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
>
>

 

Doug wrote:

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

Yes, dealerships buy their cars from the manufacturers, and as far as I
know, they are the only ones that can.

American cars are about an 8.5% markup, and the trucks are about 12 to 14%.
Japanese cars are about 12% markup, and their trucks are 12 to 14% -
generally. This is from the sticker price to the invoice price.
No...there's not 3 invoices, either. The US government started requiring
car companies to publish invoice numbers because of past complaints of
fraud by dealerships.

A bottle of shampoo in the store is about 100% markup. With that in mind, it
seems that Biggs is ripping you off worse, doesn't it?

Now, the average car/truck nowadays sells at invoice unless its a new/hot
vehicle where the demand outweighs the supply, as in the new Mustang GT.
This means the dealership gets 3% holdback, assuming it hasn't been on his
lot more than 90 days because holdback is what pays for the floorplan
(money borrowed to have the car on the lot). If it has, interest starts to
eat at the holdback. They also often get advertisement reimbursements
that's designed to be spent promoting the product by the dealership. Of
course, they try and pocket as much of that as possible. However, we're
talking about $200 to $300 or so.

Now, your biggest, most aggressive dealerships have the slimmest margins of
all. They usually try and roll as many cars as possible to be the king of
the hill. They try and get more traffic in service, body shop, and used
cars to make up for it and the high number of new cars they sell generates
that traffic. You see, there are many dealerships in your area that likely
have the same cars on their lots, and so the product isn't unique enough to
command a good profit. It's too easy for Joe Consumer to go down the street
and bargain a little more. Therefore, many dealerships don't make much, if
any, profit from new cars after they've paid their salesmen, finance guy,
office people, general manager (if the owner doesn't run it), sales
manager, and any assistant sales managers. Believe it or not... This is
especially true today, where sales are difficult to get. It's a buyer's
market.

The opposite is true for used cars. They are unique. Your chances of finding
the same model, with similar mileage, with the same options, and the same
color, in the same condition are about as good as hitting the Powerball.
Therefore, the profit margins are much better. However, with 0% financing
and massive rebates on new cars, this market has taken a hit. With used car
interest rates at 5% and higher, it's often cheaper to get a new car that's
a few thousand more, but at 0% interest you'll pay the same or less for it.
Therefore, the used car market has taken a beating.

About 10 years ago, the new car sales, on average, netted the dealerships
about $1100 a copy. That's including everything before paying the help. I'd
say that due to the current market, where cars are routinely sold at
invoice, it's probably something more like $600 to $800 a copy.

Believe it or not, the manufacturer doesn't make that much profit per
vehicle, either. In 1997 they reported that GM had the highest profit per
vehicle at somewhere around $850 per vehicle. That doesn't sound like much,
but if you consider that GM produces about 3 million vehicles a year in the
US alone, that's a staggering $2,550,000,000, not to mention large/medium
commercial truck sales, GMAC, profits from foreign operations, and other
ventures. Of course, as most of you probably know, GM is now losing money
and their cars aren't selling anywhere near what they did in 1996.

--



Registered Linux user #378193

 

Doug wrote:

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

Yes, dealerships buy their cars from the manufacturers, and as far as I
know, they are the only ones that can.

American cars are about an 8.5% markup, and the trucks are about 12 to 14%.
Japanese cars are about 12% markup, and their trucks are 12 to 14% -
generally. This is from the sticker price to the invoice price.
No...there's not 3 invoices, either. The US government started requiring
car companies to publish invoice numbers because of past complaints of
fraud by dealerships.

A bottle of shampoo in the store is about 100% markup. With that in mind, it
seems that Biggs is ripping you off worse, doesn't it?

Now, the average car/truck nowadays sells at invoice unless its a new/hot
vehicle where the demand outweighs the supply, as in the new Mustang GT.
This means the dealership gets 3% holdback, assuming it hasn't been on his
lot more than 90 days because holdback is what pays for the floorplan
(money borrowed to have the car on the lot). If it has, interest starts to
eat at the holdback. They also often get advertisement reimbursements
that's designed to be spent promoting the product by the dealership. Of
course, they try and pocket as much of that as possible. However, we're
talking about $200 to $300 or so.

