How Do Car Dealers Make Money Reddit New Car Sales For most franchise car dealers this is either a straight up we are losing money sector or if we break even we are happy I would say in today s market at least in our case at least 50 of the cars we sell are for a net loss We do our best to keep that number to the smallest number possible Why
Car dealer make money by selling cars Just like your grocery store buys produce than sell it to your for a higher margin Unlike the grocery store dealers can add extra stuff to your car like a wheel locks or door protectors at a huge markup somewhere in the 10x Dealers also make money from repair and services that they charge at again huge Car dealers generally do business the right way but some take advantage of ill informed customers All three are ways for the dealer to make money meaning all three are places you can
How Do Car Dealers Make Money Reddit
How Do Car Dealers Make Money Reddit
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Dealer holdback This money is from when the manufacturer pays the dealer after a car is sold It s typically 1 or 2 of either the invoice or the sticker price of the car What most people don t realize is that dealers do not finance the car loans They simply arrange financing using their relationships with banks financing companies and in some cases their manufacturer s captive finance company Since they re middlemen they get a piece of the pie Here s how dealers typically screw over car buyers 1 Packed
Car dealers make money in many ways besides loans off the vehicle itself from your trade in from warranty sales and service work Profit from one area of the sale may subsidize a discount in Other ways dealerships can make money Up to now we ve covered the traditional ways car dealers make money There are a few nontraditional ways dealers and more appropriately their owners can make money Savvy dealers make money from their dealership by owning the real estate that the dealership sits on
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Understanding the Business Model of Car Dealerships Car dealerships act as intermediaries between automotive manufacturers and consumers They purchase vehicles from manufacturers at wholesale prices and sell them to individual customers at a markup This markup allows dealerships to cover their operating expenses and make a profit Car Dealers Also Make Money By Selling Used Cars NADA said dealers made about 34 of their gross income from used car sales in 2023 Dealers typically get used cars one of two ways either they buy them from private owners either outright or when they are traded in toward another vehicle or they buy them at wholesale auctions Either way
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How Do Car Dealers Make Money Reddit - Dealer holdback This money is from when the manufacturer pays the dealer after a car is sold It s typically 1 or 2 of either the invoice or the sticker price of the car