@crkyolfrt said:
Anyway, can we please stop this? I know you are sick, as am I. This is not healthy for either one of us.
I would suggest that you go over to the Edmunds Forums discussion and suggest that we rename the abuse button to something less negative. I like the idea of "thumbs down" but don't want to trample on some other software's right to the term.
@Michaell@Edmunds said:
I would suggest that you go over to the Edmunds Forums discussion and suggest that we rename the abuse button to something less negative. I like the idea of "thumbs down" but don't want to trample on some other software's right to the term.
I think that could be easily dealt with without legal ramifications by simply using an icon of a thumb pointed down, as opposed to it written out. The symbol only, would be the desirable icon either way. Surely a thumb pointed down has no copy write protection? Although who knows...you could be right, Michael.
How about a "Humphff" button then? I doubt anyone has secured that one yet. Although there may be some who wouldn't know what it meant. Anyway, one thing Ia m absolutely certain of...Abuse (being on its own) is not a good idea for Edmunds or its members at all.
I don't know, I've never had a real issue in buying a car. I don't buy one every week, but when I do, I do my research and buy what I want at what I hope to be a fair price. If it wasn't, the dealer more than likely wouldn't have sold it to me. They are getting SOMETHING out of the deal... I work with one dealer until it becomes apparent it just isn't going to work out (or I buy!). If it doesn't work out, I feel bad, we've both invested some time, but if they let me walk, then we must be in agreement. Then on to the next, I don't really "play" dealers against each other.
I have had some salesfolks who are less knowledgeable than me about their products ("Sorry, Laurasdada. It is impossible to have a turbocharged engine mated to a manual transmission." Really.), several times I've been offered (perhaps facetiously?) jobs at the dealer after buying a car!
I like what my recent salesman said as I'm buying my current ride this past New Year's Eve, "Laurasdada, at this time of the year, it's not so much about making a lot of profit on each car. It's about moving inventory." I got what I consider to be an outstanding deal on the purchase price, but I do believe they did get a good deal on my trade. But when I factor in the sales tax savings and time spent to sell privately....Ok, they still got a good deal on my trade!
'21 Dark Blue/Black Audi A7 PHEV (mine); '22 White/Beige BMW X3 (hers); '20 Estoril Blue/Oyster BMW M240xi 'Vert (Ours, read: hers in 'vert weather; mine during Nor'easters...)
Why in every restaurant you see there are signs saying employees must wash hands before going back to work yet in hospitals there aren't?
Because in most hospitals, dental offices, and doctor offices the hands are sanitized in front of every patient as the provider enters the room. Only exception was the data check nurse who asks prescriptions I'm on and takes blood pressure and asks what problems are you having if any on my visit last week at my urologist.
I recall when I had major surgery 13 years ago and there was a sink along with the squirt containers of sanitizer hanging on the wall. Doctors and all sometimes used both. The reality is that they understand passing germs and staph. I recall my doctor saying he wanted to get me out of the hospital as fast as possible because people can get sick in there, meaning they can get contaminated wounds, and this was before the major flesh-eating staph publicity.
People in restaurants scratch themselves and serve an entree salad holding the edge of the bowl with the same fingers and the fingers/thumb get into the lettuce. My wife watches as food is coming. She often rejects food. Same for water glasses held by the rim. People in restaurants are very careless about washing. Take a look at the doorknobs on the restrooms that workers use to open the door as they leave the rest room even if they did wash their hands.
@laurasdada said:
I got what I consider to be an outstanding deal on the purchase price, but I do believe they did get a good deal on my trade. But when I factor in the sales tax savings and time spent to sell privately....Ok, they still got a good deal on my trade!
There is one thing a dealer just can't stand - and that's to lose money on the resale or wholesaling of a trade! Let me explain:
All dealers (with the exception of the very high end dealership like Rolls, Bentley, Porsche, etc.) often "give away new cars" at invoice or even well below invoice at certain times of the year in order to meet sales objectives or maintain their lead as the number 1 dealer for that brand in their area, or state, and especially if they are number 1 in the country. I know because I worked at 2 dealerships that were the National Leaders for their brand. There are so many special dealer incentives for this and that, in the end, they really don't lose much, if anything.
But the trade is the one area of a sale that can make or break it for the dealership. That is why there is such a huge turnover of used car managers at dealerships - almost as big a turnover as there is for sales people. Let's assume the appraiser places a cash value on a trade of $17,500 - and let's assume it's a 5 year old Mercedes or Lexus on the higher end of the line. They did their homework - checked out CARFAX, examined the vehicle from front to back, etc. They looked up Manheim (auctions) and used their NADA Black Book, and felt the value of the trade was on target - no problem getting that at the auction. Two weeks later, title comes in and one week after that, the car is on the truck headed for the auction.
At the auction, the car goes through and the highest bid on the car is $15,650. The used car manager feels that the most he could get on the lot for the car is $18,500, so he decides to bring the car back to the dealership, It now has to go through a safety inspection - and the mechanics will always find a safety issue with a 5 year old car (brakes, radiator, hoses, power steering, or whatever). So now another $1000 is poured into the car to bring the car up to safety standards for sale on his lot. The car sits on the lot for 60 days - no sale. He lowers the price on the car to $16,500, no sale. He takes the car back to the auction and he gets $14,500 - a loss $4000 on the trade if you include transportation, repairs, interest being paid, etc.
This doesn't happen every day, but I was in the business long enough to know that it happens a few times a month - it may not be $4000, but it could be $2000, etc. So, now you understand why a dealership has be be very careful about putting a cash value on a trade-in.
Unfortunately, most dealers try to "screw" the customer on a trade if they can get away with it. That's the problem - and why the customer has to research carefully to determine what a fair "auction value" is for his trade. You are rarely going to get a dealership to offer more than auction value for a trade - but they often subtract $1000 to cover themselves if the value drops prior to getting the car to the auction.
