Dealers only make a little on car sales, I'm not having it!
Discussion
Mercedes-Benz World (MBW) is split into 2 separate businesses within Mercedes-Benz.
The dealership, Mercedes-Benz Brooklands, is just like any other dealership and pays "rent" to MBW for the facility.
The rest of MBW is a "brand experience centre" and although it has income from track rental, shop, restaurant etc it doesn't generate a profit (unless something has changed since I left MB). The overall cost is a marketing expense for MB UK.
The dealership, Mercedes-Benz Brooklands, is just like any other dealership and pays "rent" to MBW for the facility.
The rest of MBW is a "brand experience centre" and although it has income from track rental, shop, restaurant etc it doesn't generate a profit (unless something has changed since I left MB). The overall cost is a marketing expense for MB UK.
Searider said:
Rincewind209 said:
http://www.pendragonplc.com/main_content/pdf/resul...
A link to Pendragons 2013 accounts, as published. It clearly shows that the profit margin on new cars is 7.6%. Now as you pointed out Pendragon struggled a bit, so presumably they are not particularly good at making money. So that would indicate that other dealers make more perhaps? Also as you point out the business made only 2% net profit, but that is the overall performance and not the amount of profit on a new car.
So,A link to Pendragons 2013 accounts, as published. It clearly shows that the profit margin on new cars is 7.6%. Now as you pointed out Pendragon struggled a bit, so presumably they are not particularly good at making money. So that would indicate that other dealers make more perhaps? Also as you point out the business made only 2% net profit, but that is the overall performance and not the amount of profit on a new car.
A) £500 million gross profit split between 265000 new and used cars sold gives a gross margin of £1800 per car.
Does this suggest that this is the average "mark up" per car?
and
B) £38.9 million profit before tax split between 265000 sales gives £146 per car.
Surely this is what's left after all the staff have been paid, the glass showroom paid for etc. It's what's left over to pay as a dividend to shareholders (once corporation tax paid).
But how you get to B from A depends on how you run the business. Whether you have the choice to have a fancy showroom. How much you pay your staff. How many layers of backroom staff you have - irrespective of how many you need.
It's not at all clear!
ralphrj said:
Mercedes-Benz World (MBW) is split into 2 separate businesses within Mercedes-Benz.
The dealership, Mercedes-Benz Brooklands, is just like any other dealership and pays "rent" to MBW for the facility.
The rest of MBW is a "brand experience centre" and although it has income from track rental, shop, restaurant etc it doesn't generate a profit (unless something has changed since I left MB). The overall cost is a marketing expense for MB UK.
It works too - I went to MB world one Sunday Morning as i had spent the night at friends that live close by. At the time i had a BMW 7 series. A week later i had bought a Mercedes (although not a new Mercedes).The dealership, Mercedes-Benz Brooklands, is just like any other dealership and pays "rent" to MBW for the facility.
The rest of MBW is a "brand experience centre" and although it has income from track rental, shop, restaurant etc it doesn't generate a profit (unless something has changed since I left MB). The overall cost is a marketing expense for MB UK.
daemon said:
blade7 said:
Yet brokers make a living substantially undercutting the dealers that use them for leads.
They dont though do they?They generally have relationships or represent dealer groups who will sell off cars at a discounted price - presumably to meet targets or hit bonus levels.
TA14 said:
daemon said:
blade7 said:
Yet brokers make a living substantially undercutting the dealers that use them for leads.
They dont though do they?They generally have relationships or represent dealer groups who will sell off cars at a discounted price - presumably to meet targets or hit bonus levels.
They dont "undercut" dealers, they work with dealers who are prepared to offer cars at heavily discounted prices for whatever reason. They then either take a back hander from the dealer, or commission from the customer, or add it in as a margin.
For example, Broadspeed are part of the Inchcape dealer group thus when you speak to them all they do is put you through to the dealer within the Inchcape group who will supply the car at that price.
"Undercutting" dealers implied in some way they were bypassing them and getting stock elsewhere, when in fact they usually work with them.
