Re: how much do stealerships mark up new cars by?
 

>I figure there's got be some common ground here. Any thoughts? 100% markup?
Do dealerships basically buy their cars from manufacturers?>

This is a bit complicated, but, yes, of course, they buy the cars from
manufacturers at whatever the mfr. sets as the "invoice" price. However,
that's obviously not where it ends.

Mfrs often give dealers incentives (discounts off invoice, called "trunk
money") on certain cars & trucks that aren't selling well, plus there's
something called "holdback", which is a certain percentage of invoice
(usually 2 - 5%) that's paid to dealers for each car they buy from the mfr.
Mfrs pay this to dealers on a periodic basis. Thus a dealer can sell you a
car for "Invoice", i.e., what he technically paid the mfr for it, but still
get paid whatever the trunk money is, plus 2-5% holdback. It varies
frantically, manufactures change this stuff weekly or monthly, based upon
what's selling & what's not. This is why you'll see crazy swings in
advertised prices, goofy rebates, etc.

So, a simple answer to your question is hard to provide, however if you
figure 10% off list is the invoice price, you'll be pretty close. Figuring
out the invoice price is easy, just check out the National Automobile
Dealers Association (NADA) website. It shows invoice & retail for any car
you can think of.

http://www.nadaguides.com

(Why would dealers tell potential customers what they paid the manufacturer
for the product? Simple, that ain't what they paid once you figure in
holdback & trunk money/incentives.)

You can often check them and other sites for current incentives (rebates)
for both customers and dealers. It helps when negotiating to let the dealer
know flat out that you know what the invoice price is, and what any rebates
are, and you can grill them on the holdback %.

It also helps to know that dealers generally don't buy their inventory, but
instead finance it on something called a "floor plan". It's an open-ended
line of credit the dealer's bank or captive finance company gives them, with
which the dealer pays the factory for the cars. Dealers then pay monthly
payments comprised of accrued interest on anything being held in stock, plus
the cost of anything they sold during the month. (Dealers who don't pay the
bank back promptly owe more to the bank than the value of the inventory,
it's called being "sold out of trust".) Thus, it often pays for the dealer
to get vehicles on & off the floor plan quickly, as the finance charges
escalate and eat into whatever profit there may be on any given model. It's
often in a dealers' interest to get rid of a car that's been in inventory
too long at a paper loss, just to save the finance money, which can be
applied to something else that might make a profit. Dealers fight with
manufacturers for cars that sell, versus having to take stuff that doesn't.
Manufacturer sales reps often make a dealer take five "stiffs" just to get
five hot models, so a Jeep dealer may get stuck with five Libertys just to
get five Rubicons.

If you think this is complicated, it is. This is why dealers get so
aggressive & have bad reps, they work on incredibly skinny margins in terms
of the capital outlays involved, and the manufacturers don't do much to
smooth this crap out for them, Further, if the dealer goes broke, the
manufacturer is out absolutely nothing. They just go looking for another
dealer / investor in the area to pick up the franchise.

(Oh, I worked in retail for a number of years, then spent twenty years with
two manufacturers in Service....I hate the car business!)

Re: how much do stealerships mark up new cars by?
 

>I figure there's got be some common ground here. Any thoughts? 100% markup?
Do dealerships basically buy their cars from manufacturers?>

This is a bit complicated, but, yes, of course, they buy the cars from
manufacturers at whatever the mfr. sets as the "invoice" price. However,
that's obviously not where it ends.

Mfrs often give dealers incentives (discounts off invoice, called "trunk
money") on certain cars & trucks that aren't selling well, plus there's
something called "holdback", which is a certain percentage of invoice
(usually 2 - 5%) that's paid to dealers for each car they buy from the mfr.
Mfrs pay this to dealers on a periodic basis. Thus a dealer can sell you a
car for "Invoice", i.e., what he technically paid the mfr for it, but still
get paid whatever the trunk money is, plus 2-5% holdback. It varies
frantically, manufactures change this stuff weekly or monthly, based upon
what's selling & what's not. This is why you'll see crazy swings in
advertised prices, goofy rebates, etc.

