Quote:
Originally posted by JSDSKI
Ken, I understand your viewpoint, but as I explained above, invoices are what manufacturers charge dealers for each car, one by one, and are paid - to the penny - by the dealer's bank. Then the dealer starts paying interest on the unit day by day. There just isn't any magic, secret, slush fund hidden out there that dealers get to dip into every time someone wants to buy a car. There are just different incentive programs that manufacturer's control - based upon market activity - and compensation for interest paid on the car while it was in stock.
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Look, I know McDonalds operated on a 3% margin and makes it up on the volume, but I find it hard to believe that car sales do.
I know this much first hand, I used to sell high camera equipment, Hasselblads, Linhof, Nikon Pro gear, etc. Yes, we had a "book price" which we would show the customer if need be, to show them that there was a 8% markup on Hasselblad, and that everybody paid the same price. But what's not in the book is the 3% discount for "check with order", and if you order 10 cameras, you get one free. Or buy 5 lenses get one free ($2500 per lens avg.) Factor all that in and the store is making 8+3+10= 21% profit. And that's not counting "Demo" gear, special deals on "rental" equipment, etc.
You can't tell me this kind of business model does not exist in the car world. The bigger the dealership, the higher the volume, the deeper the discount. Some dealers will sell cars at invoice to keep the volume up and keep their discounts maximized, otherwise it wouldn't make sense to have a huge lot with a huge staff.