tdrake2020

I laid out a 2020 Coupe using the forum RPO worksheet and came up with the following:

The difference between dealer invoice and dealer cost is about 6.5% on the $72K MSRP coupe I priced out.

Dealer Invoice was $62924 and Dealer Cost was $58884.

I was thinking that this difference would include the 3% hold back, but I'm confused since it's a difference of 6.5%.

Is this 6.5% difference some type of dealer discount before the 3% hold back? i.e. Dealer pays $58884 and then gets another 3% back at the end of the month?

Looking forward to the 2021 worksheet with HTC option.

JALLEN4

The prices you quote do not include the 3% holdback which is MSRP minus freight times 3%. The dealer has options as to when the hold-back is paid but they will receive it. The original price you quote is what is traditionally called "invoice".

Desmtg

I agree with your numbers for MSRP and dealer cost. As the MSRP goes up with options that % will increase.
also have been told by my dealer that dealers are NOT getting hold back like before. They complain about the cost of all the new
equipment and training of technicians with smaller margins.

Bob Paris

Forget about all of the smoke & mirros with holdbacks etc. The gross margin on a new vehicle sale, after all of the mumbo jumbo, is around 15%.

JALLEN4

The percentage of mark-up does not change appreciatively between a loaded and a base car. This has always been that way and long been a "myth". The profit potential for the manufacturer does increase.

Your dealer lied to you about the hold-back...they do still receive it. It is on every invoice for every GM car. The dealers have always had to buy special tools for the Corvette since day one and have always had to pay for the technician training. The reality is that they do not have "smaller margins". They do though have increasingly smaller percentages of margins as the years go by. Going back fifty years Chevrolet had around 25% margin on a new Impala but that car was less than $5,000. Over the years margins have been decreased percentage wise as the list prices grew. All manufacturers have done the same thing and the effort has been to bring transaction prices closer to list prices.

JALLEN4

Another terribly inaccurate statement with absolutely no truth to it!

jcp911s

If you think this is simple "buy $100 wholesale and sell for $120 retail".... its more complicated... there are all kinds of back deals between MFG and dealers, and whoever has more leverage gets the long end of the deal.... I've heard this discussed a hundred times.... even "experts" who either do (or clam to) own or manage car dealerships cannot explain it consistently... that may be because they don;t know, or more probably because the deal is different for each dealership group, and vehicle line...

When you see ads for cars "at dealer invoice".... that tells you everything you need to know about "dealer invoice".

My advice, just buy from a dealer who has a good reputation, gives a competitive price, does not jerk you around or try to "hard sell" financing, extended warranties, extra fees, etc, and just be happy with your deal.....

Don't worry about how much profit they are making, because it doesn't matter

CitznFish

OK, I'll bite. What's the "truth" then?

papillion

For the near term, you only 'important' number is MSRP. That is what you will pay through 2021. Likely 2022 as well? With a 2WD short bed Silverado, the shoe fits your foot. With a C8, it only fits the dealer's foot.

CorvetteAJ

On the 2020 Corvette it self total dealer profit is right about 8%. 4-6% plus 3% hold back.

JALLEN4

The truth is that the average gross profit on new cars sold in the U.S. is just a shade over $2,000 per unit. That is gross profit before any expenses such as commissions etc. and includes the hold-back. The dealer can obviously make additional profit on the sale if they sell financing, warranties, insurance, or any one of several potential products. They do not by any stretch of the imagination make 15% per sale. That would be $5400 on the average new car sale of about $36,000. Just doesn't happen!!!

Dealers all pay the same price for their cars. While it is an incentive business and there are always incentives available from the manufacturer, they are all available to all dealers...not just one dealer or one group of dealers. As in any business, some will hit their incentives and some will not. The biggest supporter of these myths are the dealers themselves. For the last 100 years dealers have been claiming they are bigger than everyone else and therefore can buy cars cheaper than everyone else and can therefore sell them cheaper than anyone else. Not true...been there done that!

A good dealership of decent size can do about 60 million in gross sales a year. If well run, they can make 2.5-3% net profit before taxes. A large number will do worse and a certain number better as in any business. I understand there are a million stories out there that have been told a million times and people love to pick and choose the ones they want to hear. In reality, if you want to spend enough time on the internet the answers are all there and you simply have to wade through the facts and the fiction.

Phil1098

And since they sell for list, what difference does it make?

When I was selling new cars (for over a decade) I used to love when someone would stroll in like the Shell Answer Man and tell me all about mark up and hold back and then go on to think he was entitled to it. I said the same thing every time - I work here over 60 hours a week, have the three Ds that appear to be mine but aren't, my desk, my demo, and my day off, and when I buy a car here I DON'T get the hold back, so it's not happening. I sold stone cold with no fear, if the guy walked, it didn't bother me in the least.

SD27

The dealers owners never tell there manager’s exactly what they make per vehicle. Do you think when a dealer spends 15 million dollars to build a new showroom they only make about 6 percent. It’s closer to 15 percent. They couldn’t afford to keep the place open on less money. How many dealers do you know that aren’t multimillionaires. Don’t kid yourself.

cmonkey713

A couple of months ago or so a member posted an actual GM billing to the dealer. document. I had never seen a document like this but it contained a tremendous amount of specific information pertaining to the subject C-8. When looking at the document numbers there was a 12% mark-up from GM billing to the MSRP. This was also the case on the GM accessories listed on the billing sheet. I realize that with all the dealer credits, payments another financial incentives we will most likely never know what the actual dealer cost is.

JALLEN4

Well, the numbers didn't change between the time I just worked there and when I owned it. But you do make a lot of sense with all your theories because I am willing to bet you did once walk into a dealership. That is one of our modern era problems...people who have all the answers about something they know nothing about!

Aquarian

I get everyone wants a deal, but there is only so much on these new vehicles now...Silverado's, Tahoe's and suburban's dealer can make the most profit. Corvettes..this is the year to make a few bucks...When a dealer has a C7 2019 or in some cases a few 2018 still in stock they try to fire sale it up to 15k off.. Costs money everyday it sits there. Malibu's, Equinox and the rest are usually looser deals..depends on demographics and closeness of other Chevy stores. A store in the middle of nowhere vs a store with 5 other same franchise location within 20 miles ...whos going to make more profit.

wbrands

I totally agree with Bob re the smoke and mirrors aspect of new car sales. I also believe he is near the mark with his 15% figure and throw the BS flag on JALLEN4's reply. Otherwise, Kerbeck, MacMulkin and other dealers could not afford to sell cars at 12% or more below MSRP (like the last few years of the C7 run) and make any money on the sale. Without making money, I know you can't stay in business, much less become one of the top two Corvette dealers in the country.

919cw313

Rebates.

BIG Dave

My dealer is in the Top 50, and my salesman has been with that dealer for ages. I never asked him, but he volunteered to tell me they make on average $10K on a new Corvette when they sell at MSRP. Now take a moderately optioned C8 which might come in at around $70K MSRP, multiply that by 15%, and you get $10,500! Seems to me Bob’s math makes sense. Why would my salesman inflate the profit margin? If anything, I would expect him to downplay it.

wbrands

Rebates, markup, holdback. Whatever you call it, it all factors into the dealer's gross profit. Take out his/her expense and you get net profit. I would probably bet the farm that the net profit is close to the 2% to 3% suggested above after all the rebates, markups, holdbacks and discounts from MSRP you care to apply.