How Much Profit Should A Car Dealer Make?

grandtotal

Car prices will come down.

To some extent, yes. Also people's aspirations will be modifed by reality and manufacturers will stop loading cars up with everything they can think of.

isellhondas

Where are you coming up with 36,000 for a new Mustang?

Try a base model instead of the top of the line one you must be talking about!

Kirstie_H

Seems like this was directed at me, so I'll respond to the false accusation - I spent about 10 minutes "grinding out the deal," and made it clear up front that I was in a time crunch. I was in a rental car, and quite far from home (i lived in a major metro area, so being "far from home" wasn't difficult). Actually, for those of you who remember member brentwood_volvo - it was his former dealership.

The transaction went something like:
Me walking around used car lot. Found car. Test drove car.
Me will you take $xx for the car today?
Saleslady: Yes!
Me: I'd like to do the transaction today. If I can get out of here in an hour (had to pick up a child), we can do that.
Saleslady: no problem.

It was a Thursday afternoon at about 2pm, and I think I was the only buying customer at the place. I didn't try this stunt at noon on Saturday. Everyone seemed happy with the transaction (except, perhaps the F&I guy).

mako1a

V8, Auto, A/C is all I require. That's just what the MSRP is. Edmunds TMV is more like $35,600, but still sounds like way too much to me for a car that still uses a stick to hold the hood up.

Not to worry, I have a nice Toyota Solara for everyday driving. I just wanted to sell my 91 Z28 convertible that has been pro modded with HP galore. I don't flex like I used to and wanted something that sits higher. I tried to trade on a Mustang and was floored by the prices. They didn't want my Camaro (didn't want to tick me off with their low trade), but still wanted to sell me the Mustang.

My response was garage space is limited and one has to go out before another comes in. It was just a fleeting desire to have a nice sounding new car to pull up in and impress my buddies. Certainly not make a major financial investment.

isellhondas

No, it wasn't directed to you. Not at all and I'm sorry if it sounded that way.

It just seems to happen a lot and I'll use last Saturday as an example.

A very nice couple spent quite a biut of time with me on what was a very busy day. They drove three different used cars and had many, many questions that I took the time to answer. It wasn't a grind at all. The car they landed on was sale tagged and they were happy with the price.

They did have a problem trade that we had to shop around over the phone with several of our wholesalers. My customers were relaxed and not in a hurry.

Finally we came to terms and a deal was struck. It was at that point that they started looking at their watches and let me know that they HAD to be somewhere in a half hour!

So, I rushed through the paperwork, I grabbed an already swamped lot attendant to do a quick wash job. I stressed out the F& I gal who slammed the paperwork together for them. I did manage to get them out in a half hour but it turned what had been a pleasant transaction into a pressure situation for a lot of people.

I try to read my customers and if I sense there is a time situation I'll let them know what to expect. I missed this one.

joel0622

Ok, I gotcha now. Ya you would think with all the technolgy they could build them a little cheaper.I would be curious to know how much it actually cost to build a car. Not all the other crap that is included in but just the cost of the actual car.

fezo

Maybe I'm wrong but I always thought that the Mustang is there as a profit center to make up some of the money lost on the Focus and such. I could be wrong.

I like the Mustang but wouldn't like it at that kind of money. I'll have to look that one up. Probably the old when the top goes down the price goes up.

mako1a

Joel, I'm sending you a possibility, maybe (better than a nobody, never). It's my call nurse from Nashville.

Ever since I had my 4 way bypass 3 months ago I have to talk to a Blue Cross nurse in Nashville named Heather. I told her to go see you at the newest large Ford dealer in Nashville and ask for Joel in the Finance dept. I also told her to say "Mustangs cost too much" so you would recognize her as being sent by me. The curious thing was that she wasn't aware there was a new large Ford dealer there. She may be on the other side of town or just doesn't pay attention to car dealers. Or since I live in a very small town I have no idea how large Nashville is. Anyhoo, there ya go.

ps Heart surgery went just dandy. I quit smoking (after 40 yrs of a pack a day) and do the treadmill thing and swimming thing weekly (weakly LOL). Waiting now to resume Bow Shooting (target) as breastbone has to heal solid before pulling 65 pound string.

