How much did the dealer pay for the used car?
It is not only possible, it happens all the time. I have bought cars at auction, or taken them on trade, and stepped on my **** before. Everyone has. Those honest, salt of the Earth customers who traded them negelcted to say taht they had never changed the oil, or that the tranny slipped in 3-4 gear. So we wind up having to spend more to make the car ready than we expected. In that case, its either take it to auction, and take a huge loss, or fix it and hope to break even. The other car that has lower miles? Maybe he bought it better, it didnt need as much recon work, or it has less equipment. As desparate as we are to sell cars right now, if he absolutely refuses to move on teh price, then that is the price. Agree to it and buy the car, or shop elsewhere. Give me more details on the car - which model 3 is it? 2 dr, 4dr/5dr etc
What does a dealer actually pay for a new car?
Most sales associates are only paid on profits above invoice, which is probably why the sales associate told you what he did. The dealership does make additional money in the form of quarterly bonuses (which are often based on meeting sales quotas) as well as hold-back, however this varies with each manufacturer. Dealerships are not 'non-profit' organizations and as the person above stated, if you can get $100 over invoice plus all applicable customer incentives, it would be consider a great deal, as long as it is the car you want and fits your needs. I hope this helps.
How much does a car dealership make?
The short answer is that most vehicle sales representatives don't gain an entire whale of a great deal of cash. Dealership business people average around 10 vehicle deals for each month, and win an average of about $40k to $45 every year. On the off chance that you figure it out, that is about $220per vehicle.Be that as it may, that is not the entire story. There's a tremendous disparity between extraordinary business people (who offer 20+ autos multi month) and terrible sales representatives (who may battle to offer 8 vehicles in multi month). A sales representative who moves 20 vehicles multi month is most likely going to gain $6-$8k, while a sales representative who can just move 8 autos multi month is probably going to procure the lowest pay permitted by law.There's likewise the way that the $330 per vehicle average incorporates both new and utilized vehicle deals. New vehicle deals once in a while pay $300+ commissions, while utilized autos can now and again pay $1,000 commissions.
How do I negotiate with a Mercedes dealership to lower a price on a certified vehicle?
Most certified pre-owned Mercedes-Benz Products are priced relatively close to what the dealers paid for them plus their reconditioning costs. The Mercedes-Benz corporation (Gottlieb Daimler Auto Group) puts forward strict requirements to their dealers on criteria for certified pre-owned vehicles. Part of this criteria is a pre determined percentage of profit which is the maximum dollar value that Mercedes_Benz certified pre-owned vehicle can be sold for. I have brokered many deals with the ownership of local Benz dealers and I have seen their dealer contracts which stipulate this. So when the dealer says "I don't have a lot of wiggle room" chances are they aren't lying to you about this. That said, some dealers will, if they are anxious to make a sale and may agree to go $100o over cost just to move product. It really depends on how long they have had the car, what their cost of reconditioning (repair to make it sellable) is, and how much they actually paid for the car. Some dealerships slip under the radar of the above rule by paying less on trade for a car and working a bigger margin in for themselves. I would recommend that you try and get a trade in vs a inventory purchase piece because the trade in will have a more flexible margin then one purchased from Mercedes-Benz certified dealer inventory sales. As a bigger plus you'll know it's a local car and it will likely have been serviced at the same dealer it was traded to. Most important: BRING CASH! if you show them you're serious and ready to buy they're serious about getting your money over walking you out the door where you'll take your money with you to another brand or dealer.
How much off MSRP can you talk a car dealer down?
You work at a dealer, or for the corporate office? I am guessing corporate employees have a set program, I know Ford, Chrysler, & GM do. http://corporate.honda.com/careers/detai... If you work at the dealer, ask your manager what they offer. Hopefully would be a good deal. Good question, but you are looking at the wrong way, with dealer rebates, customer rebates, dealer incentives, dealer current inventory, etc, there is now way to say $X is good. You simply shop around and try to go back and forth between dealers, if three dealers all say $21,350 is the bottom line price, I guess that is the best deal. Also if you work for a given dealer and drive into work with a new Honda from another dealer, I am not sure how well that will go over. Not saying you would be fired, and I know the employees drive all types of cars, but it would be like if you are getting a Honda, might as well get form the place you work.
What is the profit margin of a new car dealer? Does the percentage vary between normal and luxury cars?
