Any Questions for a Car Dealer?

zueslewis · February 2003

so why the need to be condescending and feel "superior" - your word?

landru2 · February 2003

What do realtors have to do with this thread's topic anyway?

mfullmer · February 2003

Definition:

Condescending: n 1: the trait of displaying arrogance by patronizing those considered inferior.

Why is it anytime someone is diligent and loyal to the facts as they know them, there is always someone who feels they are being condescending?

I, in no way, consider you inferior. On the contrary, you are sitting here, hashing out an issue just as I am.

I believe you to be wrong about an issue. I have no doubt that on myriad other issues, the tables would be turned.

We are here to learn, teach and to be heard.

I felt no need to feel "superior". The need to feel and the act of feeling are two different things. One is a voluntary emotional need. The other is an involuntary emotional response.

mfullmer · February 2003

You have to read back many, many posts.

I'm not sure how it all got started but lets just say they were compared to each other as being the same. Some felt different.

Then we got onto the whole "Who owns the vehicle after the Manufacturer sells it to the Dealer" issue.

Any insights would be welcome and appreciated.

I mean, what better of a question to ask a dealer? Who owns the vehicle?

landru2 · February 2003

the vehicle. Whether the dealership pays cash (yes, some do pay cash) or floor plans them, they are still owned by the dealership.

Just because someone hasn't completely paid for a vehicle doesn't change the fact that they are still the owner. Now, of course, if for some reason they don't finish paying for it, the lien holder will become the owner.

zueslewis · February 2003

Just quoting you, that's all: "Good Grief. Now I am feeling a bit superior."

I'm done here - see ya! Need a break from all this superiority.

stickguy · February 2003

So, North East area car dealers, many buyers show up today with all the snow?

See, an on-topic post.

zueslewis · February 2003

back to the Chrysler dealer for a few "we owe" items and the guys were working hard to clear the lot. Several dealerships remained closed. A whole lot different from my Wyoming experience - we always jumped in like a SWAT team and got the lot cleared. The Chevy store down the road let the sun clear its cars - I never could figure that out. Those cars would stay covered for days.

vikd · February 2003

Thanks for the advice mfullmer; we will be getting our own representation. We have not entered in to any verbal agreement with the builder's agent as of yet, she has simply shown us the homes we were interested in.

For the record, I started this line of discussion not as a means of comparison (never stated car/real estate sale were the same, only that there were a few similarities) but more along the lines of being curious as to why many car biz folks seem to have a certain amount of animosity towards realtors. It has been stated many times here on this board by car biz folks themselves, that the realtor occupation fell in to the same category as lawyers, car salesman etc... I was simply trying to get to the genesis of this perception and thought it would be a lively conversation; which it has been. I was also looking for some real advice from folks here regarding realtors (which mfullmer, zues and others have provided) as we are currently in the market. I realize obviously that this is a CAR discussion site, but since many of you who post here have provided me with excellent guidance and advice regarding automobiles, and, who also seem relatively knowledgable about other sales occupations/concerns, I believed I would glean some good advice, which I have.

Regards... Vikd

zueslewis · February 2003

it's ridiculous.

I'll admit I'm wrong any time I'm wrong - I simply asked for someone to explain what I was wrong about, since we'd discussed about 10 different factors on the same subject.

Chill with the personal stuff.

zueslewis · February 2003

I still haven't been told what I was wrong about and I stand ready to admit a mistake - I'll throw myself on my sword, figuratively.

rivertown · February 2003

It's there in the posts - who owns the cars, who has a lien on 'em.

I get your point, BTW, if it's that the dealer is working with borrowed money.

BTW, I'd like the courtesy in the future of a straight answer to 'Where am I wrong?'.

zueslewis · February 2003

and you weren't in the conversation. Now I'm really confused.

I'm really DONE with your double-talk. Have a nice day, go bother someone else.

mfullmer · February 2003

You were WRONG zeus.

You said that the dealers did NOT own the cars. It's there is several posts. (2803, 2813, 2816, 2819)

It has been stated by several people (and is just common knowledge in the industry) that the Dealers PURCHASE the cars from the Manufacturer. When you purchase something, you OWN it.

What is so difficult to understand about that? Why is it so difficult to say "Whoops, I was wrong." Geees, it's not like we aren't all wrong some of the time.

isellhondas · February 2003

Can't you guys knock it off?

Just IGNORE each other!

