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Comments
How about some enlightenment then? How much profit on jmonroe's Sonata is fair?
I know some of the high end stores can average more than twice that.
I don't worry about the dealers profit any more then he worries about my take home pay.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
You talking about Pyatt's fiance? Or the non stop daily gang shootings we have here?
Just to stay on topic...
Last week I reported about the email guy who hung up on me.
Well now we're in the middle of an email war of the words. Whenever customer don't get thier way they like to point out how us dealers are "begging" to the government for bailout money. :confuse: Ummm dealers? Bailout? If you're going to make a point and try to make me feel bad, at least get your facts straight so you don't end up embarassing yourself.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
BTW, 2 grand on 20K car is a 10% gross margin. I think there are tons of retail establishments that would kill for that. Now let's put 2 grand on a nice $8K used car and you get 25% gross margin.
I think it's totally unrealistic to expect those margings with such market saturation. Rover may despise guys who think he should lay down for he is desperate, but I must say - until the market thins itself out and adjusts to lower volumes (read - many more dealers go bust), you will face more and more people thinking just that.
2018 430i Gran Coupe
A Corolla?
Pay money to ride in the back seat of a Corolla?
That is exactly how I feel when I buy something. I don't care how much profit a store made.
With others, it's an obsession to make sure a store makes as little profit as possible. I'll never understand this!
Just a guess from the sidelines.
I think profit has to be based on percentage. With most items the higher the cost, the more profit. Probably about 10% gross profit is a minimum, with 15% at the higher end. So on a $10,000 car the gross profit is $1000. Take out commissions and overhead and you might end up with a %5 profit of $500. Of course some cars will average lower or might be a loss, but 5% net profit isn't that great for having that much money invested.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
Boom, just please don't phone him.
Funny, that as mad as he was, he's back again.
We had a sale at our book warehouse open to the public for the weekend. Most people are nice, but there is a few. One lady said she wanted a series of kid's books $3 each and she would buy the set of 12 = $36. I said I would take off 20% to make it $30 (they're already wholesale prices). So, she wanted to know if that was the best I would do. Yeh, I think so...not much point in selling at a loss. So she decided to take 4 books but still wanted 20% off :sick:
Glad we only have sales to the public a few times a year....at least retail customers know the rules.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
It's not really about how little profit you'll make - I don't really care. It's about how little I could pay and still get what I want (just as much as for you it is how much you could get and still sell how many you need/want). If I had to pay more, I would, but why should I if I don't need to? If there are five other guys within 50 mile radius ready to sell me the same/similar machine for less, why should I lay down and pay up whatever they dreamed up as "fair profit"? My clients don't pay me for everything, either and I take it because there is competition.
You want me to pay more - close down three other stores. It really is that simple.
2018 430i Gran Coupe
We've gone down this road before. But, if I can know how much a dealer paid for a car, this can only help me in negotiations. If the auction value of Car X is $10k for a dealer trade-in, and the dealership bought it for only $8,500, then that would be a pretty big bargaining chip I could use. You say the car is still worth $10k, but if it has been sitting on the lot for a couple weeks, and I show up with a brown paper bag full of cash, then maybe you take $9.5k
it's an obsession to make sure a store makes as little profit as possible
Well, maybe not an obsession, but it does seem that would be a reasonable goal for the buyer... to let the dealership make as little profit as possible. The dealerships goal is go make as much profit as possible, only seems fair.
I'd forgotten about sending you a link. Let us know what happens when it shows up. May take weeks if they have a loan to be processed on the car and title. There's always the possibility it went "home" to Pa and won't be titled in Oh.
2014 Malibu 2LT, 2015 Cruze 2LT,
I've made that trip twice. Once in a busload of drunken wedding guests at night with beer flowing down the isles and getting my feet wet. The second time was during daylight on the way back to Miami. I much preferred the second trip as you could stop and take in the sights.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
Socialism- A type of government where everyone is equally miserable.