POORCARDEALER said:
An example of whats wrong with new car sales in the UK is this...VW dealer I know is minimum 3 month wait for most of the product and longer on some models yet they are only retaining £280 per chassis average...the manufacturer is getting the big margins whilst their "dealer network" fight against each other for the scraps
Exactly. As a manufacturer you'd be bonkers to discount when demand outstrips supply. But manufacturers (of anything) usually treat their distributors like s
t, especially when they don't add any value.Big manufacturers like to be in control whether it's Microsoft or Porsche, they retain the vast bulk of the profit and will control demand by releasing sales allowances and rebate funding to stimulate demand as they see fit.
I got 34% and 25% off the last 2 cars I bought the vast majority of that will have been manufacturer funded in one way or another.
They need the retail networks and want you to be able to eat but not too well....
daemon said:
blade7 said:
Yet brokers make a living substantially undercutting the dealers that use them for leads.
They dont though do they?They generally have relationships or represent dealer groups who will sell off cars at a discounted price - presumably to meet targets or hit bonus levels.
blade7 said:
Must be a cosy relationship, I can haggle but DTD undercut the cheapest I could beat Ford dealers/Ford Direct down to on a Fiesta ST2 by over a grand, plus whatever commission was built in for the broker. No doubt target bonus can be a factor but not on every car a broker quotes for. Follow up servicing wasn't a factor either, I got 2 years thrown in on the Partners scheme.
I suspect the dealers sell them to them using a fleet discount. Either way, they're not buying them direct from the manufacturers.
daemon said:
blade7 said:
Must be a cosy relationship, I can haggle but DTD undercut the cheapest I could beat Ford dealers/Ford Direct down to on a Fiesta ST2 by over a grand, plus whatever commission was built in for the broker. No doubt target bonus can be a factor but not on every car a broker quotes for. Follow up servicing wasn't a factor either, I got 2 years thrown in on the Partners scheme.
I suspect the dealers sell them to them using a fleet discount. Either way, they're not buying them direct from the manufacturers.
blade7 said:
Yet brokers make a living substantially undercutting the dealers that use them for leads.
Personally I do it the other way round.1. Find out from the brokers how much a particular car will cost me to buy from them.
2. Go to the main dealer and negotiate towards a similar price.
Ozzie Osmond said:
Personally I do it the other way round.
1. Find out from the brokers how much a particular car will cost me to buy from them.
2. Go to the main dealer and negotiate towards a similar price.
Same here. We normally find the broker price then go armed to the local dealers.1. Find out from the brokers how much a particular car will cost me to buy from them.
2. Go to the main dealer and negotiate towards a similar price.
daemon said:
blade7 said:
Must be a cosy relationship, I can haggle but DTD undercut the cheapest I could beat Ford dealers/Ford Direct down to on a Fiesta ST2 by over a grand, plus whatever commission was built in for the broker. No doubt target bonus can be a factor but not on every car a broker quotes for. Follow up servicing wasn't a factor either, I got 2 years thrown in on the Partners scheme.
I suspect the dealers sell them to them using a fleet discount. Either way, they're not buying them direct from the manufacturers.
blade7 said:
That's what the dealers who couldn't/wouldn't match the price suggested, however I was the 1st owner and bought directly from the dealer not the broker.
Yes, as i've said already a lot of brokers just put you in touch with the supplying dealer.If you didnt pay a "handling fee" to DTD then they'll be getting a back hander from the dealer (or both)
Ozzie Osmond said:
blade7 said:
Yet brokers make a living substantially undercutting the dealers that use them for leads.
Personally I do it the other way round.1. Find out from the brokers how much a particular car will cost me to buy from them.
2. Go to the main dealer and negotiate towards a similar price.
daemon said:
If you didnt pay a "handling fee" to DTD then they'll be getting a back hander from the dealer (or both)
I give up, I've already said the commission would have been built in to what I paid the dealer. DTD wanted £200 if I cancelled after the car was ordered so I assume that's what they got from the dealer.blade7 said:
daemon said:
If you didnt pay a "handling fee" to DTD then they'll be getting a back hander from the dealer (or both)
I give up, I've already said the commission would have been built in to what I paid the dealer. DTD wanted £200 if I cancelled after the car was ordered so I assume that's what they got from the dealer.Gassing Station | General Gassing | Top of Page | What's New | My Stuff