As a general rule, new vehicle auto dealers have a net profit margin of 1-2% on new vehicle sales. It's pretty pitiful.Gross margins, however, run between 8 and 10% for most full-line automakers, and luxury cars often earn 10-15% margins. Depends on the vehicle, market conditions, etc.New vehicle dealers have a lot of costs that hurt margins, including:- Facilities aren't cheap, especially when automakers mandate dealer investment in new showrooms and customer waiting areas every few years- Staff requirements are surprisingly high as well. To sell a car, you need 9 or 10 different people all working on different parts of the transaction:A pre-delivery-inspection technician who checks the new cars when they come off the truck and gets them ready for sale (installs accessories, checks fluids, etc.)A detailer who pulls off all the plastic packaging and cleans the exteriorA porter who parks the car and makes sure it gets re-parked after every test drive, moves it around to keep the lot looking "fresh", etc.A salespersonA manager to make sure that salesperson is working and productiveA finance manager to obtain financing, process paperwork, get funding for a consumer's loan, etc.A title clerk who secures legal documentsAn accounting person to check everything the sales and finance mangers doA manager to oversee the entire sales processA manager who oversees the dealershipGranted, you can have the same people share some of the roles I've listed, but it's not like one person can do all of these things. You might be able to get by with 5 people, but that assumes you're not selling many cars.- Carrying costs are the biggest "killer," as every piece of inventory on a dealer's lot is paid for with borrowed money. We call this "floor plan" financing, and it's exorbitant once new vehicles begin to age. In fact, if you have to floor a vehicle for more than 120 days, you're officially losing money on that car even if you sell it at MSRP.If a dealer can sell their new vehicles quickly (less than 30 days after they arrive), optimize all their processes, and keep facility costs under control, they can earn a tidy profit...but that's much easier said than done.
How much is a dealer license?
Some people are lying to you. Not even a Dealer can buy a new 2006 or 2007 car for a couple of thousand of dollars. They may have pre-paid a lease, but unless they are talking about a couple of 15000 dollars or so, they are lying. It takes a lot of money, and legal and accounting advice to become a dealer. You can't just get a license, you have to have a physical location with a minimum number of cars on the lot, and you are constantly being inspected for permit, license, smog, and a host of other things. There is no quick, easy way to buy cheap cars. Even with an auction, you have to be registered with that auction, have credit established with them, or hold a floorplan account with a lender. All dealers pay the same price for new cars, and there is only about $1500 to $3500 mark up in cars, so even the dealer does not buy them "cheap".
How much will a used car dealer come down in price?
Depends on the car and what similar cars are selling for. Check edmonds.com or kelly blue book to get an idea what similar cars are selling for. If it's a car that's in demand, don't expect the dealer to come down too much. This is probably one of the worst years for buying a used car. Car makers over the last few years haven't produced that many cars because the economy has been bad. No new cars then, means few used cars today. The cost of owning a new car on a per mile basis is actually often cheaper these days than a used car, so if you can swing a loan for a new car, you might be able to get a better deal. Remember, you can sell that new car in couple of years and get back a lot of the purchase price.
How much do dealerships buy used cars for from auction? Can I know this when making an offer?
The amount we pay at auction depends upon the vehicle. Some cars cost $6,000 and some cars cost $60,000 because of what they are. The used vehicle market fluctuates depending upon the time of year as well. Typically, July is the highest and December the lowest. These fluctuations are not as drastic as they once were, but they do in fact still exist. The percentage of new vehicles that are being leased also effects this. If a manufacturer has an aggressive campaign for leases on a specific model (say a 24 month lease), then 24 months from now the market will be flooded with that model because of all of the lease returns. These models will have a lower wholesale value due to market saturation. Can you know how much I paid for a vehicle? Sure. Ask me. I will show you the auction invoice, and the freight bill, the repair tickets that were added to that vehicle's cost, the invoice from the detail facility, and the interest payments that were sent to my bank for carrying it in my inventory. I will share this because I believe my customers are entitled to as much information as they need in order to be comfortable with their decision. These numbers however, do not effect how much you are going to have to pay for the car. I price my inventory according to my market. If 2012 Toyota Camrys of similar value are priced at $15,400 within my market, then I am going to price mine at $15,000. The amount of money that I have invested in my 2012 Camry will not be a factor in the pricing of that vehicle. Good question.
How much money does a new car dealership actually make, on average, on each new car sale (taking into account all the factory rebates, etc. they might be getting after the sale)?
Good question. I had to go through my archives for hard data since I’m no longer in the business. Luckily, I saved all my dealer group’s numbers for the 3 years that I worked at a Mazda store. I’m sure I could have Googled it, but that would have been too easy.This dealer group consisted of 7 different stores in the Houston and Dallas markets. Here were the new car, total gross numbers (per unit) from August of 2013:Honda - $2,625Honda - $2,585Acura - $2,716Toyota - $2,270Honda - $2,071Honda - $2,134Mazda - $1,860The dealer group average was actually $2,367, not $2,323, because the volume varied at each store. For example, the Toyota store had the highest volume at 285 new car units whereas the Mazda store had 107 new car units.Whether I was in the F&I role or my last role as new car sales manager, I always kept in mind that it’s all about month-end averages. This allowed me to take the “loser” deals along with the “winner” deals.Would you like to know each store’s VSC penetration? I’ve got that too. This is the percentage of customers that bought an extended warranty (Vehicle Service Contract) for new car sales. Same order and same month as above:Honda - 65%Honda - 62%Acura - 56%Toyota - 50%Honda - 64%Honda - 57%Mazda - 58%“Now you know…and knowing is half the battle” - G.I. Joe