I'll second to what Mike saui regarding trade ins. Brining them in right is especially crucial at a place where I work, used car lot. These are cars we end up keeping anmd have to sell them and turn a profit. Unfortunately on older units things can add up pretty quickly. Brakes all around, couple gaskets, this and that can easily push recon costs into a grand or more. On a cheap car that we may bring in for $3000, we'll be in it for $4000 by the time its front line ready, and may ask $5995. Someone will come in grind down $500-$600 and we make $1300 gross. Pay the salesman a commision of $300-$400 and the dealer made $900-$1000 on the unit. If it comes back with an issue a week later then the dealer is usually left holding the bag and that profit can disappear quite quickly.
So when customers want crazy amounts for trades, because "that's what they're going for online for" we just tell them to sell it themselves. Otherwise the dealer is just going to lose money in the long run.
And i've seen it before at new franchise stores, where we'd be constantly losing new car deals to another dealership over trade values. Sure the other dealer would get the new car sale but then their used car inventory accumulates on their lot, and voila, a year later there's a massive change in management or that dealer is bought out by another auto group because they couldn't turn a profit on their used cars, and made very little on new units.
"Had I answered the question I would have said 2500.00."
Would you break that down for me?
Do you mean that the dealer principal or corporation should be 2500 ahead on each car sold ,after interest,commisions, salaries....all overhead? If not, forgive my ignorance.
This is confusing for a consumer (the last 15 posts or so). Isell says a dealer should make $2,500 profit on a $30k car. Mike says dealers give away new cars at no profit and can actually lose if they give auction value on the trade. Then I read this on an ebay car > DOCUMENTATION FEE We are required to charge ALL customers our Documentation fee of $599.50. Am I supposed to feel sorry for a dealer not making enough profit? Maybe I just don't care enough about a few thousand dollars, but if anyone that sold me a car in the last 40 years actually lost money...good. What if I trade a 2012 hoosiermobile for a dealer's 2010 zoomomobile, do I get to charge doc fees and profit because my trade is newer than his? Seems like a one way street. According to sales people, what a dealer owns is always more valuable than what I own even if they are identical. If I started with a Rolls Royce and traded at a dealer for a new car every day for a month I'd end up with a Yugo. Fair? No.
Thanks, Mike and Boom. They cleaned up my XK (which needed nothing, I had just put new sneakers, recent brakes on her) and sold it within a month. I saw the advertised price, it was actually a bit lower than I thought they'd retail it for. But, one of the reasons my trade was "low" applied to the "lower" retail price: wrong car/wrong time of year (in New England). But, other than missing the XK, I have no regrets or animosity. I'll just eat that much more of the free food the dealer offers (donuts, danishes, fruit and ice cream!!!) each time I visit until I've recouped my losses. The way I eat, that should be by this Thursday!
'21 Dark Blue/Black Audi A7 PHEV (mine); '22 White/Beige BMW X3 (hers); '20 Estoril Blue/Oyster BMW M240xi 'Vert (Ours, read: hers in 'vert weather; mine during Nor'easters...)
@genericram said:
"Had I answered the question I would have said 2500.00."
Would you break that down for me?
Do you mean that the dealer principal or corporation should be 2500 ahead on each car sold ,after interest,commisions, salaries....all overhead? If not, forgive my ignorance.
No, my 2500.00 figure was a gross number, not net.
I never wanted or expected my customers to think about overhead or how I was paid but I can tell you the monthly overhead for a modern well run dealership is staggering!
OK, Isell. 2500 gross I can see. ......and it'd be interesting to see the books at a well-run dealership. I can imagine overhead dollars flowing out in rivers. Nevertheless, $2500 NET per car would be "nice if you could get it". I'd say that a dealer is entitled to go for whatever ROI he's aiming at, but he's not going to get there if the market doesn't allow it.
A word on the "abuse" feature
It is a new feature, as michaell mentioned. It's intended to be available so that you members can quickly flag spam posts, or posts that violate our Membership Agreement. The good thing about the feature is that other people have to agree with your assessment about a post in order to have it brought to a moderator's attention. I won't mention the number, but unless a certain number of individual members flag the same post, no action is taken as a result of the flag. If we find a any member is consistently abusing the "abuse" flag, well... that's also abuse.
Let's just be decent to each other and leave personally-directed comments out of the forums. It's aggravating and not much fun to read when people are taking pot-shots at each other.
MODERATOR /ADMINISTRATOR Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name. 2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h) Review your vehicle
I'll second to what Mike saui regarding trade ins. Brining them in right is especially crucial at a place where I work, used car lot. These are cars we end up keeping anmd have to sell them and turn a profit. Unfortunately on older units things can add up pretty quickly. Brakes all around, couple gaskets, this and that can easily push recon costs into a grand or more. On a cheap car that we may bring in for $3000, we'll be in it for $4000 by the time its front line ready, and may ask $5995. Someone will come in grind down $500-$600 and we make $1300 gross. Pay the salesman a commision of $300-$400 and the dealer made $900-$1000 on the unit. If it comes back with an issue a week later then the dealer is usually left holding the bag and that profit can disappear quite quickly.
So when customers want crazy amounts for trades, because "that's what they're going for online for" we just tell them to sell it themselves. Otherwise the dealer is just going to lose money in the long run.
And i've seen it before at new franchise stores, where we'd be constantly losing new car deals to another dealership over trade values. Sure the other dealer would get the new car sale but then their used car inventory accumulates on their lot, and voila, a year later there's a massive change in management or that dealer is bought out by another auto group because they couldn't turn a profit on their used cars, and made very little on new units.
It all has to balance out in the end.
If folks come in expecting too much for their trade, could it have anything to do with the constant overwhelming promise from dealers offering $5000 over KBB - desperate for your car -- guaranteed more for your trade -- any reasonable offer accepted-- guaranteed $4000 trade in no matter what the condition-- credit for everyone. It goes on and on and it is nothing but a bunch of lies and deception. If you sales folks are disgusted with the shoppers, what do you think this bull**** does for your image ?
