Dealers only make a little on car sales, I'm not having it!

[CPTCar]

Would this affect your leverage in a negotiation at a dealership? I've noticed a lot of people think that they are doing the dealer a massive favour and expect huge discounts and extras etc... Often because they are spending what to them is a huge sum of money.

If the dealer is only making 2% profit on a car as some people have suggested, then that perception of 'this dealer owes me one' is totally unfounded. Or is that just propaganda that they want us to believe?

[jbsportstech]

When I worked for a large ford group the car sales was the least profitable arm of the business.

Looking at the figures one day with the group sale manager


New cars lost money overall

Used made a modest profit

Parts made loads

Service made a reasonable profit

Can't have parts and services without selling the cars so my take was car sales was not very profitable but was needed to support the rest of the activities.

[TA14]

daemon said:

TA14 said:

Let me make it easier for you then:
If you or I bought a car for £10K, spent £500 on it and all of the indirect costs that need to be included like rent, rates, electric, wages, advertising, VAT, etc. were £500, then sold it for £15K we'd call it £4K profit but in those big groups you knock off the salesman's wages and bonus and all of a sudden that £15K sale only made £200.

Gee, would that be because the indirect costs amount to more than £500????

For kick off the VAT would be payable on the margin, so theres £833 down the pan and thats before you take into account the massive running costs of those "glass palaces" we're talking about, so your £500 figure is wayyyyy out.

Heres a closer to life worked example BTW -

£15K used car on a forecourt, the dealer has probably bought it for £12,000.

The customer will be expecting 10% discount, so theres £750 gone.
The VAT man will take the guts of £400.
Prep costs - servicing, valet, minor repairs - £300
Advertising - £100
"House" charge per car to cover rent, rates, electric, etc - £300
Warranty - £300
Salesmans commission - £100
TAX allowance - £200

So thats leaving him with a heady £550 NET profit, which is on a used car which is where the REAL profit is.

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.

[greggy50]

Grandfondo said:

greggy50 said:

Dealer equipment must be a load of bks

Not sure how you need special equipment to remove a sump nut, change a filter and then fill a car back up with oil...

Maybe to turn off the service due light?

Most decent independent garages will have the necessary computer equipment now its all part and parcel if they want to remain competitive.

I know on anything VAG can pick up Vag Com for £200 or so and find out whatever you like, independent by me has variety of software on a laptop though and a snap on device thing they plug into the car and see to be deal with near enough anything and this is just a standard back street garage.

[greggy50]

V8RX7 said:

Some modern cars don't have sump nuts.

Nor dipsticks.

And unless you tell the ECU, at best you'll have an annoying "SERVICE" dash message but I think some now restrict performance if the ECU isn't told that it's been serviced.

I understand a lot of cars don't have a dipstick but sump nuts? They must be some sort of drain as otherwise how the hell do you get the oil out?

Service lights are normally all too easy to remove with a laptop and a lead as mentioned most independents have the ability to do this if they are any good.

[lowdrag]

Of course all the dealers are honest and only there to give service! How could you think otherwise? It is a fact of life that cars are now built less well, which is why brake pads need changing every year and discs every two years. Well, isn't it?

As an aside, they aren't like that here in France - well, at least to my knowledge - and give a good service at my Merc dealership, but don't expect a free valet; the car comes back serviced, but in the condition you took it in. And you pay for a "loan" car.

[Grandfondo]

greggy50 said:

Grandfondo said:

greggy50 said:

Dealer equipment must be a load of bks

Not sure how you need special equipment to remove a sump nut, change a filter and then fill a car back up with oil...

Maybe to turn off the service due light?

Most decent independent garages will have the necessary computer equipment now its all part and parcel if they want to remain competitive.

I know on anything VAG can pick up Vag Com for £200 or so and find out whatever you like, independent by me has variety of software on a laptop though and a snap on device thing they plug into the car and see to be deal with near enough anything and this is just a standard back street garage.

Sorry should have put a

[unrepentant]

greggy50 said:

dme123 said:

greggy50 said:

V8RX7 said:

unrepentant said:

I wouldn't trust a new car to anyone other than a factory trained expert.

