JALLEN4

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A Chevrolet dealer should be so lucky to make 10% on a 50,000 new car!

OnPoint

Ok - that's fair. I'll answer per my pov. If the dealer's actual cost, after holdbacks and all other bs is 50k - i.e. he actually has 50k in the vehicle, then up to 5%. So up to $2,500. And I really don't care how the dealer and salesman splits it.

On the second point - sorry, if it takes me 3 hours to buy a car, you've lost a sale. I'm walking after an hour. I know when I come through your door what car I want, and what options, color, model etc. All we need to do is agree on price and you timely get the deal papered.

AORoads

In what time period: the end of the month, the end of the quarter, the end of the year? In other words, when is the "final-final tally" made?

mpuzach

Interesting...I think this is the first time I've heard it to be stupid to openly ask for another person's opinion. Whatever.

If your primary interest is in getting the lowest possible price, at what point do you say, "I have enough numbers and I'm ready to stop comparison shopping?"

BTW, it's been my experience that my customers who grind the hardest on price are the ones least likely to be happy with their purchases. No need to dispute this; it's my actual experience. YMMV.

JALLEN4

Don't take me wrong. It is a stupid question...not a stupid person asking the question. I can understand the thought process and there was a time I would have enjoyed the conversation. That changes once you realize that the average person buying your product has no true basis to answer the question with any accuracy or validity of thought.

The person not in the business has no way to know what would be reasonable or customary, what it actually takes to operate a dealership, nor what a salesman should or could make. There are those on this forum who would argue $500 is plenty to make on a $75,000 car and those who would argue that a dealer makes at least $5,000 when they do sell one.

When I bought my first new car store, I had been in the business for about eight years and was the GSM in one of the top 100 Chevrolet stores nationally. When I went to the Regional Office to sign the paperwork and become a dealer principle, I remember thinking I would finally know how much new cars "really" cost. You can imagine my disappointment when I found out I already knew.

JALLEN4

All of the above. It is just not happening that at the end of the day, Chevrolet dealers are averaging $5,000 on Corvettes. Or any other GM car for that matter!

Gary '09 C6

This is what I do as well. Vehicles are expensive purchases and I want to get it as "right" as possible (for me). I'm willing to leave
a few hundred dollars on the table if I like the dealership/salesperson and feel they're cooperating with my quest, and it enables
me to buy local (more convenient for me).

I still maintain that the best deals can be had by being there in person, checkbook-in-hand, looking to buy a car already on the lot.

I have faith the dealer won't consistently sell vehicles at a loss, and that the better salespeople will be fairly paid because
it helps the dealer to do so, lest they leave and go elsewhere.

roadbike56

The problem here is, this is an apples and oranges discussion, i.e. not all dealerships use the same sales model. Our local Chevy dealer sells their Corvettes for higher prices than the big three. They use a different sales approach and they are fortunate enough to be in an area that has a number of buyers who will pay a premium to buy local. They are not in the top three Corvette dealers, but they are consistently in the top 20, sometimes making the top 15, so they move out a fair number of Corvettes. My point is, they don't care if they're not in the top five, they care more about how much they make on each car. I'm sure they are not the only dealer that has higher prices and profits but settles for selling fewer Corvettes. To me that's the problem with this thread, different dealers have different sales models and different approaches.
At the end of the day, I don't care how much the dealer makes on the car. I only care about finding the Corvette I want, then finding a dealer that will sell it for an out-the-door price that's competitive.

owc6

This whole thread is rather confusing, because I'm still trying to figure out if you (mpuzach), are trying to figure what we, as consumers think is a reasonable profit margin for a dealer, or if sales people are paid well enough , or if you think your commission is reasonable, or ???

We, as consumers don't generally know those issues (and more of them behind the curtains) or care (or if we do, most likely we can't find out). We just want a car at a price where we are reasonably sure we have gotten a "good" price.

There is no way the average consumer can figure out the vagaries of the car selling industry.

Norton24

To the OP, is the issue here the commission structure, or how much a customer pays over net net invoice? I understand your point for sure, but I see the structure of how you earn commission as part of the issue as well. Obviously, I do not know your exact structure, but I will use something typical below

Say a vehicle has a net net invoice of 50K, and the dealer puts on a $700 pack. So, the salesperson is paid commission on anything above $50,700. Say the mini for said dealership is $300, and the commission amount is 30% for illustration purposes. That means the car would have to be sold above $51,700 for he or she to make a commission over $300. This doesn't include any monthly/yearly volume incentives from the manufacturer to the dealer as the salesperson isn't typically paid on that. It's just more money in pocket of the dealership.

