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Whats a fair dealer profit margin ??

Discussion in '2nd Gen. Tacomas (2005-2015)' started by IdahoTacoTime, Nov 29, 2012.

  1. Dec 8, 2012 at 4:50 PM
    #161
    12TRDTacoma

    12TRDTacoma Powered by Ford, GM, VW, and Mercedes

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    Yeah, I am currently In The process of job hunting. The managers high up are two faced as hell.
     
  2. Dec 8, 2012 at 5:26 PM
    #162
    bash42

    bash42 Well-Known Member

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    I hope you can find something other than the car biz. The longer you stay the harder it is to get out. Best of luck!
     
  3. Dec 9, 2012 at 6:25 AM
    #163
    mcaanda

    mcaanda Geo-EngaNerd

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    12TRD -

    Sorta off topic but in the same realm to which others may wonder as well, but what is with the "hand off?"

    I HATE it when Im working with a sales guy / gal and about half way through the sales / dealing / ect... I get forwarded to someone else? Why the "F" do they do that? :mad:

    When I bought my Tacoma, I told the guy you hand me off, I'm walking out the door. Reading some of your responses now have me questioning if I put him in a spot where he had to say something to his manager about that?

    He was totally cool about it, ( or seemed to be from my perspective ) and I have to admit that it was the best vehicle purchase experience I'd ever had. No pressure, very very helpful, and willing to make sure that he found what I wanted - not what he was wanting to sell me off the lot.

    Thanks for the incite.
     
  4. Dec 9, 2012 at 10:11 AM
    #164
    SitkaSpruceMica

    SitkaSpruceMica Well-Known Member

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    I worked in dealerships for close to 20years, a few basic notes on NEW vehicle pricing......used car deals are

    really where dealers make their money and each one is so different no one can comment if they are not part of

    the deal or privy to the deal structure and can appraise thevehicle or vehicles involved.



    There are 3 main parts of a car deal:

    Front End - The amount over dealer cost that they can sell you the car for. (You can either try and figure this

    based onInvoice or you can try to figure dealer holdback too, but few dealers will let a Toyota buyer

    into their holdback and if they tell you they are.....recheck every other part of the deal.


    Back End - Everything else they can get you to buy with the car. Service Contract, Accessories, Chemical Applications,

    GAPInsurance, Credit Life and Interest Rate Mark-up (yes, they will jack up the financial institutions rate

    and they make a commission on getting you to pay higher interest. They tell you to wait and refinance after

    six months because after 90-120 days they can't have their commission reversed by the lender, only the lender

    loses notthe dealer).


    Recovery Piece - Your trade in. This is where things get impossible to compare one deal to another. If you are trading

    in a vehicle that is highly desirable you will see a better price than trading in an abomination. Customers

    almost NEVER see the ACV (Actual Cash Value) of thier trade in as most deals fall apart when the customer

    sees what the dealer really wants to pay. There are over-allowances (common) and under-allowances (rare).

    Over allowance shows you more for your trade so you feel better but you don't quite get the lowest price on

    the new vehicle. Under-allowance is when they steal your trade by so much they can ACV it at a comfortable

    price and have some left over to add profit to the new car deal structure too. If this has ever happened

    to you, you probably don't know about it......and you got SCREWED.



    Having said all that the BEST way to buy a new vehicle is with NO trade. If you have one, negotiate your price and all

    aspects of your deal first and spring the trade at the last moment. A lot of deals fall apart atthis point because the

    customer can't handle seeing the ACV of thier trade. Remember that if you buy low you need to trade low. If you buy

    high you should get top dollar for your trade. You CAN'T get the lowest possible price for the new vehicle and top

    dollar for your trade.....if you think you did, you probably got clubbed on rate or overpaid for a service contract or

    whatever but trust me.....you paid somewhere.



    I prefer to sell my own trade whenever possible. The key to getting a good price is to park it for sale so you can get

    leads. People who drive thier trade and try to sell at the same time always get less money and it takes longer to sell.

    Clean it, park it and wait for its next owner to call....it is as simple as that imo.



    Now, to answer the OP's original question a dealer should always make thier holdback and at least500 over Invoice

    and you should never buy anything except the vehicle (and service contract if thats your style or cant fix yourself).

    NEVER buy chemicals, GAP (on a Toyota GAP is just retarded). Don't finance accessories and deal with your own bank

    always, unless the manufacturer has 0-1.9%. The only way to kow your true rate is to deal with the loan yourself, get

    a purchase order for your new vehicle and have it funded by your bank. Dont pay excessive Documentation Fees either.

    I am OK paying about $100 in Doc Fees cause I know the finance person has to make money somehow and I don't buy

    'Back End' products so I think a small doc fee is fair. On my 2013 Tacoma I paid 700 over Invoice and an $86 doc.

    I feel like the deal was fair to me and let the dealer pay his folks and keep the free coffee flowing, lol.

