how much does a car dealer make on a new car?

Question

what is the price differential between what a dealer pays for a car and the retail price? how much profit do car dealers generally make on new cars?

Answer 1

Good question, and a little tricky. First, have you ever heard a dealer claiming to show you the factory invoice? Even if they sell you a car at that price, they make money. MOST manufacturers have a "hold-back" allowance, that isn't released until the vehicle is sold. (Usually $300-500) If you can negotiate with your salesman, try to get as close to their factory invoice as possible. Usually, about $300 above invoice is more than fair for both parties. Also, the dealership makes money off of financing, and extended warranties. Even if they finance you through a local bank, they receive a "kick-back" from that bank. The best way to purchase a car is to secure financing on your own, tell your salesman that you will probably use their financing, and that you don't want to pay more than $300 over invoice. Then, when you have a price agreed to, come in with your own financing.

For used cars, it is a lot worse!!! Dealers make a killing on used cars, as they give the lowest possible trade-in, then try to charge the highest retail amount. Profits can be several thousand per car, as opposed to under a $1000 for new car done right.

Answer 2

I believe entrepreneur magazine released an article years ago stating dealer and manufacturer do not make the msrp sticker on the window. That being said, we first must ask what is true and false. If the sticker on the window is not made from the factory, then a company would print these for each factory in the US. Reason being that cars are not priced the same across the US. Check it out. MSRP stickers are not identical in all zones across the US. This is not a coincidence. There is different cost to ship across the US, emissions regulations, etc. Now, assuming this scenario, the question would remain " Where do they get the so-called invoice for the vehicle? This is the invoice they advertise at every dealer that they show you when you are buying a car.Does this come from the dealer, the manufacturer, or another third party? Answer that question, and you have solved the riddle. Hint: I have never paid even invoice price for a vehicle in the last 10 years, leading me to believe this invoice they show you is not accurate, and actually used as a selling mechanism to make you think you are getting a great deal, when in fact, dealers are protecting themselves from taking a loss. One more case and point, go look at any vehicle in may or june, let them show you the invoice, have patience to wait until November, and go find the identical vehicle. You will find the prices are greatly reduced. It is true they get kick backs on all vehicles, along with financing kickbacks, and many others.
Bottom line is a little common sense and showing a little patience goes a long way. If these dealers weren t making any money, how do all these people enjoy the best of everything life has to offer.

Answer 3

This Site Might Help You.

RE:
how much does a car dealer make on a new car?
what is the price differential between what a dealer pays for a car and the retail price? how much profit do car dealers generally make on new cars?

Answer 4

Chrysler dealers make $4000 for Chargers,Magnums,Dakotas,$2000 for Caliber and Caravan's $6000 for 300C's and Durango's and Cherokee's in Canada but that's if you pay full sticker price,The Crossfire's get $5000 and the Viper get's $12000. Cadillac STS gets $18-22,000 mark up as does the Escalade truck series most of the American cars are between $2000-$6000,which isn't much considering the overhead for a dealership.

Answer 5

New Cars - most models are less than 500 each. And after all the costs are taken, the dealership makes about 200 per car. Besides luxury cars and high demand models, this is pretty good rule-of-thumb.

The place where dealerships make money is Service and Certified Used Cars.

Answer 6

The dealer pays list price, but there is a 2% or 3% holdback from the automaker that is payed to them after the sale.

So they make 2 or 3% plus anything over list.

Answer 7

when you buy a new car, you are haggling/negotiating the salesperson's commission. they will show you a paper that they call the wholesale price, of which they allegedly paid, and all you do is att 1 - 1 1/2 % to that number, and stand firm. they will give in eventually. the bottom line price is 1 - 1 1/2%.
this question was answered already, I just had to add a little bit.

Answer 8

Almost nothing. The real money in cars is in used cars. The real money in new cars comes from financing and options.
According to the Wikipedia article below, new car markup is around 15%, and used is about 75%.

Peace

Answer 9

check edmunds.com for the invoice price and don't go over $500 above the invoice price, and that's only if it's a popular model. Like one of the other people on here stated, $300 should be more than enough over invoice.

Answer 10

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