Whats a fair dealer profit margin ??

Kinda takes me back to me experiance with talking to people about being in the service.. I was in the Army infantry. Just a grunt and it was a long time ago.. 8 out of 10 guys I talk to about "their" time in the service will tell me something like..... " I was a recondo sniper re-con special forces black ops airborn firepisser.. back when I was in the NAVY"...

Some years ago, I mentioned this to one of my old first sargents in a phone call.. he says " yea.. if every person that ever told me how they were in the special forces was for real.. you would have to wonder who the hell was left to cook for all of em "...

Kinda like all the people that Toyota apparently gave trucks away to

This has been a good thread. Just wanted to know what the perception of a car deal is. Whats fair ?? that really never got answered and probably wont.

 

How long have you been selling cars?

 

To answer the original question, I suppose fair is whatever the dealer can get. On the buyers side, fair is a matter of whatever he can get. If I had to put a number on it, maybe 3% over invoice.

I purchased a new 2008 Tacoma Double Cab TRD on 1/19/09. I bought it on the last day of the $2000 rebate. MSRP = $30,394. I paid $25,200 + ttl.

I think I got a great deal. I actually went to the dealership to buy the truck one night, but got cold feet, backed out and the dealer called me the next day. They ended up offering me $1000 less than the night before. So did I cheat the dealership or were they about to cheat me (had I not backed out the night before)? Why did the price change?

Just curious for those of you that sell cars, how close is the edmunds.com true market value?

 

I have a customer I just sold a jeep grand cherokee to, we are putting a hitch on, remote start, and bluetooth in, if he was a dick, I'd book him in when I please, and when all the parts came in.

because he was a reasonable guy to deal with, I was happy to get his jeep in to put the hitch on today, and lend him a truck to use overnight to get some things home. I also gave him a free coffee mug, and had his jeep ready by noon.

I can quite easily get a good customer in for service when things are booked and busy at the dealership, and lend a vehicle to them when the service loaners are all taken, none of which I would do for a customer that wasn't pleasant to deal with, or someone that negotiated us down to no profit.

you mean would I pay 1.5x the price for the same product? no, that's not a fair comparison, paying $32k vs paying $30k is more like paying $105 vs paying $100, would I pay a few bucks more for a great salesperson, and having someone take care of me when I needed it, hell yes!

I've had nothing but trouble with my telus tv, and hate them, i'd gladly pay a small amount more to get a better provider. (unfortunately I like the way their guide works haha)

 

I think when people say what they paid on here it doesn't include tax, tag, and fee's. I don't have any problem believing anyone here saying they got their truck for $1000's under MSRP. I bought my first Tacoma in Tampa FL, MSRP was $25,580 and i got the truck for $20,200. After the fee's it cost $22,600.

The dealer in Tampa was the only dealer willing to make that deal, but i'm sure they didn't lose any money or why would you sell it? I didn't haggle, just called the guy and told him what i wanted, and he asked me if i had already got prices for the truck. After i told him i had been shopping, he offered it to me at that price and i drove 150 miles the next day and got my truck.

Now i will admit that was the first new car i ever bought and have expected to get a break off MSRP somewhat close to that ever since. It's not easy but i have always made out really well.

But i your statement above sounds like your saying that the guys on here are lying about truck their prices, when we don't really have a reason to. I know for a fact that Tacoma's sell for under $4000.00 MSRP. I still have the sticker that comes on the truck in my filing cabinet with the MSRP on it and the copy of the check i used to paid for the truck. Hell i even got them to throw in all weather floor mats and 2 spare keys in for free when i picked it up.

 

The average new vehicle is marked up 5-7% before negotiations

 

20 units per month @ $300+/- would be a real nice living.

not a bad gig...

except for the nights & weekends

 

I've been a mechanic at dealerships and independents for the past 35 years. I do not sell cars never have. But I did learn something from a big dealership that I worked at in North Hollywood California one year. When I first started there it was a small dealership doing well. The owners sons were working there way through the dealership. You see the owner wanted his sons to know everyjob in the dealership first hand. Anyway one day I was talking with the eldest son who at that time was working the parts counter. He had told me that the "Service Department" was paying the overhead for the entire dealership and that "Sales and Parts were the Dealerships profit".

Now if you look at a Dealership as many buisnesses wraped into one how do you say what is a fair profit on just the one department?

Now later when I was back for the 3rd time at that same dealership and it had grown tremendously, the son was now the General Manager after doing stints at other dealerships also. Now this Dealership owns the land, the building, all of the cars, and everything in it. It is divided into departments and each department much reach a goal set by management. Each department must pay rent for it's space to the owner. The cars are owned but the sales department must pay flooring fees to the owner. The service department pays rent for it's space. The owner is one wealthy smart buisnessman.

Again understand that in a dealership there are many ways for that dealer to earn money and profit and the sale of a car isn't what floats the boat.

vince

 

Like the last guy said. Parts and service make significantly more profit for the dealership than sales. Parts makes serious $$$$ and no one negotiates

 

Hi,

I was the cook and damned happy I was! And to those that were doing the ugly business, Thank You!!

What's fair is a perception, if I'm treated with respect with a straight forward offer I'm more willing to consider it fair. If they start pulling the "tricks of the trade" (Read this: http://www.edmunds.com/confessions.html ) I get the feeling I getting screwed and walk, that is if I haven't been separated from my vehicle by at least a mile like happened when I visited a local dealership (60 miles away here in rural Iowa) thinking I was going to take them up on an offer made over the phone only to find out they couldn't find the vehicle I was interested in!

