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 03:32 PM.
“Hitler did not have to destroy democracy; he merely took advantage of the decay of democracy and at the critical moment obtained the support of many to whom, though they detested Hitler, he yet seemed the only man strong enough to get things done.” F. A. Hayek from his book, "The Road To Serfdom".
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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