@abacomike said:
Unfortunately, most dealers try to "screw" the customer on a trade if they can get away with it. That's the problem - and why the customer has to research carefully to determine what a fair "auction value" is for his trade. You are rarely going to get a dealership to offer more than auction value for a trade - but they often subtract $1000 to cover themselves if the value drops prior to getting the car to the auction.
Mike, is there a way for a consumer, such as myself, to find the actual auction value of my car? I often see columns such as "Dealer Trade Value" or "Private Sale Value", but I never see "Value at Auction".
@crkyolfrt said:
In any event, since you have labelled me "vindictive, obnoxious and bitter" (in BOLD, no less) and since I do not live with my head in the sand, I can safely say I am glad I have never darkened the doors of your showroom back in the day and wouldn't today if you were to get back into the biz.
I hate to say this but your post did have a strong hint of bitterness and anger/rage in it. all abacomike was doing was simply pointing it out. When you walk into a room with a chip in your shoulder daring someone to knock it off don't be surprised when someone does. Many of the people here have worked in the auto retail business in one or more capacities and all you did with that post was post negative about their chosen profession.
My advice is chill out and me a bit more civil.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
You say $2,500 on a $30,000 car. I don't think that 10% would be an unreasonable profit. The dealer must detail the car, advertise the car, and do an amount of paper work on the car. Though I want a good deal, I do expect the dealer to make a decent profit. Otherwise, why would he be in business? I realize that this post comes from a guy who will sit in the manager's office for 6 hours grinding a deal. Still, I try to be very nice and even tell them that I want them to make a profit. I think that they do; perhaps not a big one, but I hope at least 10%.
I got a survey yesterday from a well known company asking me a few questions.
I didn't respond to the survey but one question did pique my interest.
How much profit do you think a car dealership should make on the new cars they sell?
Costco averages between 5 and 15% on the stuff they sell.
Anyone?
Well short answer is, and I have always said this, whatever the market will bear.
A longer answer would depend on how you measure profit, by percentage or dollar amount, by gross or net? And it would be different across brands and models. More for a hot car that everyone wants, less for the car that sits on lots for six months.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
"No, my 2500.00 figure was a gross number, not net.
I never wanted or expected my customers to think about overhead or how I was paid but I can tell you the monthly overhead for a modern well run dealership is staggering!"
I would agree that the average gross in dealerships like Honda, Infiniti, Volvo, Lexus, BMW, and yes, even Mercedes, is around $2500 - gross profit. The salesman usually gets 15% of the net gross profit "after pack" is deducted. Pack is the cost of sales for each car sold and is different for each dealership. I think average pack is around $500-$600 per car. That leaves $1900-$2000 net gross profit. 15% of that is $300 for the salesman. The % of gross profit goes up depending on the number of cars sold. Salesmen who sell 25 cars a month can earn 25%-28% at that level.
I just talked about front end gross profit. There is also "back end" profit which occurs if the finance manager hold back a certain percentage of his buy rate for loans on cars. If the buy rate is 1.99% and he writes the loan at 2.9%, he makes 1% of the total loan for the dealership of which he gets a commission. If he sells Road Hazard insurance or extended warranties, he gets a % commission on that profit.
So, the dealership could make additional profits that way. And don't forget the dealer fees - pure profit. That is why they can sell cars close to, at, or below invoice and still make money.
Also, as I mentioned in a previous post, the dealership has incentives which may be fully retained. Car dealerships do well because of all the ways they make money. Don't forget service and parts where they earn even more money.
However, the dealership also has heavy costs - they borrow millions of dollars on order to maintain inventory - which they pay interest on. This is called "floor plan" expenses. They also pay heavy real estate taxes because dealerships are usually built in clusters in the downtown areas or in auto malls. The dealership is built on 10-20 acres, depending on size and are considered developed land.
I hope this helps explain dealership profits, costs, and how they make money.
Sure if a dealer offers that in ads ($4k push pull drag/$5k over kbb) that's a different story and they would have to honor it but I'm sure there are stipulations involved in that (trade in value only on new cars with huge rebates, etc...). But in normal circumstances the dealer still needs to bring in a trade as cheap as possible so that they don't end up backwards on it.
@crkyolfrt said:
"How can you make an offer if you haven't even SEEN the car?" is ridiculous. A new 2014 blue Corolla with such and such an option pkg list, is a new 2014 blue Corolla with such and such an option pkg list. What's so special about the VIN on their lot?
Because the new 2014 blue Corolla with such and such an option pkg list on Joe's car store might have a dent in it where the lot boy hit it with a 2014 red Corolla with such and such an option pkg list. Or the new 2014 blue Corolla with such and such an option pkg list on Mike's car store might have been handled a little rough on a recent test drive, hitting a big pot hole at a high rate of speed and now the steering wobbles.
Sometime I will tell you about the new Honda CRV that was offered to me by a local car store at 1/3 off sticker and why I laughed at the offer.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
"If the buy rate is 1.99% and he writes the loan at 2.9%, he makes 1% of the total loan for the dealership of which he gets a commission."
I just wanted to add - if you are buying a car, check out Edmunds to see if the car you want has any special financing rates. If there are special rates from the manufacturer's finance arm, the dealer's "buy rate" is usually 1% less.
@abacomike said: POSTING HERE IS JUST NOT WORTH THE ABUSE
I guess I'm finished here - as evidenced by my receiving an ABUSE complaint. Been great knowing all of you - the emails I received from EDMUNDS tells it all.
Good luck all, see you sometime!
I really do hope you stay, the forum would be less for the loss.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
@brian125 said:
I'm not surprised by the negitive feed back i get with my buying method.
My impression of your buying method is that it seems more complicated and time consuming than it really needs to be.
Let me ask you a question... Your a sales guy or in the business. If Your the Int mgr. or the sales boss I call to speak with you. I let you know I'm looking for a immediate sale today if we could agree on a price.
Ah if I had a dime for every time someone told me on the phone that they are coming in and then didn't show I could retire.