The hosts here must feel like playground monitors!

mackabee · February 2003

Zues is RIGHT! The dealers DON'T OWN the cars! They are floor planned for the most part. The Financing arm owns the cars! At my store xyz Toyota we don't own the cars! Toyota/Lexus Financial owns the cars! Enough about who owns what! Have a good weekend!
: )
Mackabee

fredvh · February 2003

isellhondas:

The Acura TL is one of the vehicles on my wish list but I will not buy one until this transmission issue is answered by Acura/Honda. Why can't they tell us exactly what the problem was and how they fixed it? I have heard from forums that TLs made after May '02 do not have the "problem", but what is the "problem"? I certainly do not want to pay $27K for a car and then have to worry that the trans could go out at any time let alone a possibility of a sudden downshift at 70 mph. Please Acura/Honda, give us some honest answers.

mauislick · February 2003

SO HOW MUCH DOES A LOT SALES GUY MAKE OFF THE SALE OF ONE CAR?????
and Yes the sale of a car does go towards some sort of incentive but we're not counting that

one sale, on comission on that sale

no dealer wants to come clean and answer the question........Let me see the title of the thread is "any questions for a car dealer" or something like that......

so how much 50, 100, 500 ????

afk_x · February 2003

This question has been asked and answered many times. No one has evaded this question. Its pretty basic calculation actually.

Depending on the store, a sales person will make anywhere from 16% to 30% of the gross profit.

Some dealers have a "pac" that is subtracted from the gross profit that a salesperson is paid on.

Most dealers have some type of minimum commision they pay per sale, regardless of profit. This is where the term "mini" comes from. This usually varies from $25 to $100 dollars, although I have heard of stores that do not have a minumum commision, meaning it is possible to sell a car and make nothing.

In summery, there is no easy answer to your question. However a Honda salesperson will make much more selling a Pilot than a Civic, a Ford salesperson will make more on an SVT Mustang than a Focus.

Industry standard is 20% of gross profit.

Oh yes, and make sure you ask to see the REAL invoice.

rivertown · February 2003

Holdback has come up before, and I'd like a dealer's take.

What is holdback?
I've got the impression holdback is a percentage of the car's price (MSRP, invoice, other price?) withheld from the dealer by the manufacturer (manufacturer, manufacturer's finance subsidiary?, other?) until some settling up time. I get that the % varies between manufacturers/makes, but what is it a %age of?

How's it work? Say . . .
Dealer takes delivery on the car. Incurs a debt for/pays the manufacturer some price (invoice price?) plus holdback? Invoice price includes holdback? Dealer sells the car, and collects money from the customer (or company financing the customer's purchase). Dealer pays his debt/deposits in the bank/keeps in safe/whatever. Holder (who?) of the holdback funds settles up with dealer at some point, and the dealers gets some money? The amount of the holdback paid by holder to dealer is the amount of that %age, the amount of that percentage minus the cost of financing to the dealer?

Is holdback a positive factor in a dealer's profit?
Some dealers say 'no'. Is that because the holdback is not part of a profit equation that looks something like Profit = Sales price to customer minus 'invoice', minus Overhead, minus Floorplan (dealer's financing costs), plus Holdback?

So, what's holdback, how does it work, and is it a positive factor in dealer profit?

isellhondas · February 2003

The transmission problems are minimal. A very small percentage of the cars were afffected. It's my opinion that a small number of people have overblown the problem in these forums.

As far as a sudden downshift at 70 MPH. I guess it's somehw possible but I don't believe it.

Hopefully the problems have been isolated and solved.

grandtotal · February 2003

As far as a sudden downshift at 70 MPH. I guess it's somehw possible but I don't believe it.

Honda does believe it. I'll go with their take on this rather than yours, no offence intended. I do however agree with you that it has been overblown.

crkeehn · February 2003

Forgive the delayed post, I haven't read in a few days, I've been laid up with a sprained ankle.

Congrats on the PT Turbo, I'm sure you'll have a blast with it. I am a bit curious however. A while back in another discussion, you had stated that PT's were not too reliable, that you had handled some lemon complaints about them. That said, why did you purchase one.

In any event, welcome to the dark side. I'm sure you'll have a blast with your new toy. All you need to do is join one of the groups floating around, and remember that Tour the Falls III is coming up, registration has opened.

mark156 · February 2003

I'll ask Mack because I think Zues is done with the subject. (about who owns the cars).

I've been reading post after post and I'm still not sure if I understand. Mack, you said the dealers don't own the cars that the financing arm does. So, if a car doesn't sell for some odd reason, will the manufacturer will take it back?

Thanks, Mark

zueslewis · February 2003

The PT Cruiser lemon law issues usually dealt with 2000-2001 electrical systems and were very few in numbers. I've yet to see a transmission failure, engine failure or other major component failure, even considering most of the components are shared with the Neon and Stratus.

