DISTRBD

Hi Frank,

I've heard about the ridiculously low margins on new car sales before, but I've always been kind of skeptical. The industry I work in is very similar to the automobile industry, and most of what we sell is marked up 100%. I'm not saying that car dealers buy their stock at half the MSRP, but I cannot for one minute believe that they are only seeing a 2-3% markup.

Has anyone worked on the accounting side of the dealership industry before, and if so can they give us an idea as to what kind of markups dealerships REALLY see on new car sales?

frankd

I think that $400 plus the $750 would be great deal, but based on my expereince wth car salespeople, I'm sceptical. Maybe once you ask for the $750 grad dicount it 'cannot be combined with other discounts' And they may not have that new colour in for months for example.... and may try to switch you to a 2002 on the lot once they have you hooked... but by all means go for it....

frankd

You can research dealer invoice prices yourself from several sources, like carcostcanada.com (but it's not a free service). Invoice price is what the dealer 'theoretically' pays for the car. I say 'theoretically' as there are somtimes financial 'incentives' to the dealer to sell certain cars, and this may not be reflected in the invoice price. I recall a post recently that the P5 dealer invoice price is something like $1200 less than list in Canada. Dealers try to make up for the low margins by hitting you with outrageous prices for admin fees and dealer prep, and by selling high markup accessories.

atenza

don't expect a huge