    Folks have no idea of how expensive it is to run adealership and to try and negotiate into the holdback is just

    dicky imo, but toeach their own. Basically a dealer needs to make at least $500 on new and $2500-3500 on a used.

    Most new car sales pay the salesman a 'Mini' which is as low as $150 commission and never more than $300. Salesman

    make their money on used or high volume new at dealers witha low 'pack' and decent 'mini'.



    I am sure there is a lot I left out but those are thebasics.......good luck out there. We used to laugh that a person

    who buys a car every few years is going to come to the dealer and 'steal' a car for below its value and have the dealer

    lose money......let me tell you it isn't going to happen, they sell many cars a day and know their trade. Do folks come

    to where you work and pull the wool over everyone’s eyes and laugh all the way to the bank?......of course not. Because

    you can't remove the human element I am sure that there are deals that the dealer wish they could re-do, but 99.9% of

    the time they make a profit.....and to me thats the way it should be.



    TC
     
  5. Dec 9, 2012 at 2:27 PM
    #165
    bash42

    bash42 Well-Known Member

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    Wow. That a serious post with a lot of great information. I do have to disagree with your comment about never buying gap just because its a Toyota.

    Customer buys a new car with $0 down and finances for 60-72 months should always buy gap regardless of the manufacturer. I have seen MANY customers flipped in Toyota, just as I have seen with other manufacturers. For $300 it is a smart insurance to have.


    Edit - Oh and for being an expert in the business, $700 over invoice is not a good deal considering that means you probably only got $1,000 off MSRP
     
  6. Dec 9, 2012 at 2:38 PM
    #166
    SitkaSpruceMica

    SitkaSpruceMica Well-Known Member

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    If you have good insurance and DO NOT roll over negative equity you DO NOT need GAP.

    I live in a land-locked town with one dealer that has Honda/Toyota/Mazda/Dodge/GMC/CHEVY. There is a Jeep dealer but I wasn't considering a Jeep. Next closest dealer is 1000mi away and add a ferry ride to that.

    I paid what I was comfortable with and needed a car sooner than later. When the salesman greeted us I told him "We are here to drive 2 and buy one".....cause that was the truth.

    I don't consider myself an expert but thanks anyway for saying it. I stand behind my post 100%......but obviously it can't and doesn't apply to every situation.

    TC
     
  7. Dec 9, 2012 at 5:20 PM
    #167
    IdahoTacoTime

    IdahoTacoTime [OP] Active Member

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    I have learned a bunch from this post. Its been my observation in life that the two things a guy will fudge the facts on are.. " How little I payed for my car" and " How much I payed for my house"

    A lot of people who have sold more than a couple Tacomas have read this thread, and there have been some good discussions that came out of it.

    Truth of the matter is, and Toyota stats back this up, when it comes to Tacomas... they are seldom if ever sold below dealer invoice. Do cars sell under invoice ?? sure, all the time. Corollas, Camrys.. every day.

    I guess the point is, if you think that TRD OFFROAD D CAB V6 4x4s SELL FOR 28,500 all over the country.. or anywhere for that matter, you might screw yourself out of an actual good deal.

    I think ( having never answered the question ) that 1,500 is not an unfair amount to make on a new truck. 500 over invoice sounds about right to me. The salesman makes a mini- 200, the dealership keeps the rest.

    A lot of good information here from some guys who have been in the car biz for a long time. Its not an easy job. To be good at it you have to have your shit together, and build a client base. Its been an eye opener for me to be able to ask people outside of the car biz what they think about it. Thanks for all the responses.
     
  8. Dec 10, 2012 at 5:47 AM
    #168
    DR Da_da

    DR Da_da Infrequent Member

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    So how can a consumer ever really know what true invoice is? That number is so secretly guarded.
     
  9. Dec 10, 2012 at 7:46 AM
    #169
    bash42

    bash42 Well-Known Member

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    This is a classic line from Car Managers - there are three different managers here on the east coast who used to always say that. The real reason they tell you that, is so that you'll never believe when someone says they got a good deal. BC if you start believing all of these good deals, then you will essentially become ineffective as a sales person.

    Car managers are kings of manipulation/deception!
     
  10. Dec 10, 2012 at 8:31 AM
    #170
    SitkaSpruceMica

    SitkaSpruceMica Well-Known Member

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    DR Da da - Ask to see the Invoice or use Edmunds.com to get close.

    bash42 - We pretty much have the same truck! I got the auto because most of our driving is stop and go. I sure do like the SR5 and the 2.7L is so smooth......really nice truck.


    TC
     
  11. Dec 10, 2012 at 8:38 AM
    #171
    bash42

    bash42 Well-Known Member

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    yea i am a big fan of the 2.7L, fun to drive and plenty of capability in what i need it for. I did forego the SR5 in order to save myself around $1,000. I do really miss the intermitent wipers and back up camera (even though i am getting used to not having it again).