In the above scenario, that equates to $60 per hour for that transaction if it took 5 hours. Not too bad for the salesperson if you ask me. The problem with that is it doesn't take into consideration the amount of time that salesperson is working where there isn't a sale. If the customer walks after 2 hours, there is nothing being made. In fact, there are other sales opportunities that may have even been lost. For the customer sitting across from you, that likely isn't his or her concern.

I realize your job is to sell as many vehicles as you can. I also understand that many customers will lie, waste your time, and be flat out rude to you during the process. I think the above deal would be fair to a customer and the dealer. I just think you should have gotten a bigger chunk of what the dealer is making. It also doesn't even mention the profit the dealer may make on the back end or from a trade if it was involved.

Best of luck. I know it is a tough gig for sure.

AK Goat

...and that is why so many of us have come to hate the car buying process. I loath going into car dealerships. I will go to one for a test drive once I have thoroughly researched a vehicle. When it comes time to buy I deal exclusively via internet. The total time spent in the dealership for the actual transaction is generally under an hour.

mpuzach

I can understand the confusion of my original post, Lisa. After reading the responses, it's clearer to me that the questions I asked are tough to answer because there are so many variables involved. My reason for asking was simple: I encounter a lot of customers who truly believe that they should be able to buy a new car for less than net cost; I'm just curious to hear forum members' thoughts on what's reasonable. As you and others have pointed out, it's probably not a reasonable question to pose.

You said something in your reply that caught my attention, though.."We just want a car at a price where we are reasonably sure we have gotten a "good" price." That makes perfect sense to me and I'm in 100% agreement. I'm interested in knowing how you (and anyone else who cares to chime in) determine whether or not you got a "good" price. What is your basis for making that determination?

roadbike56

That's an easy answer, Comparison shop on line. When I find the best price(s) I determine what the hidden costs are including: taxes, dealer fees, cost to travel to the dealership. In other words ALL costs, not just the advertised price. My search radius is 300 miles from my house because that's the distance that can result in a purchase without staying overnight in a hotel. The comparison cars must be equipped the way I want and must be a color combination I want. I prefer to deal with local dealers and am willing to pay a premium to buy locally, but that premium should be less than $1K. Hope this helps.
EDIT: One more comment, if the dealer is smiling when we close the deal so much the better. They have to eat too. On all of our latest purchases (four in the last three years) the sales people were smiling, but we got the cars we wanted at a price that was very competitive if not the lowest in our search.

JoesC5

My local dealer has $62,330 2018 Stingray in stock and is offering it with a $8,874 discount(14.24%).

I guarantee you that Warren Buffet(owner of the dealership) is not losing any money on this car.

JALLEN4

Not even for one second do you assume Buffet has any idea what price they are advertising a Corvette for?

golden2husky

Well, I for one do not expect anyone to work for free, whether that means a commission or working overtime. But there is a double standard here. Businesses will require salaried people to work many extra hours and the employee gets the "be lucky you have a job" bullcrap. And in the case of dealerships, they will slap "ADM" on hot selling cars. So what is good for the goose is good for the gander. That means if a dealer can put a $20K markup on a HELLCAT and it is chalked up to being expected in a free market environment, well, then beating the dealer down to rock bottom when they have a glut of inventory is fair game.

RedC7AZ

Did you ask him if he really planted the bloody glove?

mpuzach

Thank you, Al. Your process makes perfect sense to me. I'd love to have you as a customer.

Thank you. I'm in complete agreement with everything you said, particularly with regard to the additional dealer mark-up. Even though such dealers will quickly claim that those inflated prices are just "starting points" and can be negotiated down, the truth is that if they can get away with ripping off a buyer they'll do it without thinking twice. It's a horrible business model and it's one of the reasons the auto business has such a bad reputation.

449er

I get so tired of the salesperson running to the general manager's office to see if my offer is acceptable

RedC7AZ

The answer is:

Whatever profit happens to be associated with the bottom line price I pre-determined I was going to pay for the car, after much due diligence.