Whats your response... You have a legit sale kissing you in the face.. I'm hoping its not ......... I'm to busy Brian or come down and we will talk.. Wrong answer you blew a sale..
That's the problem, unless you are there with a check in hand there is no "legit sale kissing anyone anyplace".
Plus I seriously doubt that any manager will take such a call, they will pass it off to someone else, especially if it is busy. They have better things to do than to do one sale.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
@genericram said:
The lion's share of the time I invest in trading cars is spent doing online research.
I like to arrive at the dealership in my well-polished trade and look up a no-nonsense internet-savvy sales person. I try to be as pleasant and appreciative as is possible while staying honest. I show him or her mine, and get shown what he or she has. I leave with an offer that is high, of course, taking no offense, and saying I'm going to do some more looking, but thank the sales person for his or her time. I say I'll get back to them, and I do, with what I feel is a low , but doable offer by email.... It's worked for me a couple of times.
Sounds like your taking an extra step in there that you really don't need to take. If you researched the car and have a doable price why do you have to play games saying you're going to do more looking then e-mail a counter offer? Why not get the deal done right there and then?
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Well, it looks like the bloviation, pontification and drama have reduced to a more tolerable level, at least for the moment.
It's interesting (in a train wreck sort of way) how just a few posts or posters can totally screw up a board and add well over a hundred posts I wish I didn't have to plow through.
Sounds like your taking an extra step in there that you really don't need to take. If you researched the car and have a doable price why do you have to play games saying you're going to do more looking then e-mail a counter offer? Why not get the deal done right there and then?
Poster -- has No clue how to close the deal while there. Alot of folks would rather deal via email or hope dealer reconsiders on price and calls down the road..
If you know what your vehicles value is// What dealers value is on that model sell- vs- auction you would know how to proceed and can close the deal right there.
@Kirstie@Edmunds said:
A word on the "abuse" feature
It is a new feature, as michaell mentioned. It's intended to be available so that you members can quickly flag spam posts, or posts that violate our Membership Agreement. The good thing about the feature is that other people have to agree with your assessment about a post in order to have it brought to a moderator's attention. I won't mention the number, but unless a certain number of individual members flag the same post, no action is taken as a result of the flag. If we find a any member is consistently abusing the "abuse" flag, well... that's also abuse.
Let's just be decent to each other and leave personally-directed comments out of the forums. It's aggravating and not much fun to read when people are taking pot-shots at each other.
Thanks for checking in and for the clarification. I never knew what that flag meant. We usually handle most of these situations by ourselves, but when help is needed, we all appreciate the fact that we happen to have Edmund's best host looking out for us. New members to this forum are important to us and we love it when a new poster joins us. What we don't like is that seldom seen (thankfully) poster who blows in with a big chip on his shoulder and starts misbehaving.
It seems that we have developed the knack of posting as if we are talking to each other face to face, and that seems to work....and that is all we expect of each other.
@isellhondas said:
I never wanted or expected my customers to think about overhead or how I was paid but I can tell you the monthly overhead for a modern well run dealership is staggering!
Just imagine the electric bill that is generated keeping the lot lighted, not to mention the interior. Insurance can be somewhat high. If you want to have some fun killing time look up property taxes for your local car stores. It's publicly available and over the internet in most places. I looked at a few places near where I worked and it ran between 55k and 70K a year. The nearby Carmax's property taxes are over 185K. That's a lot of cars to sell just to cover that, even with a $2,500 profit.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
A Buy / Trade trans action is frustrating for most buyers.. Especially vehicles you buy that cost a dime a dozen.. Everyone thinks there vehicles worth alot more than what a dealer offers.
Whats your options :
1- Sell it private- you well get better market value
2- Trade back to dealer- take the loss in principal . your vehicle trade in price will be deducted off sale of new purcahse lowering your sales tax..
3- Its one or the other so stop complaining..
Buying a new vehicle is one of the worst investments we could make.. You never recoup that money with depreciating values, bad roads , folks defacing vehicles, and bad drivers.
For most folks buying that 3 or 4 year old vehicle is the way to go .Financially.
Just imagine the electric bill that is generated keeping the lot lighted, not to mention the interior. Insurance can be somewhat high. If you want to have some fun killing time look up property taxes for your local car stores. It's publicly available and over the internet in most places. I looked at a few places near where I worked and it ran between 55k and 70K a year. The nearby Carmax's property taxes are over 185K. That's a lot of cars to sell just to cover that, even with a $2,500 profit.
Thats not my problem being the consumer. Your overhead/ operating costs are up to you to manage/ operate.
@genericram said:
OK, Isell. 2500 gross I can see. ......and it'd be interesting to see the books at a well-run dealership. I can imagine overhead dollars flowing out in rivers.
I have seen the books and it is amazing at the dollar volumes you would see. Do the math, with an average new car price of just over $30K a medium volume dealership might have monthly sales up around, or exceeding, $10 million. And almost as much goes right out the door.
There are some real interesting things going on there too that few know about.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
@sterlingdog said:
You say $2,500 on a $30,000 car. I don't think that 10% would be an unreasonable profit. The dealer must detail the car, advertise the car, and do an amount of paper work on the car.
ISell said a $2,500 gross profit. Gross profit is sales price less the Cost Of Goods Sold (COGS). COGS is any costs incurred to get the product into sellable condition. So the costs of detailing the car and any mechanical work done when the car arrives in order to sell it is included in the COGS. So the $2,500 gross profit would be after things such as detailing the car are taken into account.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Here's a surprising statistic: The average price of a new vehicle in the U.S. is $32,086.
A rule of thumb that says too many people are spending too much on their cars. If you apply
Interest.com's rule "20/4/10" to determine how much a household can afford to spend on a new vehicle.
That rule works like this: A down payment of at least 20%, financing lasting no more than four years, and total cost -- principal, interest, and insurance -- adding up to no more than 10% of a household's gross income. Alot of people should be driving.... Corolla's
"Thats not my problem being the consumer. Your overhead/ operating costs are up to you to manage/ operate."
