how do car dealers make money?

Answer 1

by buying cars off of people or getting trade-ins and giving people squat for the car and turn around and sell it for about $5,000.00 more.. also they charge an arm and leg for car repairs..

Answer 2

In more ways than most folks even could imagine.

1) New Vehicle Sale: Most people know that the sticker price is just a starting place, and that the invoice price is where you want to be. But, dealers have several ways to make money when they sell you a new car at "dealer invoice." At the bottom of the invoice, there is a small box that reads "holdback". This is money that is paid to the dealership when the car is sold. It is usually about 2 or 3 percent of the value of the car. Also, the dealer may be getting a kickback from the manufacturer. This is a way to compensate for the internet shopper and the general saturation in the car market today. The manufacturer will pay , for example, $750 for each truck sold. This way, the dealers can sell cars for invoice and make money. As an added bonus for the owner of the dealership, he doesn't have to pay salesmen a cut of the 'kickback' money. Thier commision is based soley on how much above invoice the car sells for.

1a) Witholding rebates. Perfectly legal. Let's say Ford has a $2000 rebate on a truck you are looking at. If you buy that truck without doing the research or asking the right questions, the dealer will just pocket that money.

3) Trade ins being sold as Used cars. Usually a cash cow in any dealership. They take in a trade, spend a few dollars fixing it up, and re-sell it. Look at any car valuation site, like Edmonds or Kellys Blue Book. They give "trade in value", "private party" value and "dealer value". Now, why is the dealer value so much more than the trade in value? Well, the fine print says something like "Remember, a dealer will stand behind a vehicle, they put money into it before they sold it to you..." Nonsense. They merely want to make more money off of you.

4) The Finance Department. Higher interest rates, warranties that you don't need, window etching, the list of add-ons is endless. They are all marked up. Back in the day, dealers didn't finance vehicles. Then, some genius figured out that he could make all kinds of money if his car-lot financed people on the spot. No time for buyer's remorse, no time to check competing rate. What about the special rates offered, like 0% interest for 60 months? Well, the manufacturer gives the dealership a kickback on that, so that they don't lose money.

5)Service Department. Another HUGE profit for the dealer. The manufacturer pays for any warranty work. The shop rates for non-warranty work usually approach $100/hr. And, the best part...more and more cars have complex computers that need a dealer to work on them.

6)Body Shop. This isn't the big money maker that some of these other departments are, mainly because when a car is having body work done, an insurance agency is paying for the work. Insurance companies don't like to overpay for a job, so a body shop usually makes a fair profit, but not as substantial as some of the other places in the dealership.

There are more ways a dealer can make money, but these are the main ones.

Have a great day!

Answer 3

2

Answer 4

Dealers charge a lot for the parts. If they charge 200 bucks for a headlight , you will be able to get that headlight online for half that. Plus they make money on selling the cars. The invoice is not the price that the dealership pays. Its just a pre generated number from the manufacturer, to help the dealerships get the most money for the car.

Answer 5

They have to sell cars for more money that they buy them for. Another way is the "protection" add ons. Like the warranties the sell with the car. These yield pure profit.

Answer 6

Uhhh, I don't know, by selling cars for more money than they buy them for?

Dealerships make most of their profit from parts sales and service work.

Answer 7

by selling cars at a profit. That's a strange question.

Answer 8

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Answer 9

by ripping off every customer