Yer welcome, if you get a sale out of it. Dave

joel0622

Thanks Brother, tell her we are in Mt Juliet, near the new Priovidence Shopping Mall.

suicideking888

I dont understand why people think a 5% profit for a dealer is "fair" or in some peoples words "healthy". We're talking about a product that costs THOUSAND and THOUSANDS of dollars... there's overhead, commission, insurance, TIME, re conditioning in some cases, etc. etc. etc. yet Jewelers and furniture retailers (to only name a couple) often charge 100%-300% mark-up or more and the consumer is just fine with it. I am no "car dealer" and of course when I buy a car I strive to make the best deal I can but I also understand that dealerships are not a "non-profit" organization and I am sure it takes quite a bit of time and money to open and run a car dealership. Sure 5% profit may be fair on a common or inexpensive vehicle but I guarantee there wouldn't be many dealerships still in business if they simply priced their inventory at 5% above cost and removed the negotiation process out of it altogether. I dont think a lot of you are taking into consideration the massive overhead these dealers have not to mention the occasional "loser" they have to accept when trying to get vehicles off the lot. I think there are just too many variables to ever come up with a "fair profit" on a product such as a vehicle. Supply and demand is too tricky and each and every vehicle is so unique that you just cant put a blanket figure on it... thats my opinion at least.
Take care everyone.
SK

fushigi

I presume you mean mark-up and not profit. Profit would be what's left after expenses are covered.

elecunlmted

As someone who sells Honda products let me say 5% is a funny number to throw around, the MSRP disregarding any dealer cash incentive puts you at anywhere from 5 to 10% gross margin before you pay any overhead. The Honda Fit Base at sticker carries maybe 800 dollars profit with no money behind it from Honda and people still maintain the "best price" mentality. We have to order those cars right now in my area and I'm at a volume dealership. Moreover if you go into a dealership and work with a salesperson that gives you good service and you spend several hours whether through email, on the lot or phone communication continue to work with them. I absolutely hate someone who asked for the best price up front and being a pragmatic person I shoot them the equivalent to an IT price and they go 40 miles out of their way to save a hundred to two hundred dollars from a po-dunk dealership dipping into holdback to meet a number from the manf. Then in the most assinine way tell you it's because you didnt give him the best price. When you ask "Whats your best price?" what you're asking is "How little profit am I willing to make" and if I give you a price that makes me $300 and you call someone else with that price they'll take $200. Too often I write down brackets on a deal recap and for those non-accounting majors that's negative gross and the customer still thinks they paid too much. The days of car salesman making 4 and 5 grand plus a month are gone, a flat on a new car is often 100 bucks plus a percentage of the gross after lot fee's, etc... which is typically nothing. This from the same public that buys 10 dollar popcorn from the movie theater and that "sale" TV at Best Buy holds more dollar amount margin then what most cars bring in now. Everyone here is probally ok with a dealership making 5%, just not on them. Someone wrote on here for everyone customer that is a skinny deal two or three pay sticker, wrong! Everyone thinks it's ok to negotiate on cars but have you done it on gas lately? what about tuition? or you dentist or doctor's fees? Better yet post what you do for a living and I'll come hit you up for your "best price" and watch you look at me wildly like I've insulted you.

boomchek

This from the same public that buys 10 dollar popcorn from the movie theater...... Everyone thinks it's ok to negotiate on cars but have you done it on gas lately? what about tuition? or you dentist or doctor's fees? Better yet post what you do for a living and I'll come hit you up for your "best price" and watch you look at me wildly like I've insulted you.

Hahaha, too funny but true.

My reply to "how much profit should a dealer (or anyone else for that matter) make" is as much as possible. End of story. :P

snakeweasel

Everyone thinks it's ok to negotiate on cars but have you done it on gas lately? what about tuition? or you dentist or doctor's fees? Better yet post what you do for a living and I'll come hit you up for your "best price" and watch you look at me wildly like I've insulted you.

Its OK to negotiate on cars because that's how dealerships work. They created the beast they have to deal with it. Have I done it on gas? No because I know it doesn't work unless I buy a boat load of gas. My doctor or dentist? No because my insurance pays them not me and they do negotiate those fees. Most other things I try to negotiate on and may of those things I do get a discount.