No, that is not the consumer's problem, you are correct. But because of many dealers inability to turn a sufficient profit, they have been sold to large conglamorates like AutoNation or have just closed their doors
I am sensitive to the need for business to make a reasonable return on their investment. Just because I buy at ridiculously low prices doesn't mean I am a hypocrit. My dealer receives a rebate from MBUSA for my USAA and MBCA certificates - so the dealer gets his money back for those because they are fleet discounts.
He usually sells my trades for a quick $2000 profit. So he is still making a profit, but I am paying below invoice thanks to those discounts.
We can't be cynical about dealerships making a profit. If they can't, they go out of business and that does concern all of us - it's the basis of our capitalistic society .
I was just flabbergasted that he would send notification to Edmunds that I was an abusive individual. He said "maybe I did, maybe I didn't". I would never do that to anyone.
Even he admitted his post was over the top, but that was after he sent the notification.
I am quite upset, to say the least.
Hey, I looked up his profile and he has 8 abuse flags. You win by 7.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
@snakeweasel said:
ISell said a $2,500 gross profit. Gross profit is sales price less the Cost Of Goods Sold (COGS). COGS is any costs incurred to get the product into sellable condition. So the costs of detailing the car and any mechanical work done when the car arrives in order to sell it is included in the COGS. So the $2,500 gross profit would be after things such as detailing the car are taken into account.
Thanks. That does put a new perspective on quoted profits.
I understand what your saying.. but for God sakes.... Do we really need dealerships with marble floors and structures looking like the.................. Taj -mahal
I'm very excited for tonight's NCAA Championship Game. Since I'm a CT resident, I can root for UCONN. As a Yankees fan (who attended opening day at The Stadium with my 7 1/2 year old son), if UK wins it is good for me too. I think every year UK has won a title since 1960 something, the Yankees win the World Series;)
2001 Prelude Type SH, 2022 Highlander XLE AWD, 2025 Camry SE AWD
Comments
I would suggest that you go over to the Edmunds Forums discussion and suggest that we rename the abuse button to something less negative. I like the idea of "thumbs down" but don't want to trample on some other software's right to the term.
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Oh, I agree with you but I am curious.
The question was, on a 30,000 car, how much profit do you think a dealer should make?
Had I answered the question I would have said 2500.00.
I'm sure there are people here who would disagree.
There is a simple way to express displeasure without an abuse (flag) button. Quote the comment, and reply with your opinion.
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
I think that could be easily dealt with without legal ramifications by simply using an icon of a thumb pointed down, as opposed to it written out. The symbol only, would be the desirable icon either way. Surely a thumb pointed down has no copy write protection? Although who knows...you could be right, Michael.
How about a "Humphff" button then? I doubt anyone has secured that one yet. Although there may be some who wouldn't know what it meant. Anyway, one thing Ia m absolutely certain of...Abuse (being on its own) is not a good idea for Edmunds or its members at all.
I don't know, I've never had a real issue in buying a car. I don't buy one every week, but when I do, I do my research and buy what I want at what I hope to be a fair price. If it wasn't, the dealer more than likely wouldn't have sold it to me. They are getting SOMETHING out of the deal... I work with one dealer until it becomes apparent it just isn't going to work out (or I buy!). If it doesn't work out, I feel bad, we've both invested some time, but if they let me walk, then we must be in agreement. Then on to the next, I don't really "play" dealers against each other.
I have had some salesfolks who are less knowledgeable than me about their products ("Sorry, Laurasdada. It is impossible to have a turbocharged engine mated to a manual transmission." Really.), several times I've been offered (perhaps facetiously?) jobs at the dealer after buying a car!
I like what my recent salesman said as I'm buying my current ride this past New Year's Eve, "Laurasdada, at this time of the year, it's not so much about making a lot of profit on each car. It's about moving inventory." I got what I consider to be an outstanding deal on the purchase price, but I do believe they did get a good deal on my trade. But when I factor in the sales tax savings and time spent to sell privately....Ok, they still got a good deal on my trade!
'21 Dark Blue/Black Audi A7 PHEV (mine); '22 White/Beige BMW X3 (hers); '20 Estoril Blue/Oyster BMW M240xi 'Vert (Ours, read: hers in 'vert weather; mine during Nor'easters...)
Why in every restaurant you see there are signs saying employees must wash hands before going back to work yet in hospitals there aren't?
Because in most hospitals, dental offices, and doctor offices the hands are sanitized in front of every patient as the provider enters the room. Only exception was the data check nurse who asks prescriptions I'm on and takes blood pressure and asks what problems are you having if any on my visit last week at my urologist.
I recall when I had major surgery 13 years ago and there was a sink along with the squirt containers of sanitizer hanging on the wall. Doctors and all sometimes used both. The reality is that they understand passing germs and staph. I recall my doctor saying he wanted to get me out of the hospital as fast as possible because people can get sick in there, meaning they can get contaminated wounds, and this was before the major flesh-eating staph publicity.
People in restaurants scratch themselves and serve an entree salad holding the edge of the bowl with the same fingers and the fingers/thumb get into the lettuce. My wife watches as food is coming. She often rejects food. Same for water glasses held by the rim. People in restaurants are very careless about washing. Take a look at the doorknobs on the restrooms that workers use to open the door as they leave the rest room even if they did wash their hands.
2014 Malibu 2LT, 2015 Cruze 2LT,
There is one thing a dealer just can't stand - and that's to lose money on the resale or wholesaling of a trade! Let me explain:
All dealers (with the exception of the very high end dealership like Rolls, Bentley, Porsche, etc.) often "give away new cars" at invoice or even well below invoice at certain times of the year in order to meet sales objectives or maintain their lead as the number 1 dealer for that brand in their area, or state, and especially if they are number 1 in the country. I know because I worked at 2 dealerships that were the National Leaders for their brand. There are so many special dealer incentives for this and that, in the end, they really don't lose much, if anything.
