sdsubzero4
Spring Valley, CA
Congrats on your first sale. What you sold?
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Some of you know or dont care lol
- Thread starter 0ne_sik_notch
- Start date
0ne_sik_notch
Well-Known Member
07 tuscon 5speed they have had it for a while and i got it sold lol but i think i only made 50 bucks off of it
Tommy
New Member
they should be giving "spiffs" / bonuses for selling old stock. Even though it may be a mini-deal, there should be more gross in the deal to make more than $50.
$50 sounds like a split deal.
On the other hand, its great that they don't have a pack on new cars. I always like it when we made gross on UA'ing the trade and 2.5% on the rate, ontop of the gross! Those were sometimes $500-$1000 pay days! :rock:
0ne_sik_notch
Well-Known Member
are we supose to/able to make money on trade in's? man pm me i want to pick you mellon
Tommy
New Member
for you to make money....and all WS viewers to save money:
when a vehicle appraises for a certain amount, the dealer offers you less. The difference is called "UA/Under Allowance". That gets added to the total gross profit of your deal, and you get 20% of that, or whatever % you're at.
example:
I trade in a car worth $15,500 wholesale. Dealer says "congrats! we got you $13,500 for your trade. Isn't that awesome!!!???"
The $2,000 they under-allow becomes 100% profit. If I don't negotiate the amount of my trade, I just got $2k less than I could have. It's 100% legal and dealers are not required to disclose it. It's like negotiating at a pawn shop.
If I say I want more, they walk away and pretend to talk to "the boss" and come back and give me a reason why they were able to give me $500 more. I feel better about it and think to myself "wow, these guys are great! They got me more money!" When in reality, they just gave me more of my own money, but kept the remaining $1500 as profit.
With sales down I would expect all dealers to offer even lower, to make up for lost profits.
Another way to make money is the interest rate. On a sub-prime/discounted rate like those special 0%-%4 O.A.C. they advertise, they can't mark it up for profit, but in standard rates they can.
Example:
You qualify for 8.99%. They say "congrats! we got you 11.49%! isn't that great!?!?!"
What happened here is that they marked up the rate by 2.5% which is all 100% dealer profit, and they are not required to disclose that.
Then, if you complain about the rate, they pretent to make calls, and work on your behalf to lower the rate until you are happy. When in reality, they just discount the profit, not the actual rate you qualified for. If all goes well, they look like hero's in your eyes, and you send them more business by referrals.
So, here's how dealers make profit:
1) gross profit of car
2) Under allow profit of trade in
3) profit in interest rate (similar in lease rates)
4) extended warranty in finance department. YES, they have a gross profit too which can be discounted.
not to mention the profit which is still in the "hold back" part of the new car invoice.
A quick example is:
a car MSRP is $30,000. 3% of that is $900.
That car has a $900 "hold back". What hold back is, is a bare bones minumum, built in profit that the dealer makes to pay the bills, mini-deal commissions, etc...
So when a dealer says they sold a car "at invoice", they still made a "hold back" profit (3% of MSRP). Even is they go below invoice, they can still make money.
Keep in mind, they pay flooring charges and interest on invested money for inventory, so a lot of that hold back gets eaten up quickly by that, so they still rely on real gross profit to keep the doors open and for salesmen to make a decent paycheck.