I do taxes and people negotiate those fees all the time. One time I had a guy come in for a quote, I asked him what he had and after some consideration (he had a somewhat complected return) I quoted him $175. He told me H & R Block would do it for $50 and without hesitation I gave him directions to H & R Block.

qbrozen

Better yet post what you do for a living and I'll come hit you up for your "best price"

I'm a medical editor for an ad agency. Clients bargain with us on a steady basis to lower our rates for them.

elecunlmted

To say "That's how dealerships work" isn't entirely true, none of us was here for the first car sale but I doubt the guy asked the buyer to offer less then he wanted for it. The truth is the cycle did start somewhere and everything is negotiable we just feel more socially comfortable negotiating with car dealerships because it's not as taboo as negotiating girl scout cookies. To your point about taxes, I agree your time and expertise has a value, if you've got a good sales person who has allowed you to test drive excessively, offering more then average customer service, or overall helped change your opinion of car salesmen in general at least cash tip him if you're then gonna stress best price. You are purchasing a commodity that pays for the car buying service the guy's not taking your dinner order or getting your new computer down he's helping you buy a car. Otherwise be in and out in under and hour and don't be difficult if all you care about is price. I once asked a customer "Are you most concerned with the best service or the best price?" He said "price" I gave it to him and was unfortunately was the lowest, then the demands started. Measure the car from mirror to mirror for me, drive to my house to see if it fits, let's test drive it three times. Needless to say I said no, on principle. It was only worth $100 to me so why waste my time or worry about loosing the business? Now here's one thing my dealership doesn't add extra options or packages or anything to the cars like every other dealership in the state. We charge tax, title and a $398 documentation fee(which isn't profit I pay it to corporate who does all the title work, dmv paper work, processing the loan paperwork, etc...) BTW if you've ever been to a NC DMV it's worth it to have us do it. Someone on here once said include those expenses in your product we gladly would but then our car would be $400 more then everyone else and you wouldn't buy it from us so since one guy somewhere did it already everyone has to.

elecunlmted

gbrozen, understandable I suppose but does the conversation go like this

gbrozen: "My rate is blank an hour"
customer: "Alright vulture I know I've wasted hours of your time preparing this presentation and data, give me your best price and I'll call 5 other medical editor's and probally go with them because I already have your best price and they'll undercut you just because they can beat it by 5 bucks an hour or so"

The thing is when someone wants best price there's still some profit typically either 100 dollars up to 500, when you call somewhere else they will always beat it by 50 bucks so should I just qoute you cost? No. If the "cost" is 15k, offer 15,750 before tax title and doc that's reasonable.

qbrozen

That's true. And we do lose business to smaller shops with lower rates all the time. As you said above, though, that customer is not getting the service we provide. Not by a long shot. But, its their dime, their loss.

And, oddly enough, just like the car biz, when we cut our rate to get these little nickle and dime customers in the door, they are the biggest pain in the butt, we make next to nothing (sometimes lose money even), and it gets to the point we can't wait to get rid of them.

So, anyway, the short answer to your question is, "yes, there are other industries where negotiating happens."

And I also have negotiated for goods/services other than cars myself. I negotiated my realtor's fee when I sold me house, I've negotiated on every TV in my house, and I negotiated for work I've had done around my house.

elecunlmted

I agree with you there are, the problem is if you lose business you may not have invested a considerable amount of time into the potential client. I typically will spend quite a bit of time with a customer and if someone beats me by 100 bucks they go there and are in and out in a hour well, after that probally smaller less reputable dealership hits them up for "protection packages" or accessories they have preinstalled. I don't mind giving a good deal but not giving away a product as on a new cars you typically don't make more then 100 to 200 bucks anyway. I had a customer come in several times and then finally called to setup "an appointment to purchase" on a Saturday which I typically don't take but he was a nice guy for the most part. He came in and offered $2000 off a Fit Base Automatic which carries nearly no markup. At this time they were selling right at sticker because there is only about $600 of markup in it. I offered several hundred off and he was irate, he said Edmunds was showing, so I pulled up the TMV on Edmunds.com he said "I don't believe in that" and asked me to search through the 9000 or so post on the Fit where one guy somewhere had bought it at the price he offered. I told him I would followup with him later after he had reconsidered our offer. He never ended up buying that car because someone on here said he should buy it for XXX and never could find a dealership willing to do that. It was a waste of both his and my time.

boomchek

elecunlmted - not sure how long you've been in thr business but over on the Stories From the Sales Frontlines board it has been agreed by many of us who sell cars that the happiest and least demanding customers are those that pay the most.