2013 LX 570 2016 LS 460
BTW, I somehow missed the used car part. Thought more on new cars. Used cars will trade with higher margins and it is totally understandable. There is much higher risk involved, which has to result in higher margins. For those 15%+ average gross seems to be "fair" (if we insist on "fair profit" concept) in normal times. I'm pretty sure today the old playbook may not fly, though. Until the field gets thinned out, lower profits may be necessary. Just like with everything else.
2018 430i Gran Coupe
That wasn't the point on if it was my business. The point was, if I have a choice of knowing or not knowing what a dealership paid for a car they are selling, I would want to know, as I believe it may be benefical in reducing the amount I paid for said car.
10%
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
I think a fair profit is determined simply by what a willing buyer agrees to pay. Nothing more, nothing less.
tidester, host
SUVs and Smart Shopper
tidester, host
SUVs and Smart Shopper
Corollas are pretty common as taxis here. I've seen a few Civics too.
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
Try driving the length (north to south) of Alaska, its almost 900 miles and would take 25-30 hours of driving (and not for the faint of heart).
Coming back from Alaska we turned off the Alaskan highway and headed straight south through BC and I think we drove for four days before we left BC and entered Washington state. Again not a drive for the faint of heart.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Wilson Pickett?
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
2016 Audi A7 3.0T S Line, 2021 Subaru WRX
With distortions present (such as regulations, monopolies, excessive labor costs, etc.) marketplace-based profit is usually not a fair one - it becomes either way too large (think pharmaceuticals and insurance) or way too small (airlines, domestic autos) -yet the companies/customers may endure and sustain those conditions for long, long time - mostly because they feel they have no choice. Usually a long-term deterioration of fundamentals ends is some kind of collapse or revolutionary change.
2018 430i Gran Coupe
To me, that go's WAY beyond rude. Then there are the people who don't ask but I can tell they are really bothered because they don't know. I love that!
And there are times we do show them. We may have an "old age" unit that's been here for 90 days that we are trying to move. Sometimes if someone makes an unacceptable offer, we will actually show them the sheet that shows what we have " in it".
But, it really isn't anyone business to know what a merchant paid for his product.
It's either a good value to the buyer or it's not.
2018 430i Gran Coupe
If I had given the dealer 10% profit on my new car last year I would have been paying over MSRP!!! :sick: :surprise:
From my perspective, the new car profit is not only on the car but also on the long term servicing. There is little risk of getting stuck with a car that just won't sell that you send off to the auction at a loss. On used cars there needs to be a greater margin as the risks on picking up something that has a problem or that just happens to sit is much higher. And just like lenders, the greater the risk, the greater the 'spread' (between buy & sell) is required.
All that said, I suspect LR was asking for either a fixed number or a percentage that we the consumers consider 'fair profit', not what we want or are willing to pay. To that I'll chime in at $750-$1000 on the front end for new, and about 15-20% on used.
The new car profit also includes the profit (or loss) on the tradein. If the store gets the tradein at a low cost, they may make more on it than on the original new vehicle.
How many times does a store trade down before the last tradein goes to the junkyard or the low end buyers/lots?
2014 Malibu 2LT, 2015 Cruze 2LT,
Now if you get a bunch of hybrid gearheads together and get them talking about which hybrid system is better HSD vs. IMA vs. ??? then you better beready to duck and run :P
While you don’t want that information to be our business it would be a great piece of information for us to have and it is a closely guarded secret. It would make us more informed as a buyer and that can only be good for us. Not so good for you guys in the biz though. How many times have we heard on these forums that the guys in the biz like to deal with informed buyers because it makes their job easier? So why do you want an uninformed buyer? That was a rhetorical question, I know the answer.
