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

[daemon]

hora said:

daemon said:

The glam and glitz is forced upon them by the manufacturer to maintain the manufacturers "image".

As has been said, new car sales is basically to support the areas where they do make money - servicing, parts, finance, extra warranties, supaguard, RTI insurance, tyre insurance, warranty work, repairs, bodywork, etc, etc.

Even then, they're not making a fortune overall.

Sytner Group - £3 billion turnover, £66 million pre tax profit (cant even think to work that out as a percentage)

http://www.am-online.com/news/2013/2/18/record-sal...

Lookers Group - £2.464 billion turner, £43.90 million pre tax profit.

http://investors.lookersplc.com/financial-summary

And many companies also declare a loss to avoid taxes. Good Accountants.


How can dividing one figure by the other back up £100 in each vehicle?

Plenty of sales people are told this and regurgitate on here but until a Dealer Principle or Accountant from a big main group says this I'll treat it as 'tell the troops this'. Agree?

Oh and OP (semi OT)alot of Merc dealers are Merc family owned...

So they're really making a billion a year but they're hiding it under their mattresses?

I've been in or around the motor trade for approx 25 years. I know various Dealer Principals and i know various sales managers.

Trust me on this - theres next to no profit on new cars.

Edited by daemon on Saturday 6th December 15:27

[stuartmmcfc]

markcoznottz said:

Yamahadivvyrider said:

According to my mates who works in car sales profit is not good on new cars.all the money's in 2nd hand and finance...

Motabilities the thing to be in, but noone wants the gig because of the, ahem, clientele.

Can you expand on that because I'm one of the clientele?

[smokeey]

stuartmmcfc said:

Can you expand on that because I'm one of the clientele?

I think he's saying a lot of them are "less than desirable".

You can be offended now...

[stuartmmcfc]

Ok, offended

[leefee]

Motab =. Smell of piss , fags and magic tree...or if you're unlucky, just piss.

[daemon]

[unrepentant]

daemon said:

Trust me on this - theres next to no profit on new cars.

Depends on the new car....

[daemon]

unrepentant said:

daemon said:

Trust me on this - theres next to no profit on new cars.

Depends on the new car....

In fairness - true.

Though we were talking about common or garden mercs and stuff like that.

[anonymous-user]

I am quite happy to accept that a new car dealer in any mainstream brand makes only a very small margin on any individual 'main market' new car sold

I think there is more in a car loaded with extras, more in an exotic member of the range and definitely more once the finance, polish, gap, alloy and tyre insurances are thrown into the mix

But the costs of being a franchisee of a big brand are pretty chunky and, as the figures from the plcs in the game show, the bit left after wages, bonuses, pensions, coffee etc. isn't massive

I have no issue with a good salesperson in a main dealer group earning good money. Make no mistake, compared to selling other things with similar ££ value, they do earn it!

What would really get my goat if I was a franchisee would be a punter like me walking into my Merc franchise (not a merc owned one) with a deal from Merc Corporate Retail Fleet and enquiring if it could be matched / beaten. Having the brand compete against its franchises is a tough one to swallow for franchisees imo.

[av185]

unrepentant said:

daemon said:

Trust me on this - theres next to no profit on new cars.

Depends on the new car....

Very true......Porsche makes an average of 15 percent......

[AlmostUseful]

Porsche do? Or the Porsche dealer does?

Presume they both make very different percentages. Though I've no doubt that a lower volume maker like Porsche makes a higher percentage than bmw or Mercedes.

[Sump]

It's a rule that if you are making a hilarious amount of money you claim not to make much and you claim always to be skint.

[silentbrown]

Sytner figure means about 2.2% profit.

So a £100K car makes them £2,200 profit.

BUT, remember that's after all their costs including rent, salaries, free coffees, courtesy cars, bank interest payments, etc. Each car they sell has to contribute to all that, somehow.

[daemon]

Sump said:

It's a rule that if you are making a hilarious amount of money you claim not to make much and you claim always to be skint.

Yeah everybody is lying.

[Sump]

Not everyone is making a comical amount of money

Majority of people are on generic 25k-45k P/A salaries..

[hondansx]

daemon said:

Thankyou4calling said:

I went into Mercedes Northampton yesterday.

A really impressive building, clean as a hospital and fitted out like a four star hotel. All new stock in the showroom, about 20 cars, were the same snow white colour wrapped in a Christmas bow.

A sales meeting had finished and at least 10 people in suits came down the stainless steel and glass stairs.

There were three on reception, a guy from service helped me, I had a hot chocolate served by someone and tucked in to a pastry.

Many claim main dealers make only a couple of hundred from a new car sale and servicing is only around £250 a year. If anything goes wrong the warranty covers it and there was no oil in sight.

How can they afford to run an operation like this whilst those who work there claim margins are so low?

The glam and glitz is forced upon them by the manufacturer to maintain the manufacturers "image".

As has been said, new car sales is basically to support the areas where they do make money - servicing, parts, finance, extra warranties, supaguard, RTI insurance, tyre insurance, warranty work, repairs, bodywork, etc, etc.

Even then, they're not making a fortune overall.

Sytner Group - £3 billion turnover, £66 million pre tax profit (cant even think to work that out as a percentage)

http://www.am-online.com/news/2013/2/18/record-sal...

Lookers Group - £2.464 billion turner, £43.90 million pre tax profit.

http://investors.lookersplc.com/financial-summary

That's a pretty naive review of things!

The profit you see is what their accounting has engineered.

[daemon]

hondansx said:

That's a pretty naive review of things!

The profit you see is what their accounting has engineered.

Within legal limits. If you're making a billion a year you would struggle to hide it with normal accounting practices. Also you may be able to hide money one year, but look at their historic accounts, and they're similar figures.

Also, the tax man knows what the margins are like and what to expect. You would see that both those big players are showing roughly the same pre tax profit percentage - and i would say thats fairly typical. IF Lookers were making 15% and Sytner 2.2% then somebody somewhere would be asking questions.

But what you're saying is that new car dealers have found a way to "hide" masses of profit that banks, big industry and oil companies havent? And ALL of them are doing it? And nobody has twigged?

Its a very low margin sector.

Its thinking otherwise that is naive.

If i won the lottery in the morning a new car dealership is NOT where i'd be sinking my money.

Edited by daemon on Saturday 6th December 22:15

[AW111]

If the margins are so thin (I am not saying they aren't), is the blinging up of dealerships cost-justified?

Here in Aus VAG have been upgrading all the dealerships to glass and pretension, and incidentally driving away owners of older cars who used to get them dealer serviced.
My mum is a case in point : at 75, she has switched to an independant as the local dealership has been subsumed into a monster new temple of glass and faux marble, where she was "treated like a poor relation" when going in to get her car serviced.
She's not the only one in that area with a similar story.

As everyone says the money is in service rather than sales, why do this? You sell a car once, but services are repeat business.

[unrepentant]

hondansx said:

That's a pretty naive review of things!

The profit you see is what their accounting has engineered.

You're the naive one. Lookers is a plc and Sytner is a division of a US public company.

[markmullen]

JPJPJP said:

I think there is more in a car loaded with extras,

The percentage is the same regardless whether it is a poverty spec or fully loaded.