Plus, the dealer has to pay the salesperson, office staff, and other dealership cost out of that profit. If all he makes is $500, there wouldn’t be much to go around. He wouldn’t be in business long.
The 3% you were referring to is generally known as “hold back” (and, it’s not always 3%). However, the manufacturer does not pay that to the dealer. They refund it to the dealer. The dealer pays that additional money on each vehicle, and it is refunded to the dealer either quarterly or monthly depending on which plan the dealer chooses. It does reduce the final cost of the vehicle to the dealer, but it is not extra money. Sometimes dealers will lower the price of the vehicle knowing their final cost will be reduced.
The only thing the manufacturers pay the dealer is floor plan interest credit to help offset the interest they pay their finance company on each vehicle. If the dealer sells the vehicle quickly enough, he can keep the extra money. Some dealers are able to pay cash for their vehicles, so they get to keep all of that money, but there aren’t many dealers that can afford to pay cash for their vehicles.
In other words, the management company gets invoiced from the mfg. The mangement company then turns around and delivers the vehicle to the dealership with the "pack". That "pack" helps to cover some of the dealerships cost.
Are you saying that cost to dealerships are no longer "packed"?
Also, though Asian mfg's do not employ UAW workers in most of thier plants, the additioanl cost can usually be attributed to the foreign exchange rate.
I am going to drive my 07 F150 until I can buy a new vehilce that runs on CNG.
Last edited by Franco; 12-10-2010 at 04:32 PM.
"Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated, but those who torment us for our own good will torment us to no end for they do so with the approval of their own conscience."
C S Lewis
Back in september I picked up a GMC Sierra 2500HD Crew Cab short box.. It stickered at 42k.. By the time the rebates and my GM points came around I walked out at 31k. I also financed through Citizens bank.. 72 months at 3.29%
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