The state of Ohio is helping you guys by not showing the price you paid to the seller at trade in time. I don’t know about the other states but it’s probably the same. Like I said in earlier posts, the dealer that took my Sonata in on trade gave me $9,600. While the Ohio web site showed this dealer as the owner of this car at the time they sold it as used, they did not show the price they paid me for the car. If a buyer were armed with that information they could drive a more logical argument at the negotiating table without the need for divulging that they had this information. On the other hand if the dealer felt they could get more by waiting for a less informed buyer they would and I understand that.
It will be a very sad day for dealerships if prices paid for cars traded in on new cars are as readily and reliably known and shown on the internet as they are now for new cars. I’m sure the dealership lobbies in all states are hard at work to prevent this and I understand that too.
It all boils down to the fact that sellers want to make as much as they can and buyers want to pay as little as they can. The free enterprise system allows for that to happen and I wouldn’t want to be in any other type of system.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
---No, it wouldn't be a sad day. Because suddenly we would see new lines under that DOC fee for Reconditioning Fee and even Service Shop Fee. In the end, same profit for fee and another :45 minutes at the dealer dickering over 2 new fees!!!
Yes and no. You can think of it as 1 blended transaction or 2 seperate transactions, 1 is the sale of the new car and one is the purchase of the used car. When asked for an OTD price the dealer will combine the transaction on paper, but I would guess that the SM is very aware of being able to show a profit on both sales.
While you don’t want that information to be our business it would be a great piece of information for us to have and it
I don't think it is the customers right to know the price paid. Do you know what Best Buy pays for a TV set? Do you know the cost price for furniture?
Then there are added costs. Fixing up the trade in, advertising, commissions, overhead, etc.,......should this all be listed?
I am just a consumer and I don't think the dealer has to disclose the price to the consumer. The consumer can do some homework and see if the listed price seems fair.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
Along with quite a few others. Just put that phone# in and search on youtube. Some great old videos.
Now to stay on topic, how about BR549 ?
2013 LX 570 2016 LS 460
2013 LX 570 2016 LS 460
This triggered a question I've had for a while. I see some of the sales guys come here and vent every once in a while when they have a bad customer, but I have to wonder what is the breakdown of transactions for most of you. 10% baby seals, 80% easy going few hunderd off msrp etc, 10% grinders???
Since I started another heated discussion with a mere curios question I’ll have to finish this saga when I get the information that I’m looking for. I think the only way to keep peace around here is for me to stop asking questions. I know one thing for sure, I ain’t never going to call a dealership with a question if I’m not going to buy from them since an “up call” is nothing to mess with.
There's always the possibility it went "home" to Pa and won't be titled in Oh.
If the sale of the used car is like it was for the new car I bought, that information will be available on the Ohio web site you provided to me. As I said in a previous post, that although I live in PA, when I entered the VIN for the new car it showed Owner as “Private Owner” and it showed the correct price I paid.
Yes, I think I have to finish this once and for all. I owe it to the posters here; both the biz guys and the common folk.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
I got $9,500 for my trade (TMV as a trade was $9k). They sold it for $11K yielding a profit of $1,500. I thought that was fair, but I don't know the hidden costs---advertising, conditioning to put it on the lot, salesman's cut of the deal, paper work, etc. I would think that a minimum net of $1k would be needed to make the deal worth it. How else can a dealership keep its doors open---lights, heat/air, insurance, product overhead, clerical salaries, etc.? It isn't quite fair for a customer to say that they don't care if you make a profit. If the customer wants you there to service their car in the future, then they had better hope that you make a profit on your sales.
As for the new purchase, why do I care what the dealer paid? Edmunds and other sources will tell me what the car is worth. After my research, it is my job to find a dealer who will give it to me for what I am willing and able to pay. If I don't like the offer, I'll walk. If the dealer doesn't like my offer, he can walk me to the door. It's called business, free enterprise, competition, capitalism, etc. It is the best thing going---until, heaven forbid, some individual or group changes it. It then won't matter at that point. We'll be buying the car for our neighbor down the street. That would not be a good "change".
Richard