The grinders are alsways the unhappiest and have most demands.

I applaud you for losing the deal over principle, as a customer like that sounds like in the end he wouldn't buy from you anyways, It happened to me before and to many others in the business where after giving a "best price" the demands shoot through the roof and you end up wasting half a day for a mini or worse for a tubed deal.

Good thing these types of customers don't represent a majority, so no point focusing on the bad 10%-20% when 80% of your other clients will net you more than a mini in commission.

boomchek

And to add to my post many of the "claims" in prices paid forums are bogus, especially in a somewhat anonymous forum where people like to show off how good of a deal they got.

I had a customer too that offered $3k below cost on a new CRV. When I told him thats undoable he said he can get it from another dealer nearby. I told him that he can't and he won't and I'm willing to bet money that he won't. He didn't bet but said he'll come back with a bill of sale. Nevertheless he never came back because of course he wanted to save face that he never got that price.

Sometimes customers think they're smarter than us but they fail to realize that we can detect 99% of the BS they spew when talking about pricing or that another dealer can do it for $XXXXX.

PS: I see this behaviour of ultra grinding is typical with Honda buyers. Stop being buddies with your customers, give them no more time than needed for a good presentation and test drive, and then present the price and if they buy, great, if not, then move on. Who cares about what they'll lose out if they buy elsewhere. The point is to close them now and stop worrying if another dealer will sell them mop n glo or treat them bad. You're not the first (and probably won't be the last) that jumped onto these boards a bit upset at customers grinding you down. I was liked that too and sold Hondas for 3.5 years.

jwilliams2

They created the beast they have to deal with it.

I've heard this from many people. However, none of us were around when the first car was sold. But I would bet that the first deviation from the asking price was as a result of the customer wanting a better deal.

snakeweasel

The truth is the cycle did start somewhere

Where the cycle started is not as important as who perpetuates it. So while it may be a customer who first asked for a discount it was the dealerships that accepted and continued it. The customer does not create the business plan the business does.

We charge tax, title and a $398 documentation fee(which isn't profit I pay it to corporate who does all the title work, dmv paper work, processing the loan paperwork, etc...)

I hate to tell you what the true cost of that really is.

hsudog

With 5 cars in my family, I am the designated buyer and I tend to buy 1-2 cars a year. I have found that the best way to approach this issue is to be frank, up-front, and efficient with time. I have a simple approach. I research the car I want, find it used (usually 2 years old - let someone else take the depreciation), then make a list of 2-3 cars I am interested in buying that meet me specs from autotrader and ebay listing. I call ahead for an appointment, show up on time, test drive no more than 15 minutes, inspect the vehicle. If I like it, I walk in with salesperson and make a written out-the-door offer $200 less than what I am willing to pay. What I am willing to pay is based on my research that should yield a $1000 gross profit to the dealer if they bought their inventory right. In most cases I am close enough, but of course too low, that the sales manager makes an appearance. I make it simple - cash, no trade, close today. I tell him that I got another $200 on my offer but not interested in haggling, and in 80% of my experience they just ask me a few questions about how I got my number and then accept it after a few attempts to get me to move. I don't go up $50 at a time, or $100, or $10 ... every counter-offer they make is met with the exact same offer from me. That usually lasts no more than 5 minutes. 20% of the time, it's clear that I've misjudged their cost structure, and I politely thank them for their time and I leave. However, I have never had to go to more than 2 dealerships to get the car I wanted at a price I was willing to pay. I usually spend 1.5-2 hours to get the deal done from start to finish, and I find it a pleasant experience and no more than 30 minutes if I don't get a deal done. If I don't get the car .. it's no big deal -- the dealer still has his inventory and I still have my cash and neither party is worse off than a few hours ago. In every case, I have been able to purchase my vehicles at BELOW what Edmunds says is the trade-in value and usually at $3 to $7k off the dealer's advertised asking price, and this is on $15 to 20k vehicles. In sum, I let the dealer worry about his profit ... I just worry about what I want to pay and never waver from my walk-away number.

exf150owner

I dont think a car can be sold at just 5%

That being said i just bought 2 honda civics, I settled on a dealer due to one of the "advertised newspaper specials" that are never there when you get to the dealer. Well when I got to the dealer the car was there! I however settled on a more expensive model. The salesman had my number ! He brought out the advertised car and it looked great,,,,,but right next to it was the nicer model . :P

My girlfriend asked how much I thought the dealer made on the car . She was suprised when I said " well probably $1000 to $1500. She looked like I didnt do my job of "grinding" I am a reasonable person and i explained- well by the time you get done with overhead - salesman salary/commision, insurance , employees/facility, and a host of other things i probably dont even know about,,, you probably get 500 bucks out of the deal. Thats a lot of liability for 500 bucks !!