But the trade is the one area of a sale that can make or break it for the dealership. That is why there is such a huge turnover of used car managers at dealerships - almost as big a turnover as there is for sales people. Let's assume the appraiser places a cash value on a trade of $17,500 - and let's assume it's a 5 year old Mercedes or Lexus on the higher end of the line. They did their homework - checked out CARFAX, examined the vehicle from front to back, etc. They looked up Manheim (auctions) and used their NADA Black Book, and felt the value of the trade was on target - no problem getting that at the auction. Two weeks later, title comes in and one week after that, the car is on the truck headed for the auction.
At the auction, the car goes through and the highest bid on the car is $15,650. The used car manager feels that the most he could get on the lot for the car is $18,500, so he decides to bring the car back to the dealership, It now has to go through a safety inspection - and the mechanics will always find a safety issue with a 5 year old car (brakes, radiator, hoses, power steering, or whatever). So now another $1000 is poured into the car to bring the car up to safety standards for sale on his lot. The car sits on the lot for 60 days - no sale. He lowers the price on the car to $16,500, no sale. He takes the car back to the auction and he gets $14,500 - a loss $4000 on the trade if you include transportation, repairs, interest being paid, etc.
This doesn't happen every day, but I was in the business long enough to know that it happens a few times a month - it may not be $4000, but it could be $2000, etc. So, now you understand why a dealership has be be very careful about putting a cash value on a trade-in.
Unfortunately, most dealers try to "screw" the customer on a trade if they can get away with it. That's the problem - and why the customer has to research carefully to determine what a fair "auction value" is for his trade. You are rarely going to get a dealership to offer more than auction value for a trade - but they often subtract $1000 to cover themselves if the value drops prior to getting the car to the auction.
2024 Genesis G90 Super-Charger
The PM is a little odd to use, I found.
2014 Malibu 2LT, 2015 Cruze 2LT,
I never thought to use a dash cam to check on a mechanic's honesty. But someone else did:
jalopnik.com/dealership-sues-long-time-customer-for-25-000-over-das-1557675732
@abacomike
I'll second to what Mike saui regarding trade ins. Brining them in right is especially crucial at a place where I work, used car lot. These are cars we end up keeping anmd have to sell them and turn a profit. Unfortunately on older units things can add up pretty quickly. Brakes all around, couple gaskets, this and that can easily push recon costs into a grand or more. On a cheap car that we may bring in for $3000, we'll be in it for $4000 by the time its front line ready, and may ask $5995. Someone will come in grind down $500-$600 and we make $1300 gross. Pay the salesman a commision of $300-$400 and the dealer made $900-$1000 on the unit. If it comes back with an issue a week later then the dealer is usually left holding the bag and that profit can disappear quite quickly.
So when customers want crazy amounts for trades, because "that's what they're going for online for" we just tell them to sell it themselves. Otherwise the dealer is just going to lose money in the long run.
And i've seen it before at new franchise stores, where we'd be constantly losing new car deals to another dealership over trade values. Sure the other dealer would get the new car sale but then their used car inventory accumulates on their lot, and voila, a year later there's a massive change in management or that dealer is bought out by another auto group because they couldn't turn a profit on their used cars, and made very little on new units.
It all has to balance out in the end.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
"Had I answered the question I would have said 2500.00."
Would you break that down for me?
Do you mean that the dealer principal or corporation should be 2500 ahead on each car sold ,after interest,commisions, salaries....all overhead? If not, forgive my ignorance.
This is confusing for a consumer (the last 15 posts or so). Isell says a dealer should make $2,500 profit on a $30k car. Mike says dealers give away new cars at no profit and can actually lose if they give auction value on the trade. Then I read this on an ebay car > DOCUMENTATION FEE We are required to charge ALL customers our Documentation fee of $599.50. Am I supposed to feel sorry for a dealer not making enough profit? Maybe I just don't care enough about a few thousand dollars, but if anyone that sold me a car in the last 40 years actually lost money...good. What if I trade a 2012 hoosiermobile for a dealer's 2010 zoomomobile, do I get to charge doc fees and profit because my trade is newer than his? Seems like a one way street. According to sales people, what a dealer owns is always more valuable than what I own even if they are identical. If I started with a Rolls Royce and traded at a dealer for a new car every day for a month I'd end up with a Yugo. Fair? No.
2013 Mustang GT, 2001 GMC Yukon Denali
Thanks, Mike and Boom. They cleaned up my XK (which needed nothing, I had just put new sneakers, recent brakes on her) and sold it within a month. I saw the advertised price, it was actually a bit lower than I thought they'd retail it for. But, one of the reasons my trade was "low" applied to the "lower" retail price: wrong car/wrong time of year (in New England). But, other than missing the XK, I have no regrets or animosity. I'll just eat that much more of the free food the dealer offers (donuts, danishes, fruit and ice cream!!!) each time I visit until I've recouped my losses. The way I eat, that should be by this Thursday!
'21 Dark Blue/Black Audi A7 PHEV (mine); '22 White/Beige BMW X3 (hers); '20 Estoril Blue/Oyster BMW M240xi 'Vert (Ours, read: hers in 'vert weather; mine during Nor'easters...)
No, my 2500.00 figure was a gross number, not net.
I never wanted or expected my customers to think about overhead or how I was paid but I can tell you the monthly overhead for a modern well run dealership is staggering!
OK, Isell. 2500 gross I can see. ......and it'd be interesting to see the books at a well-run dealership. I can imagine overhead dollars flowing out in rivers. Nevertheless, $2500 NET per car would be "nice if you could get it". I'd say that a dealer is entitled to go for whatever ROI he's aiming at, but he's not going to get there if the market doesn't allow it.
A word on the "abuse" feature
It is a new feature, as michaell mentioned. It's intended to be available so that you members can quickly flag spam posts, or posts that violate our Membership Agreement. The good thing about the feature is that other people have to agree with your assessment about a post in order to have it brought to a moderator's attention. I won't mention the number, but unless a certain number of individual members flag the same post, no action is taken as a result of the flag. If we find a any member is consistently abusing the "abuse" flag, well... that's also abuse.