The Neon has improved quite a bit since the '95-99 style, but still has transmission and engine management issues.

Mackabee - thanks. I was ready to admit I was wrong, just to make them go away, but you've convinced me otherwise.

I'll take a chance - besides, with owning a DCC vehicle, the defense lawyers can't say I'm biased against DCC. After all, I'm not biased against any manufacturer in particular - just the ones who don't "do right" by the consumer.

bigorange30 · February 2003

If the car doesn't sell, the manufacturer has to take it back since he really owns it and the dealer is just performing a service. At least that's what the salesmen here seem to be saying.

Why is there an invoice if this is true? Also, why is there a Manufacturer's SUGGESTED Retail Price (MSRP). Why don't they just call the invoice the price and the profit the dealer's fee for the service they provide?

rivertown · February 2003

They're not salesman. They're brokers, or fences, or 'miscellaneous folk who make a living selling stuff that belongs neither to them nor to their employers."

(I know, some of these groups include thieves and criminals. I'm NOT calling all car'sales'guys thieves and criminals, though.)

rivertown · February 2003

Auctioneers!

'Tax collector' would work, except tax collectors don't actually do anything to bring the sale about.

mauislick · February 2003

thank you for your answer on the sales comissions, although I don't need too I thought it would be fun see If I could sell cars......just for the expereriance.....

mackabee · February 2003

Why wouldn't a car sell? I've been in this business for 7 years and have yet to see a car we got from the manufacturer not sell. Some take longer than others but they do sell. Those we take a loss on, selling it for way under invoice to get it off the lot. Take our loss and move on. That's why the manufacturer puts incentives on slow moving cars, whether it be rebates or low financing or dealer cash. For those of you who don't know what dealer cash is, it's an additional incentive to sell a particular car. For example on the 2003 Toyota Sienna there is a $1500.00 rebate and special financing and $500.00 dealer cash. The customer can get BOTH the rebate and special financing. The dealer chooses whether to use the $500.00 dealer cash and apply it to the sale thereby giving it to the customer to lower the sale price an additional $500.00 or the dealer can keep the $500.00
: )
Mackabee

rivertown · February 2003

TY, Mack. Good info.

mark156 · February 2003

The question that I was asking was, if the dealer doesn't want a car for whatever reason, can he make the manufacturer take it back since he doesn't own it?

Thanks, Mark

rroyce10 · February 2003

....... If it comes to that, it means the dealer is about 5 minutes from going out of business .. as a rule, his inventory is transferred to another dealer or a series of dealers and the factory will help subsidize the transactions .. but the dealer does own the inventory. But to answer your question, no, the factory doesn't take them back ...

Terry.

rivertown · February 2003

TY, Terry!

xccoachlou · February 2003

What happens to all the unsold cars from the previous model year? There are still some dealers here selling leftover 2002's.

What happens if they don't sell them?

- Lou

CarMan@Edmunds · February 2003

Hi everyone, there has been quite a bit of arguing going on in this discussion over the past day or two. It is fine to disagree with another community member on a particular subject and to enter into a debate as to why your position is correct, heck that happens all of the time in Internet discussion forums. However, please do so in a civil and respectful manner. Any posts from this point on that are rude will be deleted in accordance with the Edmunds.com Town Hall Member Agreement. Thanks and carry on

.

Car_man
Host
Smart Shoppers / FWI Message Boards

xccoachlou · February 2003

I know they meant it as positive advertising, but...

In today's Sunday Newark Star Ledger, in the auto section, there is a "blurb" proudly showing the Bloodmobile right outside a dealership.

My first reaction was, "Boy, they really squeeze the customer!"

I also wonder why there are no turnips in that photo.

I've never been to any of those dealers, but I just thought that was kind of humorous.

Lou, who has donated and won many a baggie race.

landru2 · February 2003

Like Mack stated a few posts up, they all get sold. Some just take a little longer to sell than others.

zueslewis · February 2003

seen several vehicles that had "birthdays" on the lot and were labeled with a "most wanted" award.

xccoachlou · February 2003

from my brain to the keyboard.

I meant do those leftover cars get sold mainly to private parties, wholesalers, or does the dealer's service department buy them and use them as loaners?

- Lou

mfullmer · February 2003

I'm not going to be rude or disrespectful of anyone however, there are people who read these boards who are not in the business and are getting the wrong information about the ownership status of "financed" goods.

The whole premise of financing is that the purchaser (dealer in this case) is able to retain OWNERSHIP of the goods while the lender holds a lien, enforced if the payment terms are not met.

A "Floor Plan" is little more than a line-of-credit that dealers use to pay the manufacturer for vehicles that they purchase to sell.