So, a simple answer to your question is hard to provide, however if you
figure 10% off list is the invoice price, you'll be pretty close. Figuring
out the invoice price is easy, just check out the National Automobile
Dealers Association (NADA) website. It shows invoice & retail for any car
you can think of.

http://www.nadaguides.com

(Why would dealers tell potential customers what they paid the manufacturer
for the product? Simple, that ain't what they paid once you figure in
holdback & trunk money/incentives.)

You can often check them and other sites for current incentives (rebates)
for both customers and dealers. It helps when negotiating to let the dealer
know flat out that you know what the invoice price is, and what any rebates
are, and you can grill them on the holdback %.

It also helps to know that dealers generally don't buy their inventory, but
instead finance it on something called a "floor plan". It's an open-ended
line of credit the dealer's bank or captive finance company gives them, with
which the dealer pays the factory for the cars. Dealers then pay monthly
payments comprised of accrued interest on anything being held in stock, plus
the cost of anything they sold during the month. (Dealers who don't pay the
bank back promptly owe more to the bank than the value of the inventory,
it's called being "sold out of trust".) Thus, it often pays for the dealer
to get vehicles on & off the floor plan quickly, as the finance charges
escalate and eat into whatever profit there may be on any given model. It's
often in a dealers' interest to get rid of a car that's been in inventory
too long at a paper loss, just to save the finance money, which can be
applied to something else that might make a profit. Dealers fight with
manufacturers for cars that sell, versus having to take stuff that doesn't.
Manufacturer sales reps often make a dealer take five "stiffs" just to get
five hot models, so a Jeep dealer may get stuck with five Libertys just to
get five Rubicons.

If you think this is complicated, it is. This is why dealers get so
aggressive & have bad reps, they work on incredibly skinny margins in terms
of the capital outlays involved, and the manufacturers don't do much to
smooth this crap out for them, Further, if the dealer goes broke, the
manufacturer is out absolutely nothing. They just go looking for another
dealer / investor in the area to pick up the franchise.

(Oh, I worked in retail for a number of years, then spent twenty years with
two manufacturers in Service....I hate the car business!)

Re: how much do stealerships mark up new cars by?
 

>I figure there's got be some common ground here. Any thoughts? 100% markup?
Do dealerships basically buy their cars from manufacturers?>

This is a bit complicated, but, yes, of course, they buy the cars from
manufacturers at whatever the mfr. sets as the "invoice" price. However,
that's obviously not where it ends.

Mfrs often give dealers incentives (discounts off invoice, called "trunk
money") on certain cars & trucks that aren't selling well, plus there's
something called "holdback", which is a certain percentage of invoice
(usually 2 - 5%) that's paid to dealers for each car they buy from the mfr.
Mfrs pay this to dealers on a periodic basis. Thus a dealer can sell you a
car for "Invoice", i.e., what he technically paid the mfr for it, but still
get paid whatever the trunk money is, plus 2-5% holdback. It varies
frantically, manufactures change this stuff weekly or monthly, based upon
what's selling & what's not. This is why you'll see crazy swings in
advertised prices, goofy rebates, etc.

So, a simple answer to your question is hard to provide, however if you
figure 10% off list is the invoice price, you'll be pretty close. Figuring
out the invoice price is easy, just check out the National Automobile
Dealers Association (NADA) website. It shows invoice & retail for any car
you can think of.

http://www.nadaguides.com

(Why would dealers tell potential customers what they paid the manufacturer
for the product? Simple, that ain't what they paid once you figure in
holdback & trunk money/incentives.)

You can often check them and other sites for current incentives (rebates)
for both customers and dealers. It helps when negotiating to let the dealer
know flat out that you know what the invoice price is, and what any rebates
are, and you can grill them on the holdback %.