Jim

 

You probably wouldn't have gotten a 4WD model for that price if you didn't have a trade in. It sounds like they might played some games on the trade in, to make it look like a slightly better deal.

 

And i fully understand that and appreciate your view point, but 2,000 in price works out to roughly $40/month in payment. So a free coffee mug and potentially a loaner vehicle or maybe some expedited service (if you go back to dealer service dept $$$$$$$) once every 3-4 months is worth $40/month to you?

To me, it is not and that is why I will negotiate the extra $2,000 off my truck.

Here is out it breaks down and it is very simple to understand -

The dealer is in business to make as much money as possible. If someone would pay $5,000 over MSRP, it is in the dealers best interest to say yes.

I am in my own business to improve my bottom line and if i can find a dealer to sell me the same vehicle for $3,000 less than MSRP, it is in my best interest to do so.

 

Its not really up to us the consumer to determine the fair dealer profit margin. All we can do is determine what we are willing to pay for the vehicle and let the dealer decide if its a fair deal or not for them. The dealer must be making something otherwise the door wouldn't be open and the lights wouldn't be on. Just remember the dealer has the upper hand on the buyer because they truly know the invoice price and the actual dealer price paid for each vehicle. This is called free market and its what makes this county great.

 

OP, since you work for Toyota, what do you think is a fair profit on each new Tacoma sold? What does the dealer expect to make on average for each new Tacoma sold?

 

Agreed, I'm sure some people dont include tax, fees and tags however... I personally am an Oregon resident in the military and even purchasing my new truck here in Nebraska, I paid no sales tax. Saved about 2.4k with that. Only cost me $83 for a 2 year registration.

 

No. USAA auto buying program. The dealer I went to was an approved USAA auto buying program dealer. I put in through USAA the exact model and specs I want and USAA tells me what I should expect to pay. That figure was exactly $29,061 for a 2012 DCSB TRD OR V6 4x4, MSRP of $33,900 (approx). The dealer contacted me once they received the paperwork though USAA to schedule an appointment. When I arrived I said nothing of a trade, in fact I parked in the back. Salesman had my paperwork but had a little better price for me than USAA said I should expect to pay ($28.5ish). After we agreed on that number, I then told him I had a vehicle to trade, 2008 AC V6 4x4 SR5. They offered 18.5, I countered with 19.5 and was offered 19 even. We agreed on that, felt it was fair, giving me just just about 2.5k in positive equity putting me at a out the door price of just over $26.

So no, no games were played on the trade to make it seem like a slightly better deal. The deal was reached prior to even mentioning a trade.

Now you know all know my business... suppose it took doing that to get some of you to believe the rest of us when we say that its possible to get these prices for our trucks. Ya'll just have drank too much dealership kool-aid.

 

These days, I think 100-300 over invoice is FAIR.

 

I think a fair price is a grey area.

I know of one guy locally who sells more Toyota's than the dealership his office is in. He gets paid by big Toyota and not where he works.

I think the finance guys and the sales guys kinda work case-by-case depending on how bad that want to get rid of a car that's taking up space, so they may be more in a position to deal and take a loss on that one instance, but are able to make it up on another.

The service/parts keeps them going. The mechanics are paid with jobs with a time-quote, so if the mechanics beats the clock, the dealer profits.

It's almost like a balancing act to squeeze as many jobs into their operating hours as possible.

Some of the cars here sell themselves...so the sales guy wouldn't have to stress over every sale as long as he pushes a volume. If he is stressing, then he's either greedy or behind the quota.


Like this one time last year I went looking at the 2012, got a fair enough price quote but they didn't have it on hand, so the sales guy tries to sell me the truck in a different color(that was on hand) and play his games about paying the $200 reserve to hold the truck(that was the wrong color) for me.


I guess some people are used to doing business that way, I just walked out.

just my $0.02

 

I can't speak for anyone else but for me, the prices quoted in the majority of posts here and in the "What did you pay for your 20XX" threads are meaningless. Without knowing the specific numbers about your state/ provincial tax; if freight is included; or registration fees; or admin fees; or trade-in details...the dollar amounts posted are useless for comparison purposes. I'd like to see people post the price of the truck, inclusive of all options, freight, and admin fees but not including any trade in amounts or tax or interest. Then we could all compare numbers equally and help each other to determine an actual fair price. Thank you Teeps for sharing the full picture for your purchase, I think you got a great deal.

 

I've read most of the replies on here, and really everyone seems to think they have it all figured out, as far as how much we deserve to make, but most are incorrect in their logic as to how we work.

at the top of this page, the guy saying we should make $100 to $300 per vehicle? are you on glue? you realize when you buy that nice big screen tv they are making more than that right?

As a sales person, I think I should be able to TAKE HOME $600 ish per vehicle. some will be significantly more, and some significantly less.
I go in early and I work late any day of the week, I work most of my days off, I don't get "lunch breaks" and I am busting my ass for those deals, in doing so isn't it fair that I can become a wealthy person?

Most dealers pay the sales person 25% of gross profit (the profit between what we pay, and what we sell the vehicle for)
so that would mean we need to make $2400 per vehicle on average for me to make the money I want to make.

don't you think when I sell a $40,000 RAM truck I should be able to make $600?