JALLEN4

The problem with "believing" is somewhere along the line you need to have actual proof. There are numerous sites on the internet that will give you real invoice numbers...not ones people dream up. I spent 40 years doing this process of working in, running, and owning new car dealerships including GM. I learned a long time ago a lot of people just don't know what they don't know.

The reasons dealers can sell cars with greater discounts than 12% at times are called manufacturers incentives. For the 2019 cars the forum dealers have posted about losing money on cars simply to build the allotment of the 2020 that everyone knew was going for MSRP. But, if you wise guys without a clue wish to think you know better than everyone actually in the business...good for you. It is after all very stylish presently!

JALLEN4

A seventy-thousand dollar car is going to have just slightly over $8,700 in it. If their average car runs closer to eighty- thousand...he is on the money at ten-thousand. You just can't adjust the numbers to make your argument sound better. Look it up...its on the internet!

JALLEN4

Net profit at 2-3% is on the money for the total sales of the total dealership. Not just for new cars. At those numbers you will win another farm!

AORoads

As an accountant and a finance exec once told me, it all depends on what line you put the rebates. Or, for that matter, the monthly/yearly cost of $10-$15 million dollar store renovation. It isn't too hard to figure the numbers if you sit down and go thru it with people who know the methods to use. That's true for about any biz.

harley2

Who cares, they have to make a profit! Make your best deal and be happy!
the folks thst go to 5-8 dealerships to try n save 100$ are Never happy!
i sold cars for years.

paid msrp minus the 3500$ off with the gm buy power card!
happy

Corvette ED

I will also add this the top 5 Corvette dealers are all family-owned not a corporate store.in the first two years of a new model Corvette they make a lot of money selling at list and set aside some of that profit to give back in the last year selling cars at a loss. The more you sell of the old earns you more of the new. It's sort of a rigged system because the top guys keep earning more allocation and the smaller guys can never catch them.

tdrake2020

[QUOTE=jcp911s;Don't worry about how much profit they are making, because it doesn't matter[/QUOTE]

I do worry about how much profit margin a dealer makes at MSRP, especially if I plan on paying less than MSRP. Why pay $5k more than you have to?

If a dealer is happy moving a Chevy Spark with a $2k margin my guess is he'll be happy moving a $72k C8 with a $2k margin assuming it's either $2k profit or more floor plan interest while the car sits on the lot. Key words are "sits on the lot". Right now it's time to sit and wait and see what the future brings. Current projections are 20 million unemployed by June. Great Depression unemployment was 24%. Car loan defaults (late payments) are also currently sky rocketing. The near future isn't going to be pretty.

Corvette ED

You're right again!! You know this better than most on here with owning new dealerships. The cost of my dealership before we sold one C8. Dealer training at Spring Mountain the owner, service manager, and myself $3,000 each plus airfare from Pennsylvania, two nights in Las Vegas, rental car, meals. C8 Corvette special tools I think they were $2,500, 3 Corvette techs to C8 training school, $16,000 for the C8 tour truck for one day, two cases of C8 brochures 25 per case $300,00

So we have $31,000 in costs before we sell one C8. So the first 4 C8's will cover the cost of selling them before we make any money.

tdrake2020

Only problem is your use of "near term". I don't believe your crystal ball.

Corvette ED

Let me show you what the dealer mark up is on a new 2020 Spark
MSRP is $15,590.00 and cost is $15,237.49 and this month GM is offering $1,000 consumer cash rebate

tdrake2020

I can't read the screen grab, but based on your numbers it looks like $350.00 and 3% hold back. ($850 or so total just using the numbers you show.) The $1000 rebate comes from GM, not the dealer. If my number is close to correct it makes the $2k on the C8 look even better.

C8 Gator

I feel I ended up spending about $700 more than I could have because I bought from a local dealer. But you know what - keeping the money local and helping out the dealership is important to me. And the trip and incidentals to one of the big 3 or 4 dealers would cost substantially more than that. Relationships are important.

Phil1098

The delusion you are operating under is the poor dealers are going to be stuck with C8s laying around and paying juice on floor planning. Not going to happen anytime soon. This whole situation is more like a natural disaster than what the depression was about.