You clearly haven't met the monkeys working in a Dealership.

You'll be lucky to have one mechanic who knows what he's doing - the rest haven't got a clue

I nearly spat my coffee out in the office reading that

As said most people in dealers don't have a clue just plug a computer in and lack any common sense at all. You would be far better off at a decent independent garage to be honest unless it was less than 3 years old and want to keep a warranty.

Yeah if this is even remotely true I wouldn't even consider buying another Jaguar. If you need the dealer equipment just to change the oil then that means you are stuck with dealers forever as the car ages and actual things start going wrong with it. My experience of Jaguar dealerships is that they are totally clueless and incompetent at anything more complex than changing oil so you're effectively restricted to take your car for repair to someone who absolutely does not have the technical ability to diagnose and repair it properly. When it starts fking up in complex ways (and it will when it's a few years old of course and the thin veneer of JLR quality wears away) you really will be high and dry.

Dealer equipment must be a load of bks

Not sure how you need special equipment to remove a sump nut, change a filter and then fill a car back up with oil...

Ahh... the ignorance of PH. This used to be a car site you know. Now.......

DME - no need to worry mate, it'll be a long long time until the modern stuff gets down to your price level.

[loose cannon]

greggy50 said:

I understand a lot of cars don't have a dipstick but sump nuts? They must be some sort of drain as otherwise how the hell do you get the oil out?

Service lights are normally all too easy to remove with a laptop and a lead as mentioned most independents have the ability to do this if they are any good.

They suck the oil out of the dipstick tube the undertray doesn't even come off
They won't be able to carry out software updates as that is main dealer only,
Some control unit programming won't be possible due to having the need for an oem uplink via the net. Though if they wish to pay the £20,000 odd a year for the privilage to the manufacturer if they even let you
Most indies are just ex dealer chaps that God fed up being payed crap money and set up there own site

[AW111]

Regarding diagnostic information, I looked into this about a year ago.

Manufacturers grudgingly, under threat of legal action, provide the minimum of diagnostic information via the OBDII port.
They only do this because the US made it mandatory for checking emissions.

They also provide a lot more information in proprietary form via the same port.
Most manufacturers will tell you what this extra data is, if you pay an annual fee of tens of thousands of dollars or more. The information comes with draconian non-disclosure terms.

What actually happens instead is that diagnostic kit gets "borrowed" and plugged into an analyser which effectively reverse-engineers the protocol.
This may involve an overnight trip to the far east

I wonder what the attempted manufacturer lock-down of servicing does to residual values.
Would you buy a 5 year old Jag if it could only be dealer serviced?
What about 8 years old?

[V8RX7]

unrepentant said:

greggy50 said:

dme123 said:

greggy50 said:

V8RX7 said:

unrepentant said:

I wouldn't trust a new car to anyone other than a factory trained expert.

You clearly haven't met the monkeys working in a Dealership.

You'll be lucky to have one mechanic who knows what he's doing - the rest haven't got a clue

I nearly spat my coffee out in the office reading that

As said most people in dealers don't have a clue just plug a computer in and lack any common sense at all. You would be far better off at a decent independent garage to be honest unless it was less than 3 years old and want to keep a warranty.

Yeah if this is even remotely true I wouldn't even consider buying another Jaguar. If you need the dealer equipment just to change the oil then that means you are stuck with dealers forever as the car ages and actual things start going wrong with it. My experience of Jaguar dealerships is that they are totally clueless and incompetent at anything more complex than changing oil so you're effectively restricted to take your car for repair to someone who absolutely does not have the technical ability to diagnose and repair it properly. When it starts fking up in complex ways (and it will when it's a few years old of course and the thin veneer of JLR quality wears away) you really will be high and dry.

Dealer equipment must be a load of bks

Not sure how you need special equipment to remove a sump nut, change a filter and then fill a car back up with oil...

Ahh... the ignorance of PH. This used to be a car site you know. Now.......

Irony mean anything to you ?

I was a car specialist and I know other car specialists.