Now, your biggest, most aggressive dealerships have the slimmest margins of
all. They usually try and roll as many cars as possible to be the king of
the hill. They try and get more traffic in service, body shop, and used
cars to make up for it and the high number of new cars they sell generates
that traffic. You see, there are many dealerships in your area that likely
have the same cars on their lots, and so the product isn't unique enough to
command a good profit. It's too easy for Joe Consumer to go down the street
and bargain a little more. Therefore, many dealerships don't make much, if
any, profit from new cars after they've paid their salesmen, finance guy,
office people, general manager (if the owner doesn't run it), sales
manager, and any assistant sales managers. Believe it or not... This is
especially true today, where sales are difficult to get. It's a buyer's
market.

The opposite is true for used cars. They are unique. Your chances of finding
the same model, with similar mileage, with the same options, and the same
color, in the same condition are about as good as hitting the Powerball.
Therefore, the profit margins are much better. However, with 0% financing
and massive rebates on new cars, this market has taken a hit. With used car
interest rates at 5% and higher, it's often cheaper to get a new car that's
a few thousand more, but at 0% interest you'll pay the same or less for it.
Therefore, the used car market has taken a beating.

About 10 years ago, the new car sales, on average, netted the dealerships
about $1100 a copy. That's including everything before paying the help. I'd
say that due to the current market, where cars are routinely sold at
invoice, it's probably something more like $600 to $800 a copy.

Believe it or not, the manufacturer doesn't make that much profit per
vehicle, either. In 1997 they reported that GM had the highest profit per
vehicle at somewhere around $850 per vehicle. That doesn't sound like much,
but if you consider that GM produces about 3 million vehicles a year in the
US alone, that's a staggering $2,550,000,000, not to mention large/medium
commercial truck sales, GMAC, profits from foreign operations, and other
ventures. Of course, as most of you probably know, GM is now losing money
and their cars aren't selling anywhere near what they did in 1996.

--



Registered Linux user #378193

 

Doug wrote:

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

Yes, dealerships buy their cars from the manufacturers, and as far as I
know, they are the only ones that can.

American cars are about an 8.5% markup, and the trucks are about 12 to 14%.
Japanese cars are about 12% markup, and their trucks are 12 to 14% -
generally. This is from the sticker price to the invoice price.
No...there's not 3 invoices, either. The US government started requiring
car companies to publish invoice numbers because of past complaints of
fraud by dealerships.

A bottle of shampoo in the store is about 100% markup. With that in mind, it
seems that Biggs is ripping you off worse, doesn't it?

Now, the average car/truck nowadays sells at invoice unless its a new/hot
vehicle where the demand outweighs the supply, as in the new Mustang GT.
This means the dealership gets 3% holdback, assuming it hasn't been on his
lot more than 90 days because holdback is what pays for the floorplan
(money borrowed to have the car on the lot). If it has, interest starts to
eat at the holdback. They also often get advertisement reimbursements
that's designed to be spent promoting the product by the dealership. Of
course, they try and pocket as much of that as possible. However, we're
talking about $200 to $300 or so.

Now, your biggest, most aggressive dealerships have the slimmest margins of
all. They usually try and roll as many cars as possible to be the king of
the hill. They try and get more traffic in service, body shop, and used
cars to make up for it and the high number of new cars they sell generates
that traffic. You see, there are many dealerships in your area that likely
have the same cars on their lots, and so the product isn't unique enough to
command a good profit. It's too easy for Joe Consumer to go down the street
and bargain a little more. Therefore, many dealerships don't make much, if
any, profit from new cars after they've paid their salesmen, finance guy,
office people, general manager (if the owner doesn't run it), sales
manager, and any assistant sales managers. Believe it or not... This is
especially true today, where sales are difficult to get. It's a buyer's
market.

The opposite is true for used cars. They are unique. Your chances of finding
the same model, with similar mileage, with the same options, and the same
color, in the same condition are about as good as hitting the Powerball.
Therefore, the profit margins are much better. However, with 0% financing
and massive rebates on new cars, this market has taken a hit. With used car
interest rates at 5% and higher, it's often cheaper to get a new car that's
a few thousand more, but at 0% interest you'll pay the same or less for it.
Therefore, the used car market has taken a beating.

About 10 years ago, the new car sales, on average, netted the dealerships
about $1100 a copy. That's including everything before paying the help. I'd
say that due to the current market, where cars are routinely sold at
invoice, it's probably something more like $600 to $800 a copy.

