Quote:
Originally posted by hatpix
JR- Good info, thanks. A few questions for you.
Is there a mark-up on the destination fee?
How much did you make on the mechanics' check-up?
Do you know if the Documentation fee gets marked up, and if so how much?
I have heard that dealers mark up the financing by 3% over the buy rate, is this correct?
Your dealership sold 50-60 cars per month. Do you know if a dealer that sells 2500 cars per month (e.g. Longo Toyota) gets a better deal on cars, or more holdback or some kind of perk?
Thanks,
Ken
P.s. I buy my cars used, from private parties, with a bank check in hand.
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Ken,
With our brands there was no markup on the destination fee. You can look up the info for almost all brands on the internet.
Generally, on the pre-delivery inspection, we got paid around two hours, at a lesser rate than what customers paid. The manufacturers pay "warranty rate." We paid the mechanic his hourly rate, his benefits, some parts costs (fluids, and the like) and then we lost the ability to make money for two hours on something more productive. Believe it or not, I was limited by my shop area and couldn't economically take on more work. So, you have to factor in a little overhead expense. Without overhead, we probably netted between 50 and 100 bucks a car. With overhead, I doubt we made any money on a PDI.
The documentation fee is charged by the dealer to the customer. It has nothing to do with the manufacturer, so there is nothing to mark up. At our volume level, we didn't even completely cover the payroll costs of the two people on staff that did the paperwork so we lost money there. We just didn't lose as much as we would have if we didn't charge the fee.
The amount that the buy rate gets marked up isn't an set amount. It's basically what the customer will bear. We would have been tickled pink with 3%. Usually, it was much less. When I buy a car, I'm willing to let them make .5%, just so I won't have to screw with arranging the financing.
We paid the same price for cars as the big boys. The only exception I knew of to that rule was some Honda dealers in the mid- to late-eighties were handing sackfuls of cash to the Honda Sales reps under the table to get more cars. They paid the same amount per car, they just were able to sell more at a time when you could sell all you could get. We didn't play that game. Some did and there are now people sitting in prison as a result of their involvement.
Your relationship with the manufacturer dependent upon size. Usually the bigger dealers make more trouble and aren't rated as high because they tend to have a mentality that they want to rip you a new one on every deal. Listen to the BS they put out in their radio ads on Saturday and see if something doesn't sound right. They have some sort of BS sale every day of the year, and they make it all up. There is no "test marketing;" they didn't accidently order too many cars; they didn't run out of used cars and desperately need yours; they won't give you a trade in value equal to what you originally paid for the car; they won't pay off every thing you owe, no matter what; and all the rest. It's all crap.
In today's market, we could get all the cars we wanted. We didn't keep as many cars in stock as the big boys; we wanted low overhead. If we needed a car we didn't have, we'd just buy it from a big dealer that had it and they were all too happy to unload some inventory. The big ones have to hit more home runs because their costs are so high. I know of dealerships where the monthly overhead will be a 7 figure number. Just count the lights at one and figure their electric bill. It will blow your mind.
JR