Bought a new car recently. I was curious if there are industry insiders to can share the business model.
I went to two and surprisingly the second one couldn't match the offer. I understand there are also factors of stocklist, etc at play.
Say in $35,000K drive away car, how much does dealership make and what commission does sales agent get? (Unless they are on fixed salary).
Surprised there hasn't been an AMA from a car sale's agent.
yes to share general numbers. Obviously not to share client list and balance sheet. Its good to have some level of transparency.
Great, what’s your business and margins?
Ok
Many sales people aren't granted access to cost of goods to prevent them from discretionary discounting.
Good to know. That would be challenging where you don't have full information on product you selling
Gross profit on new car sales is around 5-7%. Used cars around 10-15% or higher.
Most of their profit is from service and aftermarket parts. Next highest is finance and insurance.
Thanks for sharing
You sure???
https://announcements.asx.com.au/asxpdf/20240222/pdf/060p45v…
These guys don't break out exactly new/old/serivce margins.
But as you can see half of their sales is new, and their overall gross margins is 20%.
I'd say, new cars is about 15%, old cars and service combined is 25% to get an average of 20%.
Out of old cars and service, I know service is higher, so I reckon 30% margins, and old cars is probably around 20% GM.
It’ll differ among marques and locations of course.
However, you’re comparing to a ‘prestige’ third party dealer that will naturally aim for higher margins.
I guess i am trying to put some verfifed numbers to the discussion, if you can reference 5-7% from a trusted source im happy to learn :)
Ok since you never replied I thought I’d do more research.
Here’s a general dealer selling all your typical brands not just as you term luxury brands.
https://announcements.asx.com.au/asxpdf/20240222/pdf/060nyvb…
They claim 18.9% overall gross margin, in fact, they claim almost 5% profit margins, so definitely making your claims of new car gross margins totoally inaccurate.
@cloudy: Thing is, the last few years have almost been the holy trinity for new car dealers.
This won't go on forever. In fact, most of the above is being undone now.
They must makes heaps as I always see them driving around in a new car.
They are loan cars. They get sold as "ex-demo".
Can confirm… When I was doing new and used car sales, we were given any car that we wanted to take home. I would often take fresh trade ins or demo vehicles home. In the area that I lived in, my cars would stick out like dogs balls. $150,000 Range Rover, XK8 Jags, etc. Once took home a traded in Porsche and a 7 series BMW. Once had a Ferrari traded in (456?? from memory) but the dealer manager took that car for the whole week before pranging it into a pole on a test drive.
They pay $50 a week which includes fuel and a demo car to use…
Yeah except I can't, and still won't, give figures.
Every dealership differs, every car differs. There's no set formula. New car could be on special, hence have no margin. Used car could be old stock, hence no margin.
Any pay plans vary by the dealership, and can vary by how many sold that month
If you running a business, you happy to share your business model to the public?