When the Main Dealers have a problem that they can't solve - guess who they call ?

I have done things that Mazda state can't be done - what they mean is that they have never tried it.

A friend was called to the Rolls Dealer after they had tried to service a vintage Rolls and messed it up - I doubt the staff had even seen one before.

The apprentices at a local Main Dealer last on average 3 months - they start knowing as much as you and are instantly working on cars - don't worry there will be one guy who knows what he's doing - you just have to hope he's watching all of them, all the time.

[greggy50]

loose cannon said:

They suck the oil out of the dipstick tube the undertray doesn't even come off
They won't be able to carry out software updates as that is main dealer only,
Some control unit programming won't be possible due to having the need for an oem uplink via the net. Though if they wish to pay the £20,000 odd a year for the privilage to the manufacturer if they even let you
Most indies are just ex dealer chaps that God fed up being payed crap money and set up there own site

Ah well that's not too difficult for an indy to tackle...

Software updates agree main dealer only but then again these are free so nothing to be worried out.

Most basic servicing a good independent will have the software for though if they are any good and the more dodgy places may have something that has been reverse engineered...

Thought of a new complex car (F Type) and a quick google has bought up a few non jaguar garages that seem to have no problem in servicing them.

First 3 years may as well use main dealer though for warranty then move onto an independent who should have worked there way past any niggles at that point.

[loose cannon]

My apprentice worked for a merc specialist were he was treated like a slave and paid less than minimum wage
As soon as his college found out what they were up to, they sacked him, he is now almost able to work on his own
And gets looked after much better now though the money won't ever be great he will get a pension and above min wage
And he is now back at college but it's for a defence contractor now rather than a dealership

[Mr Whippy]

daemon said:

Mr Whippy said:

Anyone wonder why cars depreciate so much when they roll off the forecourt?

Because the customer perceives a new car is worth more?

Because a dealer restocking a used car still has to make a margin on it and price it to interest above said customer?

Because noone is going to pay the price of a new one for a second hand one?

Because theres better incentives to buy a new car?

Yeah, all those.

I'm justifying the business model.

The OP just needs to realise that they're not into paying for all those benefits and stuff... for them like many then used cars are a much better ownership proposition and experience I'm guessing.

[lowdrag]

Getting back to basics, in my day margins on new cars were 17.5%, servicing was cheap, and parts plentiful and not expensive. You could get a discount of 10-12.5% on a new car. Comes the modern era and margins on new cars drop, so guess what? - the dealership has to make up its money elsewhere, so parts and servicing go up. What comes around goes around I guess. But I wouldn't buy a new car ever again and lose so much money as I did in the day, nor would I use the main dealership once the warranty has expired. Most decent garages have the "suitcase" as it's called over here and can service and reset the computer ay a fraction of the cost. They will do so for mine next time the warning comes up, with but 6,000 miles since the last service, all because the system is now time expired rather than mileage. Now that is a rip-off.

[Roo]

lowdrag said:

Getting back to basics, in my day margins on new cars were 17.5%, servicing was cheap, and parts plentiful and not expensive. You could get a discount of 10-12.5% on a new car. Comes the modern era and margins on new cars drop, so guess what? - the dealership has to make up its money elsewhere, so parts and servicing go up. What comes around goes around I guess. But I wouldn't buy a new car ever again and lose so much money as I did in the day, nor would I use the main dealership once the warranty has expired. Most decent garages have the "suitcase" as it's called over here and can service and reset the computer ay a fraction of the cost. They will do so for mine next time the warning comes up, with but 6,000 miles since the last service, all because the system is now time expired rather than mileage. Now that is a rip-off.

That's why margins were reduced by the manufacturers.

They were fed up with dealers giving it all away and devaluing the product.

[Blown2CV]

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

[lowdrag]

And there was I thinking it was to bring margins more in line with Europe.

[Fast Bug]

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.

[Blown2CV]

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.

I Understand that. At cost, yes. At a loss, I'd say no. Maybe if it was the last car they needed to hit target. However I'm being told that they do this all the time, with multiple units every month. It's just bks.