I KNOW i could have grinded down the dealer a little more,, but at a certain point service is important to me. I recieved excellent service and couldnt be happier. I dont know how the car industry got to be the way it is. The salesman stayed afterhours to finish my deal ( with his wife and babby waiting in the car ) He was no nonsense about everything , but it seemed like a labor intensive job for mabey a $100 comission.

I think it is a hard industry, but has it evolved this way because of bad behaviour on the part of the customer , the times or bad dealers ? I dont know.

bb700092

Everybody knows, just like some customers show off how low they bought a vehicle for, some salespeople show off how much they made by selling a vehicle. In some cases, the negotiation is not about the money per se but eventually turns into a game where both parties want to win and a negotiation over maybe meagre $50 ensues. Nobody enjoys this. So why not get rid of all negotiations (and complaints) in the car buying process?

It is pointless for salespeople to blame customers or vice versa because both parties are equally interested in negotiating as both of them know without negotiation, there will be no deal. If any one party says to the other -- "This is the fixed price I will offer and will not negotiate." -- all negotiation will stop, but the deal might not pass. So no one has the guts to do that -- neither the customer nor the salesperson. As a result, after negotiation, sometimes pretty intense, the deal passes and both sides shake hands as a ritual and leave with a fake smile and a bad taste in their mouth. The customer gets a car while the salesperson gets some commission -- who knows how much enjoyment/peace/happiness that car or those few hundred dollars will bring to the respective person!

In my opinion, car buying process should be entirely online much like buying airline tickets where there will be no direct human-human communication. The dealerships should strictly be showrooms where customers can test drive vehicles, get all the information they want about the vehicles and buying process, and can do paperwork after an online purchase is completed. Salespeople should be there to guide the customers and help them with whatever they need including service and repairs. The salespeople should be full-time permanent employees, be paid a monthly salary and benefits but no commission. That will make the process much more enjoyable for both parties and customers can get their best price as they do with airline ticket purchases while auto manufacturers can sell at their best price based on demand as airline companies do.

andres3

There's so many pricing schemes and games as the prices flucuate wildy from day to day and sometimes hour to hour. Airline tickets is a bad example for the car sales industry.

hsudog

If any one party says to the other -- "This is the fixed price I will offer and will not negotiate." -- all negotiation will stop, but the deal might not pass

This is the business model that Carmax has used to become the biggest used car dealer in the US, and I have used on the buy side to get the last 20 vehicles I have bought. There is nothing fundamentally wrong with not concluding a deal. I have had a pleasant time buying cars this way with no "intense" negotiation, and have been able to buy great cars at good prices.

jipster

In every case, I have been able to purchase my vehicles at BELOW what Edmunds says is the trade-in value and usually at $3 to $7k off the dealer's advertised asking price, and this is on $15 to 20k vehicles. In sum, I let the dealer worry about his profit ... I just worry about what I want to pay and never waver from my walk-away number

That's a very interesting comment. But, I don't see how a dealership can make $1,000 gross profit if you're under Edmunds trade in value on a one or two year old car. Can you give us a specific example of a recent car buy? I assume you have access to auction prices?

elecunlmted

I agree that some customers are perfectly content on paying high gross margin and they are typically my best customers not because I make a lot from them but mostly because they are the happiest and so long as I helped them find the right car in the right budget it doesn't matter if it's MSRP or not it's the right car for them. They often times send me the most referrals. The issue with no going on with the deal with a "grinder" is this, depending on your dealerships pay structure even that 100 dollar flat is worth it. At my dealerships that one vehicle may not pay much but it adds another 1% of the total gross you've gained through the month. When you cut something to the bone, spend ample time necessary to close it but loose out due to 100 bucks somewhere else it's a smack in the face. I'm not upset about those customers but if you're that type of customer come see me if I'm closest, test drive and go home and due your price shopping if you feel you must. Come back to me with the lowest price youve got from the other dealerships not forums and more then likely if it's something I can do it I'll do it. Don't go back in forth for 3 or 4 hours, get my lowest number and take it to the next dealership it's just poor form.

euphonium

the "system" includes a "sales associate", sales manager, & a financial clerk?

