Dealer profit margins
Discussion
Was talking to a close family friend (who shall remain nameless cause this could get him in trouble)
He works for an Audi dealership and we were talking about the new R8 V10 convertible, The dealership makes £15k margin per car sold and he says that they can get hold of 3-4 every 6 months, at present, they do not give discounts on the R8 due to demand!
Steve
He works for an Audi dealership and we were talking about the new R8 V10 convertible, The dealership makes £15k margin per car sold and he says that they can get hold of 3-4 every 6 months, at present, they do not give discounts on the R8 due to demand!
Steve
Steve Maund said:
Was talking to a close family friend (who shall remain nameless cause this could get him in trouble)
He works for an Audi dealership and we were talking about the new R8 V10 convertible, The dealership makes £15k margin per car sold and he says that they can get hold of 3-4 every 6 months, at present, they do not give discounts on the R8 due to demand!
Steve
Wow, just WOW! A company doing normal business...... He works for an Audi dealership and we were talking about the new R8 V10 convertible, The dealership makes £15k margin per car sold and he says that they can get hold of 3-4 every 6 months, at present, they do not give discounts on the R8 due to demand!
Steve
Remember that whilst they are making 15k for each R8 they sell, they are likely to be making less than a grand on many other models. They won't be doing it forever either. It's called 'making hay while the sun shines'
As a Ford Sales Manager I used to average less than 500 pounds net profit on the actual sale of the car. The profit came in the form of manufacturer bonuses for hitting sales targets.
As a Ford Sales Manager I used to average less than 500 pounds net profit on the actual sale of the car. The profit came in the form of manufacturer bonuses for hitting sales targets.
Somewhere between Margin and Net Profit, there are costs.
£15k Sounds like new cars, and yes if supply outstrips demand then no discount is the norm, which means more limited depreication.
Very rare now days though, time was new BMW, Merc etc cars were all like this. Now they go for the volume and have to discount. Hence they dont hold their money like they used to.
£15k Sounds like new cars, and yes if supply outstrips demand then no discount is the norm, which means more limited depreication.
Very rare now days though, time was new BMW, Merc etc cars were all like this. Now they go for the volume and have to discount. Hence they dont hold their money like they used to.
The margin on that R8 is exceptional (but it is an exceptional car)....I know most BMW's have roughly 10% in them in theory but very,very few actually get sold at full retail. I think most dealers make money out of used and servicing with new car sales once you take all costs doing well to make a profit. The manufacturers themselves have very low margins...the big three Germans are all less than 10%...Audi is the best because of all the platform sharing with BMW being the worst at below 5%.
what u need to think about is some dealers will have million+ quids worth of stock in the showroom at one time. very few if any dealers will buy stock in cash and will rely on borrowedmoney. this of course is subject to interest and the longer they have this unsold stock more it takes out of the margins. its all about the turnover of cars as quick as they can some will fly off like r8s but others could be sat there for months rackin up. it's all about risk factor, if that r8 sits on the forecourt for a few months and then is sold it may appear that when it's sold a nice profit is made but when the hidden costs are factored in then this is eaten away. your mate at the dealer may only see the purchase cost and selling cost but interest, insurance and whatever else is what the boss has to juggle, ownering a dealership is a tough business looks great on the outside but external forces can bring it crumbling down pretty damn fast
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