Dealership profit

[pistonlager]

Say you bought a new car for 22K, what kind of profit would the dealership make, 3-4K?

[v8will]

pistonlager said:

Say you bought a new car for 22K, what kind of profit would the dealership make, 3-4K?

Too many variables but by the time they pay the VAT on the profit and any overheads then what the garage owner actually sees in his pocket will be substantially less.

[uncinquesei]

Gross profit or net profit?
full dealer margin could be in the region of 10 - 15% depending on franchise and how the dealership is paid (customer satisfaction, model mix etc results affect actual amount earned per car).
Take the costs out of that margin, wages, running costs etc and you're not left with a lot.
This is all assuming that the margin is still there...
Haggling, part exchange over allowances come out of it too...
So no, not that much at all hence the drive for finance, and all the bolt ons to put a bit of profit into a deal.
You wouldn't open a shop or a pub if your gross margin was that low and as for the mark up on clothing....

[odyssey2200]

Gross profit will vary between manufaturer and model.

It can even vary between model variant and time of the year or which quater of the year.

[xrv]

I'll assume you mean just in the car alone not including finance etc.
Depending on what kind of car it was, they'd probably be trying to keep £500-£1000. Times are hard though so if they desperate to make target then pobbibly nothing. Selling at a loss is not unheard of.

Edited by xrv on Saturday 25th September 20:19

[odyssey2200]

Some volume franchises will sell a car at cost and make thier margin as a result of meeting targets and being paid a volume bonus from the manufacturer.

[ToyotaJim]

odyssey2200 said:

Some volume franchises will sell a car at cost and make thier margin as a result of meeting targets and being paid a volume bonus from the manufacturer.

This.... When I sold for a franchise all unit profit (6%) went on the deal and the dealership kept in profit through healthy VRBs (volume registration bonus) for clearing targets every month.

[odyssey2200]

ToyotaJim said:

odyssey2200 said:

Some volume franchises will sell a car at cost and make thier margin as a result of meeting targets and being paid a volume bonus from the manufacturer.

This.... When I sold for a franchise all unit profit (6%) went on the deal and the dealership kept in profit through healthy VRBs (volume registration bonus) for clearing targets every month.

Thats all well and good until the dealership ends up just a few short of threshold

Cue lots of new demos being registered, new courtesy cars, and "Pre Reg'd" cars on the forecourt.

The dealership has then , not only sold all previous cars for nothing but not has to adopt the cars that it registers (pay for tham as opposed to being on a stacking plan) as well as pay for the cost of the PDI, sost of registration as then stand the depreciation while it sits around.

Further damaged is then caused when that "Pre Reg'd" car has to be sold for less than a new one to entice a punter to but it as opposed to a new one.

So the Pre reg car, has been paid for, registered, PDI'd depreciated while in stock and sold for less than ot cost.

[danyeates]

I work in the marine trade. We'd have nowhere near £3-4k profit in a £22k boat unfortunately. Not sure how the car industry operates but in today's times I doubt it's much different.

Edited by danyeates on Saturday 25th September 23:27

[Amateurish]

The manufacturer I worked for paid 12% margin. However, cars are very rarely sold at full list. Normally all the margin goes straight onto the bonnet i.e. discount from list for the customer. Then there would be monthly, quarterly and annual sales bonuses plus special one off deals to get the numbers at the end of the month. I saw cars being sold at half list and the dealer still not losing money.

[jb9193]

pistonlager said:

Say you bought a new car for 22K, what kind of profit would the dealership make, 3-4K?

Less than that; I know a manager of a Honda showroom and from what he's told me it's definitely under £1k on those types of car.

[Steameh]

jb9193 said:

pistonlager said:

Say you bought a new car for 22K, what kind of profit would the dealership make, 3-4K?

Less than that; I know a manager of a Honda showroom and from what he's told me it's definitely under £1k on those types of car.

Conversely then, how much profit would be made on say a Bentley Continental, or a DB9?

[jb9193]

Steameh said:

jb9193 said:

pistonlager said:

Say you bought a new car for 22K, what kind of profit would the dealership make, 3-4K?

Less than that; I know a manager of a Honda showroom and from what he's told me it's definitely under £1k on those types of car.

Conversely then, how much profit would be made on say a Bentley Continental, or a DB9?

I don't know too much about that, but what I do know is it's a lot more. Of course they cost more to produce because of materials etc, but there is a premium for the name all of which will contribute to a more substantial profit per unit sold.

[odyssey2200]

jb9193 said:

pistonlager said:

Say you bought a new car for 22K, what kind of profit would the dealership make, 3-4K?

Less than that; I know a manager of a Honda showroom and from what he's told me it's definitely under £1k on those types of car.

£500 max margin in a Jazz IIRC

[EDLT]

Bottom dealer price - auction price - upto £300 for repairs = the amount of profit in the cars at work. Not sure what's in the finance/warranty/service packages though.

[pistonlager]

So an approved used car, possibly from a trade-in is much more profitable?

[thinfourth2]

I thought they made their profit from the slightly bonkers labour charges

Oh and screen wash

[warmfuzzies]

pistonlager said:

So an approved used car, possibly from a trade-in is much more profitable?

It is if you conside Audi,

The 2.0tdi A3 has a depreciation of 35p/mile as trade in value, if you take a recent example known to me, it went in for 16k, was on the forecourt for 21k. probably sold for 20, hows that for a margin on a one year old car.

k

[AndrewW-G]

Steameh said:

jb9193 said:

pistonlager said:

Say you bought a new car for 22K, what kind of profit would the dealership make, 3-4K?

Less than that; I know a manager of a Honda showroom and from what he's told me it's definitely under £1k on those types of car.

Conversely then, how much profit would be made on say a Bentley Continental, or a DB9?

All depends on the deal and if there is a demand for a particular car at that time, when the demand for luxury cars died two years ago, you could get some very very good deals on them (£10-15k+ on A-M V8's IIRC)

Waiting list = healthy profits (all that stainless steel, plate glass and marble doesn’t pay for itself)

No waiting list = same cash flow generating techniques as everybody else

[Blown2CV]

For a single car retail to public, i think probably a 'good' deal for both parties would be with a gross profit of around £1.5k - £2k on a car like that, if no promotions are in effect. Margin is actually quite tight and being squeezed all the time by manufacturers. Quite often it is a very complicated breakdown of reimbursements, incentives, flat fees and percentages. Large volume deals typically the gross profit may only end up being a couple of hundred quid for each unit, but for a model benefiting from some kind of 'trading bonus' or something that the consumer isn't aware of, the margins can start VERY high. However, the trading bonus is there to enhance trading, so nearly always it is 'written-out' of the deal without much or any effort from the consumer, perhaps in advertised prices or in showroom displays; or just by allowing the consumer to think they 'beat' the dealer into getting a great deal and they go off feeling smug. If anyone gets a discount of larger than the gross profit figure I reckoned above, it will never have been their doing, but they will always be thinking they are the best negotiator in the world. Still, everyone is happy so why burst the bubble. Anyway, I am guessing you are asking because you want to know where to go in at?