As with any financed good, the dealer retains ownership of the vehicle while the finance company holds a lien. The dealership is free to sell the vehicle, while the finance company is not (A key note to "ownership") as long as the dealer pays according to the terms.

As far as the statement that the manufacturer owns the vehicle and takes it back if it doesn't sell. Thats just not true. Once the vehicle has been ordered and delivered to the dealer (purchased) it is up to them to sell. I've seen cars that sit there for over a year until the dealership cuts it so low and gets rid of it.

I'm grateful for this line of discussion. It makes the auto dealerships that more of a "legitimate business". As with any business, they own Assets (vehicles) that they finance with a liability (loan). They sell their vehicles (income) and deduct their direct (commission, etc) and indirect (overhead) expenses (expense) to hopefully make a profit.

Isn't the USA great!

zueslewis · February 2003

with leftover vehicles. Most simply sell at somewhat of a loss. Some are dealer traded when you get someone (a consumer) at Dealer X who wants a purple and gold luxury car without air conditioning and carpeting and Dealer Y, who ordered the car by mistake, happens to have one. Dealer X is happy to find one and make a car deal, and Dealer Y has a party when the ugly thing goes away. Some are taken to auction, when a dealer percieves they have more of one model/trim level than they can sell.

Most service departments, for insurance reasons, have gotten completely out of the "service loaner" business. It's easier to have Enterprise ("We'll pick you up) handle that part and the dealer can stay out of it.

bigorange30 · February 2003

I still get a loaner every time I go to my Infiniti dealership. I have friends that have Lexus and Cadillacs and they still get loaners. Don't Acura, BMW, Volvo and others still give loaners? Maybe its just in your part of the country that they are getting rid of "service loaners".

millspd · February 2003

In my neck of the woods (southwest suburbs of Chicago), it seems most dealers don't have service loaners. My Saturn dealer offers them, but in my experience the local Pontiac, Chevy, and Chrysler dealers do not. They rely on rental companies.

Might be more common in the upscale makes.

zueslewis · February 2003

have loaners, but understand that for every BMW dealership with loaners, there are 100 Ford, Chevy and Dodge dealers without them. In the upscale car business, loaners are more important and the costs to maintain and insure them is factored into the cost of doing business. I've seen where Cadillac dealers, for instance, use Enterprise exclusively, but will only use their Cadillac cars (makes sense).

It's more common to see dealerships with loaners relying on another company for their cars.

mfullmer · February 2003

Enterprise does seem to be the "loaner car" company of choice. My Cadillac dealer has an Enterprise person and their fleet right there in the Service write up area.

Do you know about the Lexus and BMW and Volvo? Here in Atlanta, those dealers have "Courtesy Cars" with their names on them? I see them around and, while I was looking at a Lexus, was told about the benefit. They offer them on routine maintenance as well as Warranty work. I'm wondering if they actually own those and them sell them later as "program cars" or if they also use an outside rental agency that is exclusive to them.

bigorange30 · February 2003

of Ford, Chevy or Dodge dealers ever offering a loaner. Upscale is the only place I have ever seen it but I don't see it decreasing. I don't know if they own their loaners or if Enterprise owns them as long as it is transparent to me. As long as I get the loaner and don't have to stand there a long time waiting on it, either is ok with me.

zueslewis · February 2003

in Oregon ('97-98) and we had 6 Chevy Corsicas, that we owned, for loaners. We phased out the loaner program with favor to Enterprise as these beasts were miled up.

Some dealers take vehicle directly out of stock, or even better, purchase low mileage vehicles at auction for loaners. These are usually high line dealers, though (like Lexus, mfullmer) and not Chevy, Ford, Dodge, Toyota, etc.

The costs for maintaining a loaner fleet is staggering and usually offsets customer pay profits in the service department - you hope it really increases sales to keep things profitable.

mfullmer · February 2003

usually will only offer a loaner car in accordance with the terms of the Manufacturers warranty. That usually states that they will provide alternate transporation only if the vehicle has to be kept more than 24 hours for warranty repairs. I was, however, able to convince Oldsmobile to supply me with a loaner on ANY warranty visit on my previous Olds. ('02 Bravada)

Lincoln and Cadillac dealerships usually provide the loaners with ANY warranty repair work at their expense (reimburseable by the Manufacturer if it takes longer than 1 day.) My Cadillac dealer also gave me 10 "rental coupons" which I use for oil changes, etc that do not include warranty work.

millspd · February 2003

Yeah, my Saturn dealer has, I think, 3 L series available as service loaners and they appear to be given to those customers who would be inconvenienced the most by the necessary service work.

It's a nice feature as you usually don't see it in this price range.

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