Is it too much to expect the salesman to have the authority to make a deal & complete the paperwork on one desk in one hour?

the cars on the lot are loaded for up to $5,000 in non desired extras such as Navigation, moonroofs, self parking, radar, & extra $ for certain color of paint?

boomchek

the cars on the lot are loaded for up to $5,000 in non desired extras such as Navigation, moonroofs, self parking, radar, & extra $ for certain color of paint?

Maybe not desired by you, but for some these are must haves. And these are usually factory options, not dealer add ons.

boomchek

I like customers like you. No-nonsense, quick and easy transaction, and you know what you want. I invest little time, and make an a commission thats proportional to time invested in you. I have no probelm with that.

boomchek

Saturn tried to have no haggle pricing, and look where they are now (it didn't hgelp that their most of their products sucked too).

If someone doesn't want to negotiate then they're welcome to pay the MSRP. It's a no haggle price that will stay constant throughout the year.

euphonium

Does not the dealer "order" cars to include certain options installed at the factory?

So, is it not the dealer who decides what the options will be on any given "order"??

hsudog

That's a very interesting comment. But, I don't see how a dealership can make $1,000 gross profit if you're under Edmunds trade in value on a one or two year old car. Can you give us a specific example of a recent car buy? I assume you have access to auction prices?

Usually dealers can make a profit from a used car sale under "trade-in value" on Edmunds or KBB because they often pay wholesale auction or under for their vehicle. There are two ways they do it. First, they actually can get the car at auction. Second, they get it as a trade-in - which is my favorite target to look for.

What I noticed about 10 years ago was that when I bargained a dealer down on a new car (back in the day when I didn't know better and bought new) to get a "deal" at $200 over invoice, I was always killed on the trade-in. The sales manager would of course be very helpful and show me his Mannheim screen showing that my car was only fetching XXX dollars at auction, and that it made no sense for him to pay more for my car. Made sense to me of course. I didn't do that deal, but I learned a valuable lesson that day. It doesn't matter whether you get a good deal on your trade, or a good deal on your purchase ... you got to look at the net.

Recent example from 3 weeks ago ... 2007 Camry Hybrid 50th anniversary edition - totally clean still under warranty @ 32k miles (loaded - leather, nav, satellite, power driver/pass seat). Dealer asking $22,999. Edmunds TMV shows private party of $20,779, trade-in of $18,779. Bought it for $17,290 + TTL (I include the "doc" fee in the sale price of the car), or about $1500 under Edmunds "trade-in" value. My guess he got the car for $15.5k on a trade, had another $500 in recondition, flooring, etc. maybe $16k in the car. Carmax had a similar car, asking $22k, the Toyota dealer had an "internet special" price for similar car $19.9k firm.

Oh, one other thing. It was from a non-Toyota dealership. I also like to cross-shop the used car against another make's dealership as they can't CPO the car and are more likely to deal on it.

Took 2 hours total. Very polite, professional ... zero aggravation ... even fun

boomchek

Thanks for the example but keep in mind that Toyotas are suffering right now on used car values, so your situation may be exclusive to buying a used Toyota. Either way you scored a great deal on a nice used car!

boomchek

Yes, a dealer has their say on what they can order with what options, but they also may have to order certain number of specific models, whether they want them or not.

But usually dealers order models with options that will sell the fastest and that are most popular. That's why you see more loaded up models than bare bones models. It's just supply and demand.

Us for example, we order a ton of base Grand Caravans, but a lot of loaded trucks, because both sell well. We don't sell many base trucks, or top of the line Grand Caravans or Town & Country vans because buyers in that price range usually end up buying a Honda Odyssey or a Toyota Sienna. But there is no competition for our base vans so we always have a lot on hand.

isellhondas

People go to those PRices Paid Forums and ferret out the lowest price someone "said" they paid. Then they try to do even better when the posted price was bogus.

I have tried to gently point this out in those forums only to have the resident host get all over me.

