for you to make a living then you need to re-think the rules. Because what you're really saying is, "without my ability to lie, I can't make money."
I understand that many salespeople work 10 + hours a day. And I understand that you're all just trying to make a living. But that's a beef you need to take-up with the dealership, not the car buyer, and certainly not with an article that gives people the information they need to negotiate an honest deal.
very unfair article , this only creates bad experiences for customers and salesmen! customer come in asking for thing that are not possible I been selling cars for 8 year and most times all I make is a flat $100.00 this are different times now with the internet everyone knows what a car cost Edmunds and KBB just create prices that are Unreal! customers that ask for a fair deal get better service and have a good experience! most people dont know the difference between a Great deal and a good low price !! People that get a Great deal usually get better treatment and those customers that are not Difficult asking for stupid pricing always get the goodies! the service and part dept tipically takes good care of them - We are in business to make a profit a small profit we are not a charity center, how many people go to work for free?? NO ONE ALSO TELLS THE CUSTOMERS THAT WE DO NOT GET A SALARY WE ONLY GET PAID IF -ONLLY IF WE SELL A CAR! We stand in the rain, heat - cold weather all year long! then we get some Hindu asking for BS prices ! GTFO!!
People go to Edmunds.com to get HELP with purchasing an automobile. They Trust, actually trust what this www says. This article is about 40% true!!!!!!! If there is dishonesty here what else is false. I will give the benefit of the doubt I will refer to this article as ignorantly written. The lack of knowledge. Allthough I do find this very disturbing due to the fact that by ignorance Edmunds is informing people to go into a car dealership with an even greater thought that car people are all dishonest and all about making the most money possible in the wrong way. The question of integrity should be asked about Edmunds.com!!! You post things that are not completly true. A lie!! Right?? With how big and powerful Edmunds have become please demand they post 100% truth. What is not being 100% truthful? A liar is a liar right? This web site is making $MILLIONS$!!!!!!! because people need good solid truthful info to help them buy cars and go to edmunds.com and in turn you all make a lot of money to which in turn you are providing partial truth. Bad business. Worse than your thought of a car dealership.
Ahh, here come the salespeople defending their practices. Look, Profit is a necessary component of business transactions, I get it, BUT dealers make like they are losing money when they aren't. THAT is dishonesty. I refuse to buy new due to the instant 20% depreciation, and I trade in cars. I fully realize that there is turnaround profit and have no problem helping the dealer keep the lights on and the employees paid. I negotiate the DIFFERENCE in price between the trade-in and the pre-owned vehicle. I don't care how the dealer writes up the deal. The ideal deal for me is the mid-point between retail and wholesale. People also need to realize that if the dealer can't sell the trade in on their lot, you aren't going to get a good offer for the car. Porsche dealerships aren't going to put your corvette trade in on their lot so you're gonna get a wholesale bid. Service is a bit of a joke... Porsche has 15,000 mile service intervals and Audi is 10K. Domestic cars? 5K, and many of the cars have parts DESIGNED TO FAIL at low mileages (Tahoe Steering Column Bushing) to force you to bring the car in! Overall, my experience has been that Ford and Chevy dealerships are sketchy at best (I purchased a Tahoe using Overseas Military Sales and offered my local dealer a chance to sell me the same car at that price and they basically called me a liar and that the deal on the Tahoe LT was impossible) I took the car and the bill of sale over to them afterI took delivery in order to let them know that they would NEVER touch that car for service. Domestic car dealerships overcharge for service (80$ per wheel for balancing?) and LIE through their teeth. I've never dealt with a ford or Chevy dealer that didn't. Counter to that is the experience is my Porsche dealer, where they have advised AGAINST unnecessary service that I thought I needed and written off additional (non-covered) labor on warranty repairs. Don't even get me started on dealer markups (Corvette).