Let's just be decent to each other and leave personally-directed comments out of the forums. It's aggravating and not much fun to read when people are taking pot-shots at each other.
MODERATOR /ADMINISTRATOR
Find me at kirstie_h@edmunds.com - or send a private message by clicking on my name.
2015 Kia Soul, 2021 Subaru Forester (kirstie_h), 2024 GMC Sierra 1500 (mr. kirstie_h)
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If folks come in expecting too much for their trade, could it have anything to do with the constant overwhelming promise from dealers offering $5000 over KBB - desperate for your car -- guaranteed more for your trade -- any reasonable offer accepted-- guaranteed $4000 trade in no matter what the condition-- credit for everyone. It goes on and on and it is nothing but a bunch of lies and deception. If you sales folks are disgusted with the shoppers, what do you think this bull**** does for your image ?
Mike, is there a way for a consumer, such as myself, to find the actual auction value of my car? I often see columns such as "Dealer Trade Value" or "Private Sale Value", but I never see "Value at Auction".
Richard
I hate to say this but your post did have a strong hint of bitterness and anger/rage in it. all abacomike was doing was simply pointing it out. When you walk into a room with a chip in your shoulder daring someone to knock it off don't be surprised when someone does. Many of the people here have worked in the auto retail business in one or more capacities and all you did with that post was post negative about their chosen profession.
My advice is chill out and me a bit more civil.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
You say $2,500 on a $30,000 car. I don't think that 10% would be an unreasonable profit. The dealer must detail the car, advertise the car, and do an amount of paper work on the car. Though I want a good deal, I do expect the dealer to make a decent profit. Otherwise, why would he be in business? I realize that this post comes from a guy who will sit in the manager's office for 6 hours grinding a deal. Still, I try to be very nice and even tell them that I want them to make a profit. I think that they do; perhaps not a big one, but I hope at least 10%.
Richard
Well short answer is, and I have always said this, whatever the market will bear.
A longer answer would depend on how you measure profit, by percentage or dollar amount, by gross or net? And it would be different across brands and models. More for a hot car that everyone wants, less for the car that sits on lots for six months.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
"No, my 2500.00 figure was a gross number, not net.
I never wanted or expected my customers to think about overhead or how I was paid but I can tell you the monthly overhead for a modern well run dealership is staggering!"
I would agree that the average gross in dealerships like Honda, Infiniti, Volvo, Lexus, BMW, and yes, even Mercedes, is around $2500 - gross profit. The salesman usually gets 15% of the net gross profit "after pack" is deducted. Pack is the cost of sales for each car sold and is different for each dealership. I think average pack is around $500-$600 per car. That leaves $1900-$2000 net gross profit. 15% of that is $300 for the salesman. The % of gross profit goes up depending on the number of cars sold. Salesmen who sell 25 cars a month can earn 25%-28% at that level.
I just talked about front end gross profit. There is also "back end" profit which occurs if the finance manager hold back a certain percentage of his buy rate for loans on cars. If the buy rate is 1.99% and he writes the loan at 2.9%, he makes 1% of the total loan for the dealership of which he gets a commission. If he sells Road Hazard insurance or extended warranties, he gets a % commission on that profit.
So, the dealership could make additional profits that way. And don't forget the dealer fees - pure profit. That is why they can sell cars close to, at, or below invoice and still make money.
Also, as I mentioned in a previous post, the dealership has incentives which may be fully retained. Car dealerships do well because of all the ways they make money. Don't forget service and parts where they earn even more money.
However, the dealership also has heavy costs - they borrow millions of dollars on order to maintain inventory - which they pay interest on. This is called "floor plan" expenses. They also pay heavy real estate taxes because dealerships are usually built in clusters in the downtown areas or in auto malls. The dealership is built on 10-20 acres, depending on size and are considered developed land.
I hope this helps explain dealership profits, costs, and how they make money.
2024 Genesis G90 Super-Charger
@jayrider
Sure if a dealer offers that in ads ($4k push pull drag/$5k over kbb) that's a different story and they would have to honor it but I'm sure there are stipulations involved in that (trade in value only on new cars with huge rebates, etc...). But in normal circumstances the dealer still needs to bring in a trade as cheap as possible so that they don't end up backwards on it.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
Because the new 2014 blue Corolla with such and such an option pkg list on Joe's car store might have a dent in it where the lot boy hit it with a 2014 red Corolla with such and such an option pkg list. Or the new 2014 blue Corolla with such and such an option pkg list on Mike's car store might have been handled a little rough on a recent test drive, hitting a big pot hole at a high rate of speed and now the steering wobbles.
Sometime I will tell you about the new Honda CRV that was offered to me by a local car store at 1/3 off sticker and why I laughed at the offer.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
"If the buy rate is 1.99% and he writes the loan at 2.9%, he makes 1% of the total loan for the dealership of which he gets a commission."
I just wanted to add - if you are buying a car, check out Edmunds to see if the car you want has any special financing rates. If there are special rates from the manufacturer's finance arm, the dealer's "buy rate" is usually 1% less.
2024 Genesis G90 Super-Charger
I really do hope you stay, the forum would be less for the loss.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
My impression of your buying method is that it seems more complicated and time consuming than it really needs to be.
Ah if I had a dime for every time someone told me on the phone that they are coming in and then didn't show I could retire.
That's the problem, unless you are there with a check in hand there is no "legit sale kissing anyone anyplace".
Plus I seriously doubt that any manager will take such a call, they will pass it off to someone else, especially if it is busy. They have better things to do than to do one sale.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Sounds like your taking an extra step in there that you really don't need to take. If you researched the car and have a doable price why do you have to play games saying you're going to do more looking then e-mail a counter offer? Why not get the deal done right there and then?
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
"I really do hope you stay, the forum would be less for the loss."
Thanks, snake, but sometimes I forget who I am dealing with at times. The venom takes it's toll.
2024 Genesis G90 Super-Charger
Snake, are you in the car biz as well?
