I Feel Sorry For Car Dealers (1 Viewer)

[James Edward]

I really do. Over the course of the past 5 days, I have been assisting my aunt in the purchase of a new car. During this time, we've been in several showrooms, and in each one, at each sales desk, the dealer was not making any money.

The sales manager, in one way or another, exasperatedly told nearly every customer that they were not making any money. Something needs to be done, or the auto dealers in this country will need a federal bailout.

I'm not kidding. Nearly every deal was a money losing or break-even situation. Desk after desk, more losses. Have some compassion, and throw the dealership a few extra bucks. They're gonna need it.

I felt kind of bad, because they sold us the extended warranty for less than what Toyota sells it to them for. Another loss. How do they keep the lights on? A once mighty industry, brought to its knees. Be nice. Take an auto dealership owner to lunch. He's probably hungry.

 

[Joel Mack]

 

[Danny Tse]

I'm at work, so I am trying HARD not to laugh out loud....

 

[Aurel Savin]

The sales manager, in one way or another, exasperatedly told nearly every customer that they were not making any money.

you do realize that you were at a "car dealer" and "auto salesmen" were telling you this

 

[Ryan Wright]

James, how's your new auto dealership franchise going? Business a little slow today, or what?

 

[Cam S]

Either YOUR a dealer, or this is a joke. You gotta be kidding me about them LOSING money. Why in the hell would they even make a deal where they are losing money ON the deal! Too funny.

 

[Armando Zamora]

I felt so bad for car dealers after reading this post that I went out and purchased a new top-of-the-line SUV with every dealer add-on, and extras such as under coating and fabric protection, and an extended warranty all for $12750 over MSRP. I was willing to pay more but the salesman said "Don't worry about it, we'll make up the rest plus some on your future service visits." I feel much better now that I helped these poor guys out.

 

[Garrett Lundy]

While your burning your aunt's cash reserves would you consider making a donation to my Mosquitoe-Bite Relief Foundation?

 

[James Edward]

Cam, yes it's a joke, but it is what I heard over and over. I thought a smilie would ruin the humor...

 

[Steve Schaffer]

In point of fact, there are dealers who "lose money" on every new car sale. Competition in large metropolitan areas really can lead to minimal or no profit on new car sales.

The shortfall is of course made up on used car sales--the one most lucrative part of a new car dealer's operation and a huge cash-cow.

Service is usually profitable, but the majority of the dealer's overhead (i.e, the electric bill and most of the building expenses) are charged to the service dept. Also note that dealership service depts. consistently lose money on warranty repairs because mfgs don't pay for diagnosis, only swapping parts once the source of a problem is discovered, and at that typically pay half the time it takes to actually do the job.

No, don't feel sorry for dealers, but don't assume they're minting money in the back room either.

 

[Keith Mickunas]

My local VW dealers charges $82 an hour for service. If VW only pays half that, I'm sure they're still making plenty of money. They wanted to charge my friend over $800 to put new springs on his car, which is a 1 to 2 hour job max if you got the tools.

 

[Alex Spindler]

That is the funniest thing I've read in ages.

 

[John Watson]

Droll, very droll...

After my last puchase, and that horrible feeling of having been cheated, abused, patronized, etc, I came to the realization that if I lived 7 lifetimes, and could remember all the experiences of each, I would still not be able to endure and outwit auto sales people...:frowning:

 

[DonRoeber]

I'm actually starting the process of buying a new car. My Mustang is at the end of it's lease, and I want to buy a new Explorer. My Dad'll be buying the Mustang at the end of the lease, so that's a garunteed sale for the dealership. I haven't talked with the dealership about pricing for my Explorer yet, but they should cut me a good deal. I can already get the exact vehicle I want from carsdirect.com for $3000 under invoice. Looking forward to seeing what the dealership will do for me.

 

[Nathan_F]

"In point of fact, there are dealers who "lose money" on every new car sale. Competition in large metropolitan areas really can lead to minimal or no profit on new car sales. "

I would seriously doubt that. I am eligible for employee discounts with a couple of different American manufacturers which allow employees and their families to purchase vehicles at significantly below invoice (typically 5% or more off of invoice). That's the dealer invoice, not sticker. They start at the invoice price (theoretically what the dealer is paying the manufacturer for the car), then subtract dealer holdback and marketing fees, plus any dealer or consumer rebates. So the dealer shouldn't be making a dime, right? Yet I've had dealers/salesmen saying they love to sell to employees and their families. They still get incentives to sell on top of those things from the manufacturers, usually based on total units sold.

Sorry for the diatribe, but I just don't buy that dealers aren't making profits on new car sales. Even if they're selling at invoice, they are still making around 5% per car.

 

[Chris Hovanic]

Here is a quote from http://davesmith.com/company/founder.asp

Each potential car buyer at Smith's gets a copy of the vehicle invoice that the dealership gets directly from the factory. Don't be fooled, Smith gets his fair share of the profits. His dealership gets a 3 percent kickback from General Motors and Chrysler for every car he sells. The amount of kickback is also shown to customers; salespeople get 20 percent of the kickback amount or a minimum of $150 per vehicle sold.

From what I understand all dealers get this kickback from the manafuctures.

seveal years ago my sister-in-law was looking at purchasing a Neon and at one of the local Dodge/Chrysler dealers and when we mentioned Dave Smith the salesman said "We cant touch his prices" and walked away.

Funny bit of scarasam James!

 

[Craig Robertson]

that "kickback" is called holdback. not all mfrs offer holdback, Land Rover being an example of one that does not. holdback is used as an incentive for the dealer to sell quickly, it decreases as time goes by. usually 3% if the vehicle is sold the first month, drops to 2% for the second month, 1% the third month and nothing after that.

 

[Marc H]

They could always apply a new fee to the sale. A 'profit' fee in addition to the admin fee, the dealer prep fee and the freight fee.

 

[Dave E H]

BMW is another manufacturer that doesn't do a holdback.

So, for example, for current model year BMW's, it's considered a great deal to get like 1k over invoice (or 3% or so.)

I do believe they get better allocations the next year though based on volume & dealer ratings.

 

[Tony Whalen]

Great bit there James..

Can I ask y'all a question about car leasing? If anyone knows?

My wife and I are turning in our leased Pontiac Grand Am. Lease runs out in August.

We have been contemplating getting a new Vibe, but I have one issue... maybe someone here can shed some light on this.

Both the Grand Am and the Vibe are similar in price. (Roughly 30k Cdn, almost fully loaded.) HOWEVER, the Grand Am was leased for three years, and our quotation for the Vibe was for FOUR years.

In both cases, the monthly payment is almost the same, for an identically priced vehicle. When I asked our sales person about this, I was told something about interest rates (which I DO believe) and because it is a different vehicle (which I do NOT believe) and some other BS.

I told them I don't want a four-year lease, and I was told that a 3-year lease would cost more. (More than 100 dollars more than I'm paying for the GrandAm) Why? Why would two vehicles in the same price range cost differently? And why, if I'm not PURCHASING the vehicle, does it cost more on a monthly basis?

Maybe I'll just buy a Yugo.