scr1244

Big margins such as 20% and up went away years ago....about 10% on most cars , and options have the same spread. It"s even less on some cheap cars. I speak with some authority....I'm a retired Volvo and Nissan dealer.

SS22

Yes, it matters. The more information you have, the better you’ll negotiate. Knowledge is power. In this instance, I might negotiate with a low option spec first, get them to a number, then say, I’m willing to add significantly to the options if you give me X or Y deal… You could do that upfront but they might bluff. This way you call their bluff.

Are you saying the manufacturers are essentially taking more of the profit and leaving less for the dealers? So a $100k MSRP car years ago was sold by manufacturer to dealer at $80k but now at $90k? Just trying to understand and do appreciate your input especially given your experience.

scr1244

The dramatic reductions in the MSRP markup began about 40 years ago. Originally the manufacturers claimed it was to reduce the wide variance in the transaction prices from one customer to another. Then after rebates and factory incentives paid to the dealers and consumers became common practice the variation in prices became just as common as they once had been. And to answer your question... yes the factory has effectively raised the prices to the dealers. Manufacturers claim that with a 10% markup, if the cars are sold at MSRP the dealers will average what they use to make after discounting practices.
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blackland

If you do not mind a couple of questions, I am in the process of helping my daughter buy here first self-financed car? For the Sales Advisor on the car are they paid a percentage commission from the profit on the total transaction or is that $900 Dealer Fee that we all have to pay their commission? I guess I am trying to better understand the deal from their standpoint. There is the money made on the new car sale and also the money they might make on the trade-in, there are manufacturer incentives and monthly sales goal incentives. My Porsche SA told me that he has to sell 8 cars per month at a minimum, then above that there are bonus payments depending on volume.

Is the end of a month still the best time to buy a car due to the monthly sales goals? With the shortage of cars, it seems like most cars are already sold before they arrive on the lot, sort of taking the pressure off the end of month sale thing.

Thanks

vintage38

I'm adding $40k in options. I certainly hope my dealer is making more money on my build. Especially since he's not charging me ADM.

scr1244

Most dealers pay the salesperson a percentage of the profit. The $900 fee you mention is that an ADM or is that a document fee? If it is a doc fee it is an absolute BS fee and probably the sales person does not get paid on it. Pay plans have been dramatically changing the past several years and vary from dealer to dealer. The commission structure varies greatly from say a Toyota store to Porsche store because the profit on a P car is so much higher. Some are paying a salary and a flat fee per sale with bonus paid for sales volume per month. There is always a push for more sales at end of every month. It will be interesting to see if car sales ever return to the way it was before covid. Dealers made a lot of money the past several years and many salespeople found it very easy to gouge buyers with large ADM's. When the market normalizes many will have to learn how to sell in a competitive market. Anyone can sell when the market is short of inventory, but what will they do when the coming recession creates a buyers market?

dhirm5

Dealers just pay invoice right? Rest goes to Porsche. Porsche makes a lot more than 10% on a 500$ seat belt color or leather wrapped fuse box.

scr1244

It is suspected that manufacturers make any where from 33% to 40% profit on the wholesale price. Many believe that Porsche is the most profitable maker of all.

2thHappy

and I'm ok with that. At this point in my life, I want what I want. If it means spending dumb money on a superfluous auto, so be it.

Shambler

And everyone's "dumb money" is at a personal set point.

NastyHabits

^ Confirmed. retired domestic brands dealer principal, still a dealer owner.

blackland

Thank you for the information! For many years I purchased BMW cars, I had a good relationship with a sales manager at the dealership and I would have a deal made with him over the phone, show up at the dealership, he would send me to a salesperson he picked, I would do the paperwork and be out of the dealership in less time than it took me to drive there. It was much easier to deal directly with the person who can actually decide what the deal will be. These salespeople now, they cannot really decide anything. I am trying to understand what makes them tick, what authority do they have to even make a deal? How helpful are they in getting me a better deal?

I am not opposed to the dealership making money, we need the dealership to be there for us for service and for future purchases. I just want a fair deal and good service, to feel like I am getting my money's worth. I think when the recession does land some of these dealers who have been taking advantage of the current problems will be remembered for it, not in a good way for future sales.

TheGeneral

[QUOTE=SS22;18928057]Yes, it matters. The more information you have, the better you’ll negotiate. Knowledge is power. In this instance, I might negotiate with a low option spec first, get them to a number, then say, I’m willing to add significantly to the options if you give me X or Y deal… You could do that upfront but they might bluff. This way you call their bluff.
Yeah....You lost me at "I might negotiate with a low option spec first". THERE AIN'T NO NEGOTIATING. PERIOD! END OF SENTENCE. These days IN THIS MARKET dealers are selling 911's at MSRP if you are lucky (and if they are lucky to even have one) and apparently with an ADM in many places if you aren't - and there is a list of people wanting to buy even then. I just can't see them selling below MSRP (a lower "negotiated price") because they don't have to. There are 10 people behind you saying, "I'll take that MSRP price!!!" Besides, if you're buying a $150,000 car that there are waiting lists for years for in this market and you're trying to beat the poor sales guy up for $200 in savings on some option (or even $1000 on the car)..... if I were the sales guy I would tell you to "f*** off and quit wasting my time. Go guy a Mustang. Oh wait, they don't have any of those either. Sorry about that. Have a nice day. Security...get this jerk out of here!!!"

SS22

[QUOTE=TheGeneral;18928903]LOL lots of assumptions and putting words into my post that didn’t exist. There is ALWAYS room for negotiation. You can negotiate the ADM. That’s how one person pays $30k ADM at the same dealer and another $10k ADM for the same trim and car. If you’re a good negotiator, you can use a lot of tools in your arsenal to be the guy paying $10k ADM and not $30k ADM.

I got a ‘23 GTS a few days before the allocation froze and didn’t wait in any line. I only paid minimal ADM (about $33k in options). I had one dealer wanting to charge me over double the ADM I paid and have heard others in my market (SoCal) pay triple the ADM. You can negotiate. Or you can give all your money to the dealer and not negotiate. Your choice, have a nice day!

TheGeneral

[QUOTE=SS22;18928921]Too bad you paid a "minimal" ADM. I too bought a '23 GTS .....at MSRP with my spec that I built ...with a free trickle charge and clear side lights installed free. Enjoy your car! Prices are always up for always up for negotiations. Whether you get what you want is another thing. On the other hand, time on this planet is never negotiable. Life is too short to quibble over insignificant rubbish.