It also helps to know that dealers generally don't buy their inventory, but
instead finance it on something called a "floor plan". It's an open-ended
line of credit the dealer's bank or captive finance company gives them, with
which the dealer pays the factory for the cars. Dealers then pay monthly
payments comprised of accrued interest on anything being held in stock, plus
the cost of anything they sold during the month. (Dealers who don't pay the
bank back promptly owe more to the bank than the value of the inventory,
it's called being "sold out of trust".) Thus, it often pays for the dealer
to get vehicles on & off the floor plan quickly, as the finance charges
escalate and eat into whatever profit there may be on any given model. It's
often in a dealers' interest to get rid of a car that's been in inventory
too long at a paper loss, just to save the finance money, which can be
applied to something else that might make a profit. Dealers fight with
manufacturers for cars that sell, versus having to take stuff that doesn't.
Manufacturer sales reps often make a dealer take five "stiffs" just to get
five hot models, so a Jeep dealer may get stuck with five Libertys just to
get five Rubicons.

If you think this is complicated, it is. This is why dealers get so
aggressive & have bad reps, they work on incredibly skinny margins in terms
of the capital outlays involved, and the manufacturers don't do much to
smooth this crap out for them, Further, if the dealer goes broke, the
manufacturer is out absolutely nothing. They just go looking for another
dealer / investor in the area to pick up the franchise.

(Oh, I worked in retail for a number of years, then spent twenty years with
two manufacturers in Service....I hate the car business!)

Re: OT: how much do stealerships mark up new cars by?
 

On Fri, 13 May 2005 13:43:36 -0700, "Doug" <pigdos@nospamcharter.net>
wrote:

>I figure there's got be some common ground here. Any thoughts? 100% markup?
>Do dealerships basically buy their cars from manufacturers?

I think you are living on a different planet from me ;)

Go to www.edmunds.com and read up on the new car buying process. There
are plenty of other good resources on the Internet.

Here's an example for a new Rubicon:
MSRP $27,365
Invoice $24,850

That's a $2515 (10%) profit if they sell for list price, which isn't
usually the case except for hard to get vehicles.

Dealers don't buy the cars, but they do to pay charges on cars that
sit on the lot over a certain time.

John Davies

Re: OT: how much do stealerships mark up new cars by?
 

On Fri, 13 May 2005 13:43:36 -0700, "Doug" <pigdos@nospamcharter.net>
wrote:

>I figure there's got be some common ground here. Any thoughts? 100% markup?
>Do dealerships basically buy their cars from manufacturers?

I think you are living on a different planet from me ;)

Go to www.edmunds.com and read up on the new car buying process. There
are plenty of other good resources on the Internet.

Here's an example for a new Rubicon:
MSRP $27,365
Invoice $24,850

That's a $2515 (10%) profit if they sell for list price, which isn't
usually the case except for hard to get vehicles.

Dealers don't buy the cars, but they do to pay charges on cars that
sit on the lot over a certain time.

John Davies

Re: OT: how much do stealerships mark up new cars by?
 

On Fri, 13 May 2005 13:43:36 -0700, "Doug" <pigdos@nospamcharter.net>
wrote:

>I figure there's got be some common ground here. Any thoughts? 100% markup?
>Do dealerships basically buy their cars from manufacturers?

I think you are living on a different planet from me ;)

Go to www.edmunds.com and read up on the new car buying process. There
are plenty of other good resources on the Internet.

Here's an example for a new Rubicon:
MSRP $27,365
Invoice $24,850

That's a $2515 (10%) profit if they sell for list price, which isn't
usually the case except for hard to get vehicles.

Dealers don't buy the cars, but they do to pay charges on cars that
sit on the lot over a certain time.

John Davies

Re: OT: how much do stealerships mark up new cars by?
 

On Fri, 13 May 2005 13:43:36 -0700, "Doug" <pigdos@nospamcharter.net>
wrote:

>I figure there's got be some common ground here. Any thoughts? 100% markup?
>Do dealerships basically buy their cars from manufacturers?