    How is the power on the 4cyl auto? some guys on here claim it is a dog.
     
  12. Dec 10, 2012 at 8:45 AM
    #172
    SitkaSpruceMica

    SitkaSpruceMica Well-Known Member

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    mcaanda - Alot of dealers use employ a Liner/Closer style sales team. The first salesman is basically a greeter and
    is used to identify real buyers and try to get them on a vehicle. They are also trying to ask questions about your
    trade and identify the decision maker. Once they determine you are a real buyer they try and turn you to the power
    closer. There are many reasons for this but the biggest reason is so thier most talented closers are not wasting
    thier time greeting tire kickers. It is a good system for alot of dealers and they do close more deals at better
    margins. ....again, those are just the basics of the Liner/Closer system.


    TC
     
  13. Dec 10, 2012 at 8:49 AM
    #173
    SitkaSpruceMica

    SitkaSpruceMica Well-Known Member

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    bash42 - I think the 2.7L is just fine for what it is and I could not be happier with it. It is far from a dog imo. We kept both of our 2004's....one with a V10 and one with an 8.1L so the 4cyl is a big change but a very pleasant one.

    TC
     
  14. Jan 9, 2013 at 8:05 AM
    #174
    bash42

    bash42 Well-Known Member

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  15. Jan 10, 2013 at 4:27 AM
    #175
    IdahoTacoTime

    IdahoTacoTime [OP] Active Member

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    Big deal.. its a base V6 and they are showing a Military and colledge grad rebate in the price. So add 2000.00 and maybe another 500 depending on the region.

    Its just a Tacoma for sale. Not a "super deal" . Unless you suck your own bank can beat 2.9 as well.

    I have sold 5 Tacomas since I started this thread. Nobody got one for free and nobody got screwed either.
     
  16. Jan 10, 2013 at 5:21 AM
    #176
    folmonty

    folmonty Active Member

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    There's so much information available to the buyer it's pretty hard for any dealer to jack up a customer unless they're uninformed. And there's still plenty of those! Shopping currently for a Taco replacement. Have KBB #'s on my old truck and new one, Internet quotes and price comps for both old and new. Hate selling vehicles and understand that's going to cost me couple G's. For the ease of a quick transaction, my purchase will come down to what the dealer is willing to give for the trade-in. We'll see today?
     
  17. Jan 10, 2013 at 6:21 AM
    #177
    aubi1414

    aubi1414 War Eagle!!

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    I gotta put my two cents in. This is not related to a new tacoma, but I bought a 2010 Sport Tacoma 4 door w/ 27,000 miles on it on 10/15/2011 for $22k. That to me was a GREAT price!!?? The truck was spotless, never been in the mud and was only driven in town by an older fella.
     
  18. Jan 10, 2013 at 6:35 AM
    #178
    bash42

    bash42 Well-Known Member

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    Actually it doesnt include those rebates.

    Yea big deal, they are selling a Tacoma for thousands below MSRP, something you said is impossible! :bananadead::crazy:
     
  19. Jan 10, 2013 at 7:30 AM
    #179
    Grieby54

    Grieby54 Horsebit

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    Sounds a lot like the purchase I just made.

    MSRP of my truck was right around $35k (2013 DCSB TRD O/R 4x4 with JBL/Entune/Nav and the towing package). Dealt with the internet sales team with the first dealership and got a price of $31,400. For those without math skills, that's nearly $4k less than MSRP. I also had the roof rack, clear bra, and hood protector installed, and the dealer had the mandatory theft protection on there as well. This brought me to roughly $33,100. Add TTL and I'm OTD at around $36k. Add in the fact that I got the $1000 recent grad rebate because of my wife and I got my truck for $32k before TTL.

    I wanted to shop around so I went to another dealership in the area, and they quoted me a price of $500 under MSRP and wanted to charge me nearly double for my add-ons. Their OTD price was $39,700 if memory serves me correctly. I asked the sales guy what his real price was and he said "Well, what do you think it should be?" I told him I wanted to see $35,500 OTD. He brought it back to the little sales box, then walked back out 5 minutes later and said that I'm asking for $5k off the truck. I said, "By your numbers, yes, yes I am." He said he couldn't do that, and he knows every dealership in the state and none of them would do that. He actually didn't believe me that I had gotten a quote for the truck at $31,400 until I showed him. He wasn't even willing to match it...

    So, all of that to say that Idaho, you apparently don't know what other dealerships are willing to sell their trucks for. Much like the second sales person I spoke to.
     
  20. Jan 10, 2013 at 7:51 AM
    #180
    bash42

    bash42 Well-Known Member

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    Nice purchase!!!!! Sounds like you ran into OP at the second dealership, you sure you didnt travel to Boise? lol

    Heres a toast to Idaho for memorizing everything they taught him at their little sales academy!

    :proposetoast:
     

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