Do high-end car dealerships have a higher profit margin on new or used cars?

Question

What %s? Looking at Porsches now.

Answer 1

i dont know what percentages would be, but there is much more profit on high end cars than there is on an entry level vehicle.

quality over quantity...Toyotas and Hondas sell very well and as a result, the profit margin is lower than say a Lexus or Porsche.

I have worked at Toyota, Lexus, Jaguar, Mazda, Volvo, Isuzu, Audi, Volkswagen and Ford dealerships. the Toyota guys complained that if they didnt get enough units out, they didnt make any money. the Lexus guys would sit around waiting for people to walk through the door and still pull in a six figure income.

of course not all profits come from the sale of the vehicle, there is also lots of money to be made on the back end (financing, extended warranty, lo jack, pre paid maint. etc etc)

there is more money to be made on used cars, but it's all a case by case basis: if a used car comes in and is something that might be in high demand (a Lexus RX330 maybe) and needs some repair or paintwork before the sale, then obviously it is going to make the bottom line a little thinner. all dealerships will try and buy the used car for as little as possible and sell it for as much as they can get away with.

if you do your research and let whoever you are dealing with know that you know your stuff, then you shouldnt have a problem. make sure you are hip on the current values of whatever vehicle you are interested in at www.kbb.com (it's what most dealerships use).

good luck!

Answer 2

There is always a bigger margin on used vehicles.

It's easy to see the overall picture with new cars because there it's possible to see the MSRP, etc.. on any website or source of information.

With USED cars, you never know what they gave the person who traded it in. There's a lot of uneducated consumers out there who settle for a low-ball figure given by experienced sales people who will sell you a bag of dirt. The SAME sales people who sell these cars are trained to maximize the sale-amount.

This is why it's important to do the research prior to going to a dealership to learn what you SHOULD get for your used vehicle at the time of trade-in.

Overall, if you do your homework you're not going to get raped.

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Answer 3

Typically there's more money to be made on a used car because there's no set invoice that they have to buy it for as they do with new cars. They could pay $1000 for a used car then resell for $5000 for a 400% profit margin. They can't do that with new cars.

Answer 4

All dealerships have better margins on the used cars!

Answer 5

Dealers do not make that much on new cars. They make most of their money on service and used cars.