Dealers only make a little on car sales, I'm not having it!
Discussion
Blown2CV said:
Fast Bug said:
Blown2CV said:
On the lease thread I'm being 'educated' that dealers strategically make a loss in order to hit target. Apparently this happens all the time
It does. Rather better to take a hit on a vehicle actually sold to a customer than taking a punt on a pre reg and not knowing how long it will be in stock.
ks. If accept it would happen rarely, just. To be honest I'd expect they were doing something wrong to get to that point. However if it becomes regular enough to be part of their business model? Time for a regime change. Churn in dealer networks is huge though. Most of those fkers don't have a clue how to run a business.
kers don't have a clue how to run a business. Fast Bug said:
Blown2CV said:
Fast Bug said:
Blown2CV said:
On the lease thread I'm being 'educated' that dealers strategically make a loss in order to hit target. Apparently this happens all the time
It does. Rather better to take a hit on a vehicle actually sold to a customer than taking a punt on a pre reg and not knowing how long it will be in stock.ks. Depends on the dealer group, some of the big boys will do it month in month out. Some of the smaller groups will do it from time to time if they're not far off target.
There's no right or wrong answer, every company is different. But if you're faced with making a £1000 loss on one vehicle, but that one vehicle will get you to target and a bonus of £50k you'd do it in a heartbeat and be foolish not to.
If each month you're pre registering 30 cars to hit your target, and only selling a dozen of the 30 before pre regsitering another 30 to hit the next months target then you're doing it wrong. And yes this does happen, I used to look after a dealer group that had massive problems a few years ago. They had over 100 pre registered vehicles in stock, some of them up to a year old. They managed to avoid going bust by the skin of their teeth
There's no right or wrong answer, every company is different. But if you're faced with making a £1000 loss on one vehicle, but that one vehicle will get you to target and a bonus of £50k you'd do it in a heartbeat and be foolish not to.
If each month you're pre registering 30 cars to hit your target, and only selling a dozen of the 30 before pre regsitering another 30 to hit the next months target then you're doing it wrong. And yes this does happen, I used to look after a dealer group that had massive problems a few years ago. They had over 100 pre registered vehicles in stock, some of them up to a year old. They managed to avoid going bust by the skin of their teeth
DonkeyApple said:
Hora has a very relevant point. Both Merc shops and Sytners in the UK are specifically designed to not turn a profit as that is taxable and hugely inefficient.
In the case of the German dealers the rel profit is booked via the offshore banking structures so not tax is paid and the dealership units flow enough revenue to cover operations.
Same with Sytner which funnels all key cash via offshore groups to Penske in the US.
The real problem for dealership owners was when they started being bought out by the manufacturers. I know one Merc dealer in London who's deal was structured based on the income declared through his business. As such he took an absolutely enormous drop in real income
There isn't much money at all in selling new cars when you look just sales as the production profit is booked at the point
the car is sold from the Group to the dealership but true income is from selling debt.
The debt side is a wonderful wheeze. You get to sell money to people with good credit ratings at the price of a bad rating, plus it is secured against an asset. It is hugely lucrative. Dealerships are fundamentally debt vendors where unlike a bank which might throw in travel insurance to sweaten the deal, they can loan you a car.
Plus, with quite lax regulation around retail debt vending you can package some very entertaining deals via basic obscuring and complexity and rape the shot out of the average man in the street as almost no one really understands debt, including most of those who sell it.
And with PCP the target audience has to keep coming back for more debt! In the case of the German dealers the rel profit is booked via the offshore banking structures so not tax is paid and the dealership units flow enough revenue to cover operations.
Same with Sytner which funnels all key cash via offshore groups to Penske in the US.
The real problem for dealership owners was when they started being bought out by the manufacturers. I know one Merc dealer in London who's deal was structured based on the income declared through his business. As such he took an absolutely enormous drop in real income
There isn't much money at all in selling new cars when you look just sales as the production profit is booked at the point
the car is sold from the Group to the dealership but true income is from selling debt.
The debt side is a wonderful wheeze. You get to sell money to people with good credit ratings at the price of a bad rating, plus it is secured against an asset. It is hugely lucrative. Dealerships are fundamentally debt vendors where unlike a bank which might throw in travel insurance to sweaten the deal, they can loan you a car.
Plus, with quite lax regulation around retail debt vending you can package some very entertaining deals via basic obscuring and complexity and rape the shot out of the average man in the street as almost no one really understands debt, including most of those who sell it.
unrepentant said:
You drive an old beater though. You are obviously going to use a cheap back street garage to look after it. I wouldn't trust a new car to anyone other than a factory trained expert.
example of the mindset that the arseperational dealers and makers want as for 'factory trained experts' ... well
unrepentant said:
0a said:
unrepentant said:
You drive an old beater though. You are obviously going to use a cheap back street garage to look after it. I wouldn't trust a new car to anyone other than a factory trained expert.
To be fair a new car needs far less expertise to look after than an old one (little should go wrong for a start). I'd only trust my old beater to Eric at my garage who did 20+ years at MB before leaving because he disliked the poor quality of modern Mercs!
My guys know far more about looking after a car and keeping it working than any main dealer. The difference is that the money I pay them goes into their pockets and not into a flash dealership - I have no problem at all with flash dealerships, they offer what their customers want.
TA14 said:
You can argue about the figures all day long but you're missing the point. In your example there, the profit is £550 + £100, which is more than the NET profit that you quote, just as the profit in the example that you quoted earlier is more than 2.2%. In your example the £550 + £100 can be split any way you like but it's the total profit that people mean not the part of that profit that goes to the holding group or whoever/whatever you choose to call it.
