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The way a dealer pays his overhead. Posted by Mike Lynch [Email]  (#81) [Profile/Gallery]
(more from Mike Lynch) on Sun, 21 Apr 2002 18:49:26
In Reply to: What is the dealer holdback on '02 9-5 linear? n/m, mack, Sun, 21 Apr 2002 00:07:12 Members do not see ads below this line. - Help Keep This Site Online - Signup |
A dealer calculates his profit or "gross" from "invoice" which does not include the hold back or additional discount on the car the dealer receives from the factory. So there's the true cost, plus the holdback which brings it up to invoice and then the MSRP. The "gross" or the profit that a dealer makes does not include any delear expenses such as commissions, rent, advertising (sometimes there's a small charge on the invoice for advertising in a particular market), or anything else. Gross profit as it's called is just the difference between the invoice and the selling price. In reality it costs a dealer well over $1,000 (average is closer to $1,300-1,400) to sell a car for a zero gross profit. Couple hundred for the salesman, a hundred for the manager, flooring, rent, utilities, management expenses, insurance, fraud and theft, sales tax and license administration expenses, licenses, ADA conformity, computers, local advertising above and beyond what the factory spends, customer goodwill, it's unbeleivable how much bureaucratic expense is involved
If you want to make a small fortune in the automobile business, start with a large one.
posted by 206.251.225...
, Sun, 21 Apr 2002 18:49:26 <-- Viewing This Message
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