Many of the responses here are obviously from salesmen/dealers. As a business person myself, let me say that profit is absolutely not a bad thing and I recognize salespeople have families to feed and need to earn a living too. However, the cloak-and-dagger methods used by auto dealers to secretly squeeze every possible penny from a customer are unique to them and only serve to breed distrust. As an ex-dealership employee AND an ex-Walmart manager (since WM was referenced by one poster) I can speak authoritatively on both. The Walmart corporate goal is a 3-4% overall profit margin (the lowest in the retail industry) and the price you pay is plainly marked. A WM shopper doesn't visit two or three offices to be repeatedly squeezed out of more cash and they don't wait in a lobby while the salesperson and sales manager manufacture a "good cop, bad cop" routine or, worse yet, the salesman allegedly negotiates for them with an unseen sales manager when in fact he's just smoking a cigarette or enjoying a soda in the lounge to wear down the buyer. Been there, seen it from both sides. Since I know the inside tricks I can smell a sneaky deal a mile away and I've gotten GMs/owners involved when the salesman and SM start playing silly games with me. I currently live in Alaska and I've actually purchased vehicles in Washington state and saved money even after paying for travel when local dealers tacked $1,000-2,000 to the MSRPs of new cars as "local market value". One salesman even tried to tell me the destination charge for Alaska is actually higher than shown on the window sticker--a willful, bold-faced lie. Considering the profit built into the MSRP, the extra "local value" markup, fictitious additional destination charges and holdback, they were looking to score a $3,000-4,500 profit just for doing paperwork and pulling the plastic off of the seats of a car I was special ordering, tacking several hundred dollars per month to my payment for doing nothing. I work hard to earn my money and I expect others to work just as hard to earn it from me. There's virtually no overhead in a car sold straight off the carrier, so $100-200 over invoice plus the $400-800 dollar holdback on a special order car is easy money and a fair profit for the dealer. If dealers want to redeem the sleazy reputation they've earned then they need to be upfront and honest--stop manufacturing secret ways to smilingly gouge the customer.
Many of the responses here are obviously from salesmen/dealers. As a business person myself, let me say that profit is absolutely not a bad thing and I recognize salespeople have families to feed and need to earn a living too. However, the cloak-and-dagger methods used by auto dealers to secretly squeeze every possible penny from a customer are unique to them and only serve to breed distrust. As an ex-dealership employee AND an ex-Walmart manager (since WM was referenced by one poster) I can speak authoritatively on both. The Walmart corporate goal is a 3-4% overall profit margin (the lowest in the retail industry) and the price you pay is plainly marked. A WM shopper doesn't visit two or three offices to be repeatedly squeezed out of more cash and they don't wait in a lobby while the salesperson and sales manager manufacture a "good cop, bad cop" routine or, worse yet, the salesman allegedly negotiates for them with an unseen sales manager when in fact he's just smoking a cigarette or enjoying a soda in the lounge to wear down the buyer. Been there, seen it from both sides. Since I know the inside tricks I can smell a sneaky deal a mile away and I've gotten GMs/owners involved when the salesman and SM start playing silly games with me. I currently live in Alaska and I've actually purchased vehicles in Washington state and saved money even after paying for travel when local dealers tacked $1,000-2,000 to the MSRPs of new cars as "local market value". One salesman even tried to tell me the destination charge for Alaska is actually higher than shown on the window sticker--a willful, bold-faced lie. Considering the profit built into the MSRP, the extra "local value" markup, fictitious additional destination charges and holdback, they were looking to score a $3,000-4,500 profit just for doing paperwork and pulling the plastic off of the seats of a car I was special ordering, tacking several hundred dollars per month to my payment for doing nothing. I work hard to earn my money and I expect others to work just as hard to earn it from me. There's virtually no overhead in a car sold straight off the carrier, so $100-200 over invoice plus the $400-800 dollar holdback on a special order car is easy money and a fair profit for the dealer. If dealers want to redeem the sleazy reputation they've earned then they need to be upfront and honest--stop manufacturing secret ways to smilingly gouge the customer.