Douevensti

I work in an Automall & have a Chevy store and worked numbers on a c8. (Not my own c8)

Msrp was 79,5XX.xx
DEALER invoice was about 74,5xx.xx
and hold back was estimated to be around another 1600-2000.

all in all on that specific c8 there was about 6-7k front end profit. Then you have whatever finance makes (depends on customer & credit)

tdrake2020

I agree that Covid is like a natural disaster, So was the drought of the late 1920's. Other similarities between now and then include tariffs, American economic policy with Europe/China, large economic disparity, and across the board reduction in purchasing. We haven't had any bank failures yet, but unless purchasing picks up and Americans learn how to save instead of tapping out every possible source of credit the banks may also suffer. I'm guessing the markets may continue to recover because of the large amount of money being thrown around by the Fed and US government. I'm also guessing that the markets will begin to falter after the liquidity "high" wears off.

Some politicians are saying that the US economy is going to sky rocket at the end of this year. I'd take that with a large grain of salt given that Covid is the gift that keeps on giving and the US now has 1/3rd of all Covid infections on the planet. Even Larry Kudlow of "We have contained this" fame said today that the 2nd quarter numbers were going to "be much worse". It took 10 years and WWII to recover from the Great Depression. Given this fact I'd be more inclined to believe that a sky rocketing economy at the end of the year is probably the greatest delusion.

On the optimistic side.... Hopefully quick and effective therapeutics and vaccines will become available soon. However even if these become available the current federal government we have in place will most likely screw up their quick roll-out unless we see some big changes, which I believe is doubtful. Some elements of our federal government are incapable of change. Let's just hope for the best..

KGS365

i agree the numbers look lousy at 2-3% ($1.2 - $1.8 million on $60 million gross) assume $30K per car = 2,000 cars annually per dealership or approx 40 cars a week ....for a lousy 2-3%?....i see new dealerships going up for millions those numbers dont add up?....has to be closer to the 10% mark or it just wouldnt work financially .....im not a Shell answer guy

JALLEN4

I assume that is the new norm in this country. People with absolutely no experience in the business are going to call those who spent a career owning them idiots or simply liars? Those same people are going to ignore thousands of pages of facts printed and available from various sources. They are going to ignore NADA studies printed yearly and also readily available because if it isn't some insidious plot to deceive it can't possibly be right. They evidently know more simply based on their "gut"!

Can you explain to us what kind of stable genius you are and what you do for a living where you disparage making a potentially lousy 1.8 million yearly per dealership owned? That has to be one of the most stupid things I have seen posted on here. Here is a news flash...you spend dollars, not percentages!

Phil1098

If dealerships didn't have a used car department and relied on new cars only, they would all fold in a matter of months. Most new car departments are not profitable, used car, service, parts, and body shop all contribute to keep the doors open.

C6Tim

Car manufacturers and dealerships have made a science out of confusing/hiding the real cost of their product. Since the "information age" began it has become increasingly difficult for dealerships to run the old scams so they do their best to perpetuate the lie that their is no profit in selling new cars and that all of their profit comes from the service department. OK, so if that were true why not sell the cars at cost and increase your customer base for the service department? If you don't make money on new car sales then why try? Just advertise we sell at our cost which would be thousands less (depending on brand/model) than other dealerships and watch the customers flock to you.

Phil1098

So how much markup is there on your new refrigerator? Oh, you don't know or care, but it NEEDS to be public knowledge what a car dealership has in mark up? One way street and you have left out the biggest factor in selling cars and that's the trade in. You don't wheel in your old refrigerator and say she still blows cold, what'll you give me for her? In your simple plan what you don't get is depending on the model, all dealerships sell cars for cost. The reason they start out at list is to make the guy with the trade feel better. If they start at cost they can do nothing but show ACV (actual cash value) or wholesale for the trade and NOBODY wants wholesale for their trade. Most consumers don't understand the difference between wholesale and retail, they just think their car is worth more because they waxed it once three months after they bought it.