New truck warranty, good for life, anything goes wrong they fix or replace it for life!

Discussion in '4x4 / Truck Forum' started by Lip Shooter, Feb 10, 2018.

  1. duckdown1

    duckdown1 Elite Refuge Member

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    I have asked you this question before yet I can never get answer. But I will ask again.

    What is a fair profit margin on a 40k truck?

    Believe what you want about profit on new vehicles. But it is a shrinking market and gets worse all the time. I think in the next 10 years the dealer body will shrink by close to 50%. In todays margins and cost of doing business its not a viable business plan.

    The discounts on vehicles is just that a discount. Some of it is rebates some is from the dealer. The dealerships don't make the MSRP on the vehicles the manufacturer does. The dealer doesn't keep raising the MSRP the manufacturer does. I can't remember the last time I sold a vehicle for sticker unless it was a specialty vehicle like a Raptor. We are not making that money if we aren't selling it for MSRP.

    Hell, I can count on 1 hand the amount of vehicles we sold last month that we didn't go into the holdback to sell it! We half to sell twice as many cars to make half as much money! Its the only business in the world that the public can go online and find out our costs. Then most don't believe it LOL. Not to mention our cost of doing business keeps going up and up! Here a clue guys when a dealership sells a vehicle for 40K they don't make 40K!
     
  2. tcc

    tcc Elite Refuge Member

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    I sold cars for a few years back in the early/mid 2000's; I can only remember 2 new cars I sold for sticker--a 2 door Chevy Cobalt(grossed all of about $800 on that deal!) and the very first Pontiac Solstice we got got in. That one sold for about a grand over sticker and still didn't gross $3k if I remember correctly.
    The overwhelming majority(I'd say close to 90%) of deals were for right around invoice, often less as you said.
     
  3. 10GAGENUT

    10GAGENUT Elite Refuge Member Sponsor Flyway Manager

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    As I stated the general public doesn't really know what the answer would be, I'm not laying it all on dealers, but manufacturers would be fools to actually let anybody know what it actually costs them to make a new vehicle. I've been hearing this same story for 40 years that I've been buying vehicles NOBODIES making any money on them.
    Common sense and logic would say if your not making any money then why are you doing it in the first place, out of the goodness of your heart or you like going home every week and telling your family we can't eat because I didn't make anything this week, I mean am I making any sense here or rambling????
     
  4. HaydenHunter

    HaydenHunter Elite Refuge Member

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    I have bought two new vehicles in the past 3-4 years and I believe that what you are saying is true. New vehicle buyers have pretty accurate information about dealer cost if they take the initiative to go out and look for it. Right down to the standard holdback dealers are given. What we don't know is any further tiered volume rebates that are given to the dealers for hitting certain sales plateaus.

    You can find an owners Forum, similar in format to this one, for any make of vehicle. You can look up threads on what discounts are being given in various areas of the country. There are even posts on the dealers who seem to consistently give the best deals. Every dealer now has an internet department. If you are willing to travel to pat yourself on the back and say you paid the absolute lowest price you possibly could for a given make / model vehicle, you can do that. I was able to go only 250 miles away to find the exact vehicle I wanted at a price no one could beat (unless I was willing to fly to Texas for only a few hundred bucks savings).

    Knowledge is power when you are a new vehicle buyer.
     
  5. duckdown1

    duckdown1 Elite Refuge Member

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    What you fail to understand is I'm not talking about manufacturer cost I'm talking about dealer cost! There is a big difference. Dealers are not the manufacturer we are their customer! I don't know what a manufacturer cost are on a vehicle I just know what our costs are.

    I never said nobody is making money the manufacturer is making plenty the dealers aren't. Now the gross profit on a new vehicle is not the only profit center for a dealer. They make money on Service, Finance and used cars but it used to much more on the new car end. The other thing is the general public has no clue as to what it takes to operate a dealership. The costs keep going up and the profit margins keep going down.

    I don't expect anyone to care about what dealerships make nor should they. I've been doing this for 33 years made a lot of money doing it have been very successful. But I feel for young people trying to get into this business cause its not going anywhere good. I also get sick of people constantly bad mouthing dealerships thinking they are constantly screwing people cause its really not the case anymore.

    So I ask the question again cause I can never get an answer to the question.

    What is fair profit for a dealership to make on a 40K vehicle?

    I ask cause I like to hear public perspective on what is fair profit as oppose to what it really is.

    Most guys say dealers are ripping people off all the time but no one wants to answer what is fair!
     
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  6. tcc

    tcc Elite Refuge Member

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    Of course they make money, just not the way you seem to think. As a dealer, the money isn't predominantly made on selling a new car, there are multiple revenue streams bringing in money---new car sales, used car sales, finance, add-ons, service dept (possibly the biggest one), parts, etc. Like most businesses they don't make massive profits off of one thing, it's the sum of them all that keeps things running. The manufacturer is the same, they make the vehicles but also sell parts and finance vehicles. Each entity may bring in a ton of money, but they have massive overhead as well.
    All that said profits have shrunk for sure, and many struggle to stay afloat just like any other business.
     
  7. GUNNERX2

    GUNNERX2 Elite Refuge Member

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    When a dealership charges $49.95 to top off the nitro in the tires, I may call that excessive.
     
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  8. boodog

    boodog Senior Refuge Member

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    tcc laid it out pretty well. In a perfect dealership world the profit from parts and service covers the dealership overhead, but that does not happen all that often. New cars are not really the profit center for a dealership as they are a commodity that can be easily shopped. The only time real money is made on a new car sale is when people make impulsive purchases rather than doing their homework-those people are generally from a socio-economic class that can least afford to 'pay up' for a new car. If money is going to be made it will be from used car sales, b/c every used car is unique and,therefore, they are not a commodity that can be shopped and compared like a new car. The finance department also is a profit center ( the guy that sells you an extended warranty, gap insurance and such)-often comparable to the gross on the new car sale. If you do your homework and/or wait until Oct-Dec to buy an outgoing new car model ( with generous manufacturer subsidies) you will do just fine. To answer the question about a $40,000 MSRP vehicle- dealer would be fortunate to make a 3% hold back (about $1100) plus a $500 to $750 gross when dealing w/ a relatively informed purchaser.
     
  9. duckdown1

    duckdown1 Elite Refuge Member

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    Somebody that actually answered my question! LOL

    I'd say you are pretty close about $1300-$1600 on a 40k vehicle and less on a cheaper one.

    Now look at what you have to pay out. Unless you sell that vehicle in the first 30 days there is a floor plan charge. You don't pay for the vehicle up front it cost to keep inventory. Then a salesman has to be paid to sell it. You have to pay a sales manager and a finance man. Then there are porter office people. Then insurance for demo rides, advertising costs. It goes on and on when its done there is very little left.
     
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  10. boodog

    boodog Senior Refuge Member

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    I answered it, b/c I've owned 2 Ford dealerships and know of what you speak. Your last post was spot on and people should believe what you wrote. The only aspect of a dealership that does not ordinarily compete well with independents is the parts and service departments which are generally higher in cost than independent shops. However, the level of service expertise is also generally higher in a good dealership.
     

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