You need to throw into the mix that some cars hang around months and can drop in value each month, the example assumes everything walks off the forecourt in month doesn't suffer write down or the cost of being cleaned weekly for 13 weeks. That can eat into the 550 very quickly I would not do it for a living again as its not a big earner and income was so erratic my basic in 2002 was £12k! mph1977 said:
unrepentant said:
You drive an old beater though. You are obviously going to use a cheap back street garage to look after it. I wouldn't trust a new car to anyone other than a factory trained expert.
example of the mindset that the arseperational dealers and makers want as for 'factory trained experts' ... well
unrepentant said:
Wacky Racer said:
Just wondered rep, why the comment about the oil...surely all that is needed is a spanner/allen key to fit the sump plug, and maybe an oil filter strap?.....
There's no drain plug Wack. The oil is sucked out by machine.Main dealers suck the oil out as its quicker than getting the car up on ramps, removing the undertray and then the sump bolt.
However the car still has a sump bolt, and you can change the oil at home/backstreet garage no problem if you don't want to invest in the machine to suck it out.
Also, if you think that a master certified tech is attaching the machine that sucks the oil out, and doing the oil services ( and oil services are all its going to need for the next 60k ) I have a bridge to sell you, as this job is usually given to the apprentice.
And you can get all the Jaguar Dealer software for £99 on ebay to reset service lights and get and reset codes.
http://www.ebay.co.uk/itm/Jaguar-Land-Rover-Diagno...
loose cannon said:
daemon said:
The new car sales injects new cars into the local area for the service department to subsequently work on.
A typical new car salesman in an "average" dealership selling fords or vauxhalls might earn £25,000 to £30,000 a year including commission.
For that he'll be expected to do 09:00 to 18:00, with at least two late nights and probably a saturday or sunday and he'll be expected to sell several million pounds worth of new cars each year.
Granted they might scratch their plums for part of any given day, but its hardly film star wages
Did they have to go to college for 5 years to learn mechanics and electrical diagnosis and risk killing people if they don't do the job correct ! Err no they didn't therefore the mechanic/ technician should be paid more than somebody that talks car features and discusses pricing which is generally fixed to a pre sales plan decided by the sales manager ? A typical new car salesman in an "average" dealership selling fords or vauxhalls might earn £25,000 to £30,000 a year including commission.
For that he'll be expected to do 09:00 to 18:00, with at least two late nights and probably a saturday or sunday and he'll be expected to sell several million pounds worth of new cars each year.
Granted they might scratch their plums for part of any given day, but its hardly film star wages
Junior salesmen are probably on £10K basic + commission, rising from there.
I would say the best of mechanics are on over £30K pa.
Theres certainly nothing to stop someone who is a mechanic becoming a salesman if they put their mind to it, but i suspect not too many would want to.
Grandfondo said:
Fast Bug said:
I really don't get the problem with buying vechicles on finance? Ignoring the fact on a pcp you can pay the balance and keep the car...
There is no problem,the problem for dealers and manufacturers would be if there was no finance like in 2008/10.Unsecured debt is where they really got jumpy.
Fast Bug said:
Blown2CV said:
On the lease thread I'm being 'educated' that dealers strategically make a loss in order to hit target. Apparently this happens all the time
It does. Rather better to take a hit on a vehicle actually sold to a customer than taking a punt on a pre reg and not knowing how long it will be in stock.Fast Bug said:
Depends on the dealer group, some of the big boys will do it month in month out. Some of the smaller groups will do it from time to time if they're not far off target.
There's no right or wrong answer, every company is different. But if you're faced with making a £1000 loss on one vehicle, but that one vehicle will get you to target and a bonus of £50k you'd do it in a heartbeat and be foolish not to.
If each month you're pre registering 30 cars to hit your target, and only selling a dozen of the 30 before pre regsitering another 30 to hit the next months target then you're doing it wrong. And yes this does happen, I used to look after a dealer group that had massive problems a few years ago. They had over 100 pre registered vehicles in stock, some of them up to a year old. They managed to avoid going bust by the skin of their teeth
I've just hopped over from the leasing thread blown2cv, and it would seem that somebody else is saying exactlty what I said to you over there. If memory serves me fast bug is in the trade. There's no right or wrong answer, every company is different. But if you're faced with making a £1000 loss on one vehicle, but that one vehicle will get you to target and a bonus of £50k you'd do it in a heartbeat and be foolish not to.
If each month you're pre registering 30 cars to hit your target, and only selling a dozen of the 30 before pre regsitering another 30 to hit the next months target then you're doing it wrong. And yes this does happen, I used to look after a dealer group that had massive problems a few years ago. They had over 100 pre registered vehicles in stock, some of them up to a year old. They managed to avoid going bust by the skin of their teeth
So two independent sources telling you the same thing, but we're obviously lying, just to wind you up.
Grandfondo said:
daemon said:
THere was always finance for the right people and the right deal. Car finance is secured against the car, so theres less risk.
Unsecured debt is where they really got jumpy.
Lots and lots of people back then were being rejected but now are ok!Unsecured debt is where they really got jumpy.
Read into this what you like.
Maybe its the company you keep?
oldnbold said:
I've just hopped over from the leasing thread blown2cv, and it would seem that somebody else is saying exactlty what I said to you over there. If memory serves me fast bug is in the trade.
So two independent sources telling you the same thing, but we're obviously lying, just to wind you up.
Its the problem with these threads - the trade tell it how it is but some just know better and get aggressive and insulting when its not what they want to hear.So two independent sources telling you the same thing, but we're obviously lying, just to wind you up.
And then people wonder why so few of the motor trade post on the main boards.
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