Car Dealers Are Getting Crushed With Razor Thin New Car Profit Margins



Today I talk about how car dealers are upset with the price increases automakers have rolled out and how automakers have decreased dealer profit margins on new cars!

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30 Comments

  1. You talk a lot,all I know there were Konas for sale pre covid for $17,000 and now they're like $27,000.Ive needed a car for over a year now and I just keep putting it off.

  2. Not sure where this info is coming from…but I just had a conversation with a guy that owns 17 high end deal ships in LA county area. He said he is making more money per vehicle sold today then ever. Car lots look thin because of ordered vehicles not hitting the lots. They are selling less cars and making more money than ever. This has allowed him to renovate half his dealerships in the last two years. This is straight from the owners mouth.

  3. Manufacturers can’t compete with Tesla. After Model Y discount of 20% or $13k they still have over $10k Gross Profit. How can they do that you ask? Easy…no UAW and ridiculous pension costs, no advertising, direct sales channel and mostly because they have new state-of-the-art factories. Tesla is breaking ground on an additional 1 million plus sq feet at Giga Texas for $700 million. They will also announce very soon a new Giga Factory probably in Malaysia.

  4. Chinese cheap cars will drive traditional car makers out of business. The much cheaper price and maintenance will far outweigh the initial cost of a vehicle that supposedly will last a little longer.

  5. Saw a news story contending lithium prices are set to skyrocket soon. How will this affect the Gretta Goons' premeditated plans to surreptitiously slowly remove our choice of gas cars away from us and shove EV's down our throats ?

  6. New Z06 is proof of what he just presented.. supply and demand, the market is the market…Tesla has built in government subsidies into each car they produce. Good Work Ben!

  7. Subarus aren’t discounted because the dealers don’t have inventory, unless these dealers are playing the hide the inventory game and just trickling the cars onto the lots (which I suspect).

  8. I'm certainly no apologist for the Dealers, but many manufacturers require the dealer to build a property per the manufacturers specifications (Audi and VW come to mind) ; the buildings, show room, and service areas are very formal and I'm sure quite costly to build. So this "fixed" overhead is now part of every sale. When margins fall to far, and those property payments are made…..Poof goes any profit! (????).

  9. Do not car dealers make a substantial profit at invoice? They do. Plus the car dealers get a holdback on every sold vehicle from the manufacturer. I know dealers make about 5-6k, if not more, on the C8 at invoice. MSRP is just a "suggestion", nothing more. So "suggest" that they start at invoice or below..

  10. Shutting down factories was in many cases a government issue. So it was hard to build when you were forced to shut down or space people out. It caused a ripple issue from vendors to the plant making it hard to ramp up.

    It’s mfg fighting back. Many dealers hurt the MFG for the past two years with the market adjustment price. The MFG said not too and argued to the dealers not to do it and many didn’t listen. Market turned and now the MFG is taking that ability away from the dealer and they are complaining about an issue they caused.

    Bottom line is it was a foreseeable problem and self inflicted. Cannot feel sorry for the dealer because they did it to themselves. Just another case of dealers not really knowing how to operate a good business. They keep acting unique business and don’t understand how cause and affect happen.

  11. importing from japan seems like a much better idea. – actually – mid way through, this will go a good way to eliminate dealerships and just do a build to order situation which will be far more beneficial.

    Dealerships should die anyways, make a couple delivery hubs per state / province and everything is online. No more fraudulent fees just for fattening dealerships.

  12. I'm in the position to pay cash for the car I'm looking at. The dealer had it listed on their website with the options I wanted and for the price as recommended by the manufacturer. Once I got to the dealership they had it marked up $4,000.00. When I questioned them about this they said the car was in high demand and there was still a chip shortage. (cough, cough BS) . I got up and walked out. Two hours later they called and said they would sell it at the price listed on the website. I told them where they could go and they lost a customer. Pi$$ on them and all dealerships that do this,

  13. This makes sense I do see the dealer side of it now. But still they made a killing the last couple years profit + forgiven PPP loans for millions all on our taxpayer dime. They can afford to sale us cars at MSRP

  14. Hey Ben, plain and simple. The dealers have to stop screwing over customers. They created
    there own problems with this $$$ over MSRP. Now they have to lay in bed for it. So greedy!

  15. As far as I can see, for instance with the Mazda Miata, many dealers are not price gouging and offering decent deals. The fact is cars are still expensive because of inflation. For instance the Mazda Miata range is like 27k to over 40k and unless some one has a huge down payment the payments are still really high. Of course, many people want the top model. Many people don't want to pay that price but people just want what they want. And still today buying a car is a depreciating asset. I am looking to buy a Miata but I would only drive it under 2000 miles a year. My main car which I bought two years ago for a great price would still be my main driver and being retired, I only drive it 4000 miles a year. So in conclusion with the purchase of my new car,. I would not have to buy another car for many many years unless the gov't outlaws gas cars.

  16. It's going to be interesting on just what the "big reset" will look like. I understand with inflation the price from the manufacturer will rise, but the manufacturer needs to be careful. During inflations the higher the cost the less they sell, both the manufacturer and the dealer. I have no idea what should be done, but I think we will find out soon.

  17. There's a few elements that weren't directly mentioned here. There is MSRP, then "Invoice", then behind that there's dealer hold back, and pre-pandemic dealers would get volume bonuses from manufacturers for selling "X" number of units of specific cars. I'm not saying there's anything wrong with that, but dealers don't pay "invoice" for their inventory. However, they certainly incur other expenses such as loans on their inventory (many dealers don't have the cash to buy all the vehicles outright so they pseudo finance their inventory)

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