I was discussing margins for car dealerships with a person the other day. My opinion was that dealerships are making more servicing the cars they sell than they are making on the sale itself. Is this true?
Depends.
New cars that used to have a 3-4K margin, now have about a $1300 one showing on the invoice..and this for a 34K auto.
Most sales people get around a hundred bucks per car they sell now where they used to get 15-20% above invoice profit. There was room then to do that. Not anymore.
The owner of the dealership gets more with the unspoken and sacrosanct money going directly in his pocket from the manufacturer.
I used to know what that was but I do not anymore in todays world.
So, if that new car now has 35,000 miles on it and needs brakes, that could very well be $650 per axle.
The dealer pays insurances, salaries, benefits, along with utilities, taxes and the nut on his floor plan and or building.
It is why we now pay $140-$180 per hr in labor costs.
It has gotten so that if as a dealership owner, and you have only the one brand or dealership, you are most likely losing money.
It has now become critical that a dealership becomes a consortium owning 10 to 20 properties and brands to cover the market gamut of choices.
It's like betting on every horse in a race to cover the customer spread of choice..