I think you are living on a different planet from me ;)

Go to www.edmunds.com and read up on the new car buying process. There
are plenty of other good resources on the Internet.

Here's an example for a new Rubicon:
MSRP $27,365
Invoice $24,850

That's a $2515 (10%) profit if they sell for list price, which isn't
usually the case except for hard to get vehicles.

Dealers don't buy the cars, but they do to pay charges on cars that
sit on the lot over a certain time.

John Davies

Re: OT: how much do stealerships mark up new cars by?
 

I was just wondering how much the markup was from say, the cost to actually
manufacture the vehicle (labor and parts but not R&D).

--
Remove nospam to email
"John Davies" <saab95aerowagon@yahoo.com> wrote in message
news:dhra81pdmmsu0gv90u3uhusj1bdqion67i@4ax.com...
> On Fri, 13 May 2005 13:43:36 -0700, "Doug" <pigdos@nospamcharter.net>
> wrote:
>
>>I figure there's got be some common ground here. Any thoughts? 100%
>>markup?
>>Do dealerships basically buy their cars from manufacturers?
>
> I think you are living on a different planet from me ;)
>
> Go to www.edmunds.com and read up on the new car buying process. There
> are plenty of other good resources on the Internet.
>
> Here's an example for a new Rubicon:
> MSRP $27,365
> Invoice $24,850
>
> That's a $2515 (10%) profit if they sell for list price, which isn't
> usually the case except for hard to get vehicles.
>
> Dealers don't buy the cars, but they do to pay charges on cars that
> sit on the lot over a certain time.
>
> John Davies
>
>

Re: OT: how much do stealerships mark up new cars by?
 

I was just wondering how much the markup was from say, the cost to actually
manufacture the vehicle (labor and parts but not R&D).

--
Remove nospam to email
"John Davies" <saab95aerowagon@yahoo.com> wrote in message
news:dhra81pdmmsu0gv90u3uhusj1bdqion67i@4ax.com...
> On Fri, 13 May 2005 13:43:36 -0700, "Doug" <pigdos@nospamcharter.net>
> wrote:
>
>>I figure there's got be some common ground here. Any thoughts? 100%
>>markup?
>>Do dealerships basically buy their cars from manufacturers?
>
> I think you are living on a different planet from me ;)
>
> Go to www.edmunds.com and read up on the new car buying process. There
> are plenty of other good resources on the Internet.
>
> Here's an example for a new Rubicon:
> MSRP $27,365
> Invoice $24,850
>
> That's a $2515 (10%) profit if they sell for list price, which isn't
> usually the case except for hard to get vehicles.
>
> Dealers don't buy the cars, but they do to pay charges on cars that
> sit on the lot over a certain time.
>
> John Davies
>
>

Re: OT: how much do stealerships mark up new cars by?
 

I was just wondering how much the markup was from say, the cost to actually
manufacture the vehicle (labor and parts but not R&D).

--
Remove nospam to email
"John Davies" <saab95aerowagon@yahoo.com> wrote in message
news:dhra81pdmmsu0gv90u3uhusj1bdqion67i@4ax.com...
> On Fri, 13 May 2005 13:43:36 -0700, "Doug" <pigdos@nospamcharter.net>
> wrote:
>
>>I figure there's got be some common ground here. Any thoughts? 100%
>>markup?
>>Do dealerships basically buy their cars from manufacturers?
>
> I think you are living on a different planet from me ;)
>
> Go to www.edmunds.com and read up on the new car buying process. There
> are plenty of other good resources on the Internet.
>
> Here's an example for a new Rubicon:
> MSRP $27,365
> Invoice $24,850
>
> That's a $2515 (10%) profit if they sell for list price, which isn't
> usually the case except for hard to get vehicles.
>
> Dealers don't buy the cars, but they do to pay charges on cars that
> sit on the lot over a certain time.
>
> John Davies
>
>