Believe it or not, the manufacturer doesn't make that much profit per
vehicle, either. In 1997 they reported that GM had the highest profit per
vehicle at somewhere around $850 per vehicle. That doesn't sound like much,
but if you consider that GM produces about 3 million vehicles a year in the
US alone, that's a staggering $2,550,000,000, not to mention large/medium
commercial truck sales, GMAC, profits from foreign operations, and other
ventures. Of course, as most of you probably know, GM is now losing money
and their cars aren't selling anywhere near what they did in 1996.

--



Registered Linux user #378193

 

Doug wrote:

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

Yes, dealerships buy their cars from the manufacturers, and as far as I
know, they are the only ones that can.

American cars are about an 8.5% markup, and the trucks are about 12 to 14%.
Japanese cars are about 12% markup, and their trucks are 12 to 14% -
generally. This is from the sticker price to the invoice price.
No...there's not 3 invoices, either. The US government started requiring
car companies to publish invoice numbers because of past complaints of
fraud by dealerships.

A bottle of shampoo in the store is about 100% markup. With that in mind, it
seems that Biggs is ripping you off worse, doesn't it?

Now, the average car/truck nowadays sells at invoice unless its a new/hot
vehicle where the demand outweighs the supply, as in the new Mustang GT.
This means the dealership gets 3% holdback, assuming it hasn't been on his
lot more than 90 days because holdback is what pays for the floorplan
(money borrowed to have the car on the lot). If it has, interest starts to
eat at the holdback. They also often get advertisement reimbursements
that's designed to be spent promoting the product by the dealership. Of
course, they try and pocket as much of that as possible. However, we're
talking about $200 to $300 or so.

Now, your biggest, most aggressive dealerships have the slimmest margins of
all. They usually try and roll as many cars as possible to be the king of
the hill. They try and get more traffic in service, body shop, and used
cars to make up for it and the high number of new cars they sell generates
that traffic. You see, there are many dealerships in your area that likely
have the same cars on their lots, and so the product isn't unique enough to
command a good profit. It's too easy for Joe Consumer to go down the street
and bargain a little more. Therefore, many dealerships don't make much, if
any, profit from new cars after they've paid their salesmen, finance guy,
office people, general manager (if the owner doesn't run it), sales
manager, and any assistant sales managers. Believe it or not... This is
especially true today, where sales are difficult to get. It's a buyer's
market.

The opposite is true for used cars. They are unique. Your chances of finding
the same model, with similar mileage, with the same options, and the same
color, in the same condition are about as good as hitting the Powerball.
Therefore, the profit margins are much better. However, with 0% financing
and massive rebates on new cars, this market has taken a hit. With used car
interest rates at 5% and higher, it's often cheaper to get a new car that's
a few thousand more, but at 0% interest you'll pay the same or less for it.
Therefore, the used car market has taken a beating.

About 10 years ago, the new car sales, on average, netted the dealerships
about $1100 a copy. That's including everything before paying the help. I'd
say that due to the current market, where cars are routinely sold at
invoice, it's probably something more like $600 to $800 a copy.

Believe it or not, the manufacturer doesn't make that much profit per
vehicle, either. In 1997 they reported that GM had the highest profit per
vehicle at somewhere around $850 per vehicle. That doesn't sound like much,
but if you consider that GM produces about 3 million vehicles a year in the
US alone, that's a staggering $2,550,000,000, not to mention large/medium
commercial truck sales, GMAC, profits from foreign operations, and other
ventures. Of course, as most of you probably know, GM is now losing money
and their cars aren't selling anywhere near what they did in 1996.

--



Registered Linux user #378193

 

Mort wrote:

> John Davies wrote:
>> On Sat, 14 May 2005 00:29:56 -0700, "Doug" <pigdos@nospamcharter.net>
>> wrote:
>>
>>
>>>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).
>>
>>
>> Well, the dealers don't get that profit, the manufacturers do. And
>> they don't make any profit on some cars - the MSRP for the Prius
>> hybrid is something like $5000 LESS than they cost to build. The
>> manufacturers make up for this loss with highly profitable SUVs.
>>
>> John Davies
> About a month ago we got a new truck at work. 2005 Ram SLT. The window
> sticker that was on it was for $32,000 CDN MSRP. We paid $24,000
> through GE Fleet/Capital. The dealer said they onl make $150 on each
> vehicle they sell that goes through GE fleet. I don't know if this is a
> standard markup but I'm sure the average Joe couldn't get that truck for
> the $24,000.