I've purchased cars three times from dealerships. Very painful experience indeed. My other cars came from auctions. My current car came from an Ebay sale. I did a trip to pick it up which is part of the reason I do that. I've done four trips based on Ebay purchased cars. I do a lot of extreme driving so I wear out a car fast. I did try to work with a dealer as recent as two months ago. They had a car I liked and the price was only $500 above bluebook. I went in, did the test drive, and did the visit to the sales office. I gave them my best offer. They wouldn't budge on the $500-over BB price. They said used cars are selling above it and if I didn't want to pay it, someone else would walk in and pay it. I left and within a couple days had bid for a nice car on Ebay and won it.
I don't get the impression that Edmund's wants to gouge the dealers, rather, I get the impression that they want the consumer to be treated fairly and get an honest deal. I've bought two new cars in the last 8 yrs, and I know the dealer made a fair profit on me, but I'm ok with it. They, as many businesses, have have huge bills to cover. Just think of the A/C bill at Larry Miller Toyota in Peoria, AZ (connected to Phoenix, AZ) is in August when it is 112 degrees for weeks at a time even over 100 at night. They must make a profit to survive. Mainly I was treated excellent and my salesman were very professional and downright pleasant to my wife and I. I would go back there in a heartbeat and it's a 2 hour drive from where we live. Today's autos are more reliable, they are safer and they last a long time if you do the maintenance, so the dealer making a reasonable profit is a good thing for them and our economy. ps-I wish dealers would install the body side moldings on all their cars. They prevent dings and actually give the sides a more 3D look that to me at least makes the car look nicer, but they are mostly an option anymore.
I really believe the person who wrote this article has very little experience in the total and overall picture of selling cars. A small used car lot does not make thousands and thousands of dollars on one car. The overhead is enormous. The insurance and licenses that car dealers has to have never end. Payroll, gas, detailing services, tire shop fees, paint and body, general supply lists are HUGE, auction fees, financing for the dealer fees and interest, BBB Fees, advertising fees, vehicle history report fees, bond to protect customers, credit card or paypal fees, cash deposit fees, and the list goes on and on. The small car lot is making a decent living if they sell enough cars but if this writer thinks that we sell one car a month and go home a play with our kids all day he is mistaken. You have to be skilled at buying and selling/reconditioning used cars. We deserve every penny we make and this guy makes our job even harder. Thanks for that!
Many comments here are obviously posted by those in the automobile industry. Many suggest this article doesn't approve of car dealers making a profit. It does not say that....of course a dealership should make a profit, BUT a REASONABLE profit. Just as a salesperson has to support their family, so does the consumer. Having to "make a living" does not rationalize unscrupulous sales practices. The car sales industry has a stigma attached to it by their own making.
Handy that you have all of the tools to fleece the dealers out of business. I love these imaginary profit margins that haven't existed for years. Most dealers I work with have a net profit somewhere around 3-4%. As websites like Edmunds and TrueCar push down the profits on the front ends of deals - dealers make the money elsewhere, and the shell game continues. You pretend like you're giving the consumer knowledge and power, but in reality Edmunds is just making money perpetuating the game.
Cars are just like any other commodity sold, except you don't walk into Target, Bed Bath & Beyond, Nordstroms, Foot Locker, Best Buy, or any other retailer telling them you know exactly how much they paid for something, and you're only willing to pay them 5 or 10% more than that. These companies all have similar overhead - real estate, power, gas, employees, insurance, advertising, etc.
Why don't you take Edmunds public and let the public and dealers have a look at your financials? Let them negotiate with Edmunds over the price of your services. You guys must be making a lot of money if you're offering the highest commission on affiliate leads in the automotive category!