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
Well, it looks like the bloviation, pontification and drama have reduced to a more tolerable level, at least for the moment.
It's interesting (in a train wreck sort of way) how just a few posts or posters can totally screw up a board and add well over a hundred posts I wish I didn't have to plow through.
Here's to better times.
Sounds like your taking an extra step in there that you really don't need to take. If you researched the car and have a doable price why do you have to play games saying you're going to do more looking then e-mail a counter offer? Why not get the deal done right there and then?
Poster -- has No clue how to close the deal while there. Alot of folks would rather deal via email or hope dealer reconsiders on price and calls down the road..
If you know what your vehicles value is// What dealers value is on that model sell- vs- auction you would know how to proceed and can close the deal right there.
23 Telluride SX-P X-Line, 23 Camry XSE
Thanks for checking in and for the clarification. I never knew what that flag meant. We usually handle most of these situations by ourselves, but when help is needed, we all appreciate the fact that we happen to have Edmund's best host looking out for us. New members to this forum are important to us and we love it when a new poster joins us. What we don't like is that seldom seen (thankfully) poster who blows in with a big chip on his shoulder and starts misbehaving.
It seems that we have developed the knack of posting as if we are talking to each other face to face, and that seems to work....and that is all we expect of each other.
2013 LX 570 2016 LS 460
Just imagine the electric bill that is generated keeping the lot lighted, not to mention the interior. Insurance can be somewhat high. If you want to have some fun killing time look up property taxes for your local car stores. It's publicly available and over the internet in most places. I looked at a few places near where I worked and it ran between 55k and 70K a year. The nearby Carmax's property taxes are over 185K. That's a lot of cars to sell just to cover that, even with a $2,500 profit.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
A Buy / Trade trans action is frustrating for most buyers.. Especially vehicles you buy that cost a dime a dozen.. Everyone thinks there vehicles worth alot more than what a dealer offers.
Whats your options :
1- Sell it private- you well get better market value
2- Trade back to dealer- take the loss in principal . your vehicle trade in price will be deducted off sale of new purcahse lowering your sales tax..
3- Its one or the other so stop complaining..
Buying a new vehicle is one of the worst investments we could make.. You never recoup that money with depreciating values, bad roads , folks defacing vehicles, and bad drivers.
For most folks buying that 3 or 4 year old vehicle is the way to go .Financially.
23 Telluride SX-P X-Line, 23 Camry XSE
Snakeweasle said;
Just imagine the electric bill that is generated keeping the lot lighted, not to mention the interior. Insurance can be somewhat high. If you want to have some fun killing time look up property taxes for your local car stores. It's publicly available and over the internet in most places. I looked at a few places near where I worked and it ran between 55k and 70K a year. The nearby Carmax's property taxes are over 185K. That's a lot of cars to sell just to cover that, even with a $2,500 profit.
Thats not my problem being the consumer. Your overhead/ operating costs are up to you to manage/ operate.
23 Telluride SX-P X-Line, 23 Camry XSE
I have seen the books and it is amazing at the dollar volumes you would see. Do the math, with an average new car price of just over $30K a medium volume dealership might have monthly sales up around, or exceeding, $10 million. And almost as much goes right out the door.
There are some real interesting things going on there too that few know about.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
ISell said a $2,500 gross profit. Gross profit is sales price less the Cost Of Goods Sold (COGS). COGS is any costs incurred to get the product into sellable condition. So the costs of detailing the car and any mechanical work done when the car arrives in order to sell it is included in the COGS. So the $2,500 gross profit would be after things such as detailing the car are taken into account.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I have to ask what brought up that question?
I have been in sales.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Here's a surprising statistic: The average price of a new vehicle in the U.S. is $32,086.
A rule of thumb that says too many people are spending too much on their cars. If you apply
Interest.com's rule "20/4/10" to determine how much a household can afford to spend on a new vehicle.
That rule works like this: A down payment of at least 20%, financing lasting no more than four years, and total cost -- principal, interest, and insurance -- adding up to no more than 10% of a household's gross income. Alot of people should be driving.... Corolla's
23 Telluride SX-P X-Line, 23 Camry XSE
I never said it was now did I?
I was just commenting on another posters comment, expanding on what that poster said. That is all.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Glad you agree with me tonight
23 Telluride SX-P X-Line, 23 Camry XSE
"Thats not my problem being the consumer. Your overhead/ operating costs are up to you to manage/ operate."
No, that is not the consumer's problem, you are correct. But because of many dealers inability to turn a sufficient profit, they have been sold to large conglamorates like AutoNation or have just closed their doors
I am sensitive to the need for business to make a reasonable return on their investment. Just because I buy at ridiculously low prices doesn't mean I am a hypocrit. My dealer receives a rebate from MBUSA for my USAA and MBCA certificates - so the dealer gets his money back for those because they are fleet discounts.
He usually sells my trades for a quick $2000 profit. So he is still making a profit, but I am paying below invoice thanks to those discounts.
We can't be cynical about dealerships making a profit. If they can't, they go out of business and that does concern all of us - it's the basis of our capitalistic society .
2024 Genesis G90 Super-Charger
Soooooooooo well said!
Richard
Richard
Biting my tongue.
Abacomike said:
Hey, I looked up his profile and he has 8 abuse flags. You win by 7.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
Thanks. That does put a new perspective on quoted profits.
Richard
Sure no doubt there.
abaco mike
I understand what your saying.. but for God sakes.... Do we really need dealerships with marble floors and structures looking like the.................. Taj -mahal
23 Telluride SX-P X-Line, 23 Camry XSE
I'm very excited for tonight's NCAA Championship Game. Since I'm a CT resident, I can root for UCONN. As a Yankees fan (who attended opening day at The Stadium with my 7 1/2 year old son), if UK wins it is good for me too. I think every year UK has won a title since 1960 something, the Yankees win the World Series;)
2001 Prelude Type SH, 2022 Highlander XLE AWD, 2025 Camry SE AWD