They made about $150 from the buyer (yes, that's from actual, bottomline
cost), but DaimlerChrysler probably sent them a check for about $450 more
through the fleet program.

--



Registered Linux user #378193

 

Mort wrote:

> John Davies wrote:
>> On Sat, 14 May 2005 00:29:56 -0700, "Doug" <pigdos@nospamcharter.net>
>> wrote:
>>
>>
>>>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).
>>
>>
>> Well, the dealers don't get that profit, the manufacturers do. And
>> they don't make any profit on some cars - the MSRP for the Prius
>> hybrid is something like $5000 LESS than they cost to build. The
>> manufacturers make up for this loss with highly profitable SUVs.
>>
>> John Davies
> About a month ago we got a new truck at work. 2005 Ram SLT. The window
> sticker that was on it was for $32,000 CDN MSRP. We paid $24,000
> through GE Fleet/Capital. The dealer said they onl make $150 on each
> vehicle they sell that goes through GE fleet. I don't know if this is a
> standard markup but I'm sure the average Joe couldn't get that truck for
> the $24,000.

They made about $150 from the buyer (yes, that's from actual, bottomline
cost), but DaimlerChrysler probably sent them a check for about $450 more
through the fleet program.

--



Registered Linux user #378193

 

Mort wrote:

> John Davies wrote:
>> On Sat, 14 May 2005 00:29:56 -0700, "Doug" <pigdos@nospamcharter.net>
>> wrote:
>>
>>
>>>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).
>>
>>
>> Well, the dealers don't get that profit, the manufacturers do. And
>> they don't make any profit on some cars - the MSRP for the Prius
>> hybrid is something like $5000 LESS than they cost to build. The
>> manufacturers make up for this loss with highly profitable SUVs.
>>
>> John Davies
> About a month ago we got a new truck at work. 2005 Ram SLT. The window
> sticker that was on it was for $32,000 CDN MSRP. We paid $24,000
> through GE Fleet/Capital. The dealer said they onl make $150 on each
> vehicle they sell that goes through GE fleet. I don't know if this is a
> standard markup but I'm sure the average Joe couldn't get that truck for
> the $24,000.

They made about $150 from the buyer (yes, that's from actual, bottomline
cost), but DaimlerChrysler probably sent them a check for about $450 more
through the fleet program.

--



Registered Linux user #378193

 

Mort wrote:

> John Davies wrote:
>> On Sat, 14 May 2005 00:29:56 -0700, "Doug" <pigdos@nospamcharter.net>
>> wrote:
>>
>>
>>>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).
>>
>>
>> Well, the dealers don't get that profit, the manufacturers do. And
>> they don't make any profit on some cars - the MSRP for the Prius
>> hybrid is something like $5000 LESS than they cost to build. The
>> manufacturers make up for this loss with highly profitable SUVs.
>>
>> John Davies
> About a month ago we got a new truck at work. 2005 Ram SLT. The window
> sticker that was on it was for $32,000 CDN MSRP. We paid $24,000
> through GE Fleet/Capital. The dealer said they onl make $150 on each
> vehicle they sell that goes through GE fleet. I don't know if this is a
> standard markup but I'm sure the average Joe couldn't get that truck for
> the $24,000.

They made about $150 from the buyer (yes, that's from actual, bottomline
cost), but DaimlerChrysler probably sent them a check for about $450 more
through the fleet program.

--



Registered Linux user #378193

 

And you wonder why used car salesman are amongst the least trusted of all
professions? I hope you are more honest with your customers than you are
with your peers.
-Brian


"IsellJeeps" <jsprauer2000@yahoo.com> wrote in message

> call a Jeep dealer near you and ask for the new car manager..
> tell him you are from abc motors and are trying to trade for an 05 unlmtd
> rubi with 2500 miles.(people dont like it anymore) ask what invoice is
> with
> all options and ask if there are any rebates?? he will think you are a
> dealer...then ask "are you a buyer if I trade for it" & what price... he
> will spill his guts on invoice rebates and all so you will have a good
> idea
> what to pay for a new one!!!! should I write a book or what!!!!
>
>
> --
> Jarod Sprauer
>
> Talk is JEEP at
> www.sprauermotorsports.com
> 281-807-JEEP (5337)