This is a good article, but the comments give a great example of the industry and the folks that work in it. The reason I think there is so much polarization, is due to the simple fact car dealers have a reputation as being some of the most dishonest [heavy influence of "drama" here] in the industry. It's PURE SALES. Car buying is 50% driven by emotion. Right this moment, I am going to dealerships for the first time in 10 years - because they simply have the selection. I can USE them to understand cars again. After sticking to 'private sellers' for the last 10. WOW. Nothing has changed. They are ALL [talking about Dealerships here, NOT the shady guys next to the Pawn shops] in 30 years. STILL the same lies, same delaying - kidnapping [holding you till you give in] and BS "market value", "retail price", and other fake terms - as if they don't realize we have the Internet now. LOVE the lies about all they DO to a used vehicle, until you actually ask them to verify what they tested, refurbished, or gaurantee, then suddenly the story changes. You still hear the line "literally driven by an old couple" all the time - really sad. Here is what I do. Go in with my price in mind, willing to walk away, and after you make your offer and get that "LOOK", right before they walk of shaking their head to "talk to the manager" - which is guaranteed to elicit a response of "Wow, my manager is in a good mood and willing to meet you half way!!" - before you get there, and stick to your price...say this: "Look Bubba [or your salesman's name], I can tell you are someone I want to deal with. This is my offer. Understand, I'm not just buying a used car from you. Bubba, I'm trying to build a relationship. You don't make money in your business on a one-time profit, and either do we in life. It's about the long term. Sell me this car at what I know is a fair price, and lets build a future of business together." LOL. This line, in one form of another is THEIR garbage and is a master neutralizer. It will shock them to the core and they'll either take the deal or walk. Remember, they are getting 40-60% profit on those 'trade-in' cars, so trust me there is room for negotiation. Especially, on the ones they call "wholesale to the public" - which is them gambling on a high profit Finance deal - or they go to auction.
This is a good article, but the comments give a great example of the industry and the folks that work in it. The reason I think there is so much polarization, is due to the simple fact car dealers have a reputation as being some of the most dishonest [heavy influence of "drama" here] in the industry. It's PURE SALES. Car buying is 50% driven by emotion. Right this moment, I am going to dealerships for the first time in 10 years - because they simply have the selection. I can USE them to understand cars again. After sticking to 'private sellers' for the last 10. WOW. Nothing has changed. They are ALL [talking about Dealerships here, NOT the shady guys next to the Pawn shops] in 30 years. STILL the same lies, same delaying - kidnapping [holding you till you give in] and BS "market value", "retail price", and other fake terms - as if they don't realize we have the Internet now. LOVE the lies about all they DO to a used vehicle, until you actually ask them to verify what they tested, refurbished, or gaurantee, then suddenly the story changes. You still hear the line "literally driven by an old couple" all the time - really sad. Here is what I do. Go in with my price in mind, willing to walk away, and after you make your offer and get that "LOOK", right before they walk of shaking their head to "talk to the manager" - which is guaranteed to elicit a response of "Wow, my manager is in a good mood and willing to meet you half way!!" - before you get there, and stick to your price...say this: "Look Bubba [or your salesman's name], I can tell you are someone I want to deal with. This is my offer. Understand, I'm not just buying a used car from you. Bubba, I'm trying to build a relationship. You don't make money in your business on a one-time profit, and either do we in life. It's about the long term. Sell me this car at what I know is a fair price, and lets build a future of business together." LOL. This line, in one form of another is THEIR garbage and is a master neutralizer. It will shock them to the core and they'll either take the deal or walk. Remember, they are getting 40-60% profit on those 'trade-in' cars, so trust me there is room for negotiation. Especially, on the ones they call "wholesale to the public" - which is them gambling on a high profit Finance deal - or they go to auction.
...but remember folks. Cars sales is a grueling and thankless career in most cases. That is why most of them smoke and/or those eyes flash like steel and those cheeks get red quickly if you are an informed buyer. Intimidation is a BIG factor with many sales folks even in this age. If you are someone NOT good at confrontation, or easily influenced by emotional and/or 'group' [sales manager gang bang] tactics, please always take someone with you the is physically, emotionally, and intellectually strong. Last week I had a salesman that was practically my best friend and about to try my church, then after the first offer became a different person - and at one point could not hide his anger as if my offer was personally insulting to him - and even broke character and tried to make me feel guilty for the cost of the fancy car dealership and the nice facilities I was enjoying but "didn't want to help pay for".... Yes, it is a grueling and thankless career. It's either the beginning of the end of an experiment for most, or a 'out of retirement due to gambling' revisit for others. ONE IN A THOUSAND there is the guy that just tells it like it is and sells cars.