People believe what they want to believe.

hsudog

Agree with you that Toyotas are taking a hit. I also like targeting good cars (and manufacturers) that are out of favor but still have a fundamentally sound vehicle. And it looks like it's Toyota's turn this year.

Since this is a forum about dealer profit, the great thing about the Toyota mess is that the dealer was able to acquire his trade cheap, I was able to get a good deal and leave the dealer with an acceptable profit. The only one who lost out was the poor guy who sold his car before the lease was up (checked autocheck - traded in what looked like 28 months into a 36 month lease) no doubt because his wife had watched the news and insisted hubby get rid of the death machine.

isellhondas

First day on the boards?

A couple of things.

First of all there is a markup of a piddly 552.00 on a Base Fit AT.

And, it kinda sounds like you are new to the business?

Your customers don't care. I don't expect them to.

Nothing you write in these forums is going to change anything. It's all about money.

This is how Wal Mart has made it so big. It's all about PRICE!

grandtotal

Now here's one thing my dealership doesn't add extra options or packages or anything to the cars like every other dealership in the state.

Wow, talk about a sweeping generalisation.

grandtotal

But I would bet that the first deviation from the asking price was as a result of the customer wanting a better deal.

You might think that, but I think a dealership saying "Buy from us and we'll sell it for $50 less (this is a long time ago, remember) than XYZ dealership across town" or "We'll sell you this Chevy for $50 less than the Ford you're looking at even though that's below our list price." is just as likely.

jwilliams2

I would imagine the dealers back then were fully capable of extolling the virtues of their product and pointing out its competitive advantages, without resorting to discounting.

And I have to believe the customers wanting to save money surely came before the dealers volunteering to discount the price.

andres3

Big problem in the industry is Collusion. Some dealers in San Diego think they have a Monopoly or Oligopoly on the market and quote only relatively high prices online (still better than sticker though).

Call up a dealer in Orange County or LA County, and it's not uncommon to save yourself $400 to $500 and all you have to do is drive maybe 100 miles up and down. Let's say you buy a gas guzzler and use up 15 gallons.

At $3 a gallon the trip costs you $45 + about 4 hours of your time driving. So unless you make $100/hour or more, you are much better off taking the time to buy from up north and say "screw you" to the dealers "monopoly" in San Diego County.

isellhondas

I say, more power to them!

The San Diego dealers are refusing to let their market be ruined by the L.A. stores who whore out their cars.

Why does that make them "scum".?

They just want to make a decent profit.

For some shoppers price isn't the only factor.

andres3

It makes them scum because they are clearly colluding!!! Colluding is wrong. They've obviously all gotten together and made a decision across the board not to compete with each other on price and to rig it at a higher price than neighboring counties on the theory people won't be smart enough or clever enough to realize you can drive more than 50 miles to buy a car.

I agree, price isn't the only factor. A decent profit? That's all fine and dandy, but isn't any sale (that isn't a loss) better than no sale at all?

isellhondas

Youi are making the assumption that they have gotten together and that they have agreed not to cheap sell their cars.

If this is the case, they aren't breaking any laws.

As to your question, let me ask you a question.

Suppose you had a used car you were selling. You do your research and you advertise it for what you think is a fair price based on the market.

Someone comes along and offers you 2000.00 less than what you are asking.

Would you take it figuring that any sale is better then no sale?

fezo

Youi are making the assumption that they have gotten together and that they have agreed not to cheap sell their cars.

If this is the case, they aren't breaking any laws.

Actually if this is the case they have broken laws. It's collusion which is what he was saying.

Of course proving collusion is another matter entirely. There have been cases where it gets proved and those who got together to set the market price payed dearly. The most famous case I remember is when the baseball club owners decided one year to get together and set maximum salaries on free agent players. The players sued and won. Big bucks.

Now I don't know the situation in San Diego but one thing that sets the market around here is the fact that you have a lot of megadealers so it's pretty useless to cross shop say an Altima and an Accord since the same guy owns both dealerships.

Myself I like a deal but I'm not a nut about it.

isellhondas

Well, collusion is a strong word and since I'm not a lawyer, I certainly am no expert.

Price fixing is against the law but if a bunch of stores get together and say...Hey guys, let's not give away our cars."

I don't think that would be against the law but I guess I could be wrong.

So. Calif is a tough, cutthroat market. I know, I'm from there and I know I could never work in that enviroment.