The last time I had a car on Craigslist, the first offer I had by someone actually looking at the vehicle in person, I told him this: "That might be a fair offer, but since this is the first day I want to wait to see what the market will bring. Give me your number and I call you back in a week or sooner if my price is too high." Why can't a car salesman say that? I sold the car THAT day, because the buyer's desire to have the car and feeling my price was fair enough overrode the delay, or chance he'd loose the deal.
You need to approach a car purchase willing to walk away, OR just buy it and shut up.
Comments
I would suggest that the F&I profit is too low. At many dealers I worked at it was in the 1600 range.
You may not even hear the lowest rate as some bank offer the dealer more profit on a higher loan.
At many of the dealers I worked at there was never much real commission. Even on a car you took in for 10,000 and sold it for 14,000 the next day. Somehow there was always 3500 worth of work done on it in that 12 hour period.
There is also a lot of bonus money paid on units sold that is not included in the story,holdback or the commission paid. This is based on units sold and can be up to 1500 per car.
I think any midsize car dealer is making at least a million a year for himself and there is no reason to worry about him.
i have been in the auto business for 20 years now, it has changed a lot.
where is edmunds getting that we get $2000 dealer cash... i am a ford\dodge combo store and ford VERY rarely gives dealer cash,,Chrysler has an objective based cash, but it might get you $500 per car, IF you meet the objective,,,,
TO the thumbs down people that think $1000 profit is enough, lets break that down,,,
salesman gets apprx $200
floorplan $200 << thats if it sells quickly and not a 50k diesel
fuel fill up $100<< no, ford/chrysler doesn't reimburse us that
i am stopping here for a reason:
first
at our store, avg price of a new truck is say $35000
that's less than a 3% return
assume we sell 40 new vehicles a month
40x$500= $20000 ($500 remaining from above)
out of that the dealer has to pay the following
himself,title clerk,sales mgr,acct. payable,secretary,detail,light,water,gas bill,pens,paper,copier,computer software,building cleaning,insurance,
DO I NEED KEEP GOING?????
IF YOU WANT TO BE A HAPPY CUSTOMER, PAY ME ABOUT $3000 PROFIT, WHY?
because when you have a problem, i can help you.. need someone to figure out the garage door programmer or the radio? my salesman will happily help you, same with picking up your car at work for service etc.
I can do this because i made some money to afford it....
USED CARS
I find it hilarious that people want to argue over a few hundred dollars..
when i am at the auction, the same car may bring $1000 more one week than the next or it may bring more in one auction lane than the other..
you tell me you found one down the road for $500 cheaper and i say go buy it, why? because i probably replaced the air filter, serviced the transmission, and put plugs in mine.... did they??
will they help you after the sale???
my whole point here is that YOU the customer and edmunds do not look at this side of the business. a $1000 swing on a used car is nothing due to a lot of factors....
a car dealers happiest customers are the ones we make money on.....
I have used Edmunds advice to negotiate cars and have always gotten a good deal. It is not easy, but it can be done. In the end, I got a good deal and the dealership still made money. That is the real win, win.
There is nothing better than seeing car dealers getting cleaned out and going out of business.
The concept of car dealerships is too old and needs to be gone.
Thanks to websites like truecar.com, edmunds, cars.com we, the consumers now have power to negotiate and deal with these blood suckers.
In a consumer driven capitalist economy, car dealerships need to be eradicated.
An online sales with factory support centers is the future.
I can order my Mercedes exact to the AMG door pins online - I do not need dealerships.
For those working for car dealerships find another line of work. You have made a living of lies and deceit.
You time is running out. watch when car sales are strictly online - you will die a slow starving death
The rules of the game were created by dealerships, for the benefit of dealerships. If the simple fact of both parties understanding the rules makes it difficult for you to make a living then you need to re-think the rules. Because what you're really saying is, "without my ability to lie, I can't make money."
I understand that many salespeople work 10 + hours a day. And I understand that you're all just trying to make a living. But that's a beef you need to take-up with the dealership, not the car buyer, and certainly not with an article that gives people the information they need to negotiate an honest deal.
People that get a Great deal usually get better treatment and those customers that are not Difficult asking for stupid pricing always get the goodies! the service and part dept tipically takes good care of them - We are in business to make a profit a small profit we are not a charity center, how many people go to work for free?? NO ONE ALSO TELLS THE CUSTOMERS THAT WE DO NOT GET A SALARY WE ONLY GET PAID IF -ONLLY IF WE SELL A CAR! We stand in the rain, heat - cold weather all year long!
then we get some Hindu asking for BS prices ! GTFO!!
BBB Fees, advertising fees, vehicle history report fees, bond to protect customers, credit card or paypal fees, cash deposit fees, and the list goes on and on. The small car lot is making a decent living if they sell enough cars but if this writer thinks that we sell one car a month and go home a play with our kids all day he is mistaken. You have to be skilled at buying and selling/reconditioning used cars. We deserve every penny we make and this guy makes our job even harder. Thanks for that!
Handy that you have all of the tools to fleece the dealers out of business. I love these imaginary profit margins that haven't existed for years. Most dealers I work with have a net profit somewhere around 3-4%. As websites like Edmunds and TrueCar push down the profits on the front ends of deals - dealers make the money elsewhere, and the shell game continues. You pretend like you're giving the consumer knowledge and power, but in reality Edmunds is just making money perpetuating the game.
Cars are just like any other commodity sold, except you don't walk into Target, Bed Bath & Beyond, Nordstroms, Foot Locker, Best Buy, or any other retailer telling them you know exactly how much they paid for something, and you're only willing to pay them 5 or 10% more than that. These companies all have similar overhead - real estate, power, gas, employees, insurance, advertising, etc.
Why don't you take Edmunds public and let the public and dealers have a look at your financials? Let them negotiate with Edmunds over the price of your services. You guys must be making a lot of money if you're offering the highest commission on affiliate leads in the automotive category!
Right this moment, I am going to dealerships for the first time in 10 years - because they simply have the selection. I can USE them to understand cars again. After sticking to 'private sellers' for the last 10. WOW. Nothing has changed. They are ALL [talking about Dealerships here, NOT the shady guys next to the Pawn shops] in 30 years. STILL the same lies, same delaying - kidnapping [holding you till you give in] and BS "market value", "retail price", and other fake terms - as if they don't realize we have the Internet now. LOVE the lies about all they DO to a used vehicle, until you actually ask them to verify what they tested, refurbished, or gaurantee, then suddenly the story changes. You still hear the line "literally driven by an old couple" all the time - really sad.
Here is what I do. Go in with my price in mind, willing to walk away, and after you make your offer and get that "LOOK", right before they walk of shaking their head to "talk to the manager" - which is guaranteed to elicit a response of "Wow, my manager is in a good mood and willing to meet you half way!!" - before you get there, and stick to your price...say this: "Look Bubba [or your salesman's name], I can tell you are someone I want to deal with. This is my offer. Understand, I'm not just buying a used car from you. Bubba, I'm trying to build a relationship. You don't make money in your business on a one-time profit, and either do we in life. It's about the long term. Sell me this car at what I know is a fair price, and lets build a future of business together." LOL. This line, in one form of another is THEIR garbage and is a master neutralizer. It will shock them to the core and they'll either take the deal or walk. Remember, they are getting 40-60% profit on those 'trade-in' cars, so trust me there is room for negotiation. Especially, on the ones they call "wholesale to the public" - which is them gambling on a high profit Finance deal - or they go to auction.
The last time I had a car on Craigslist, the first offer I had by someone actually looking at the vehicle in person, I told him this: "That might be a fair offer, but since this is the first day I want to wait to see what the market will bring. Give me your number and I call you back in a week or sooner if my price is too high." Why can't a car salesman say that? I sold the car THAT day, because the buyer's desire to have the car and feeling my price was fair enough overrode the delay, or chance he'd loose the deal.
You need to approach a car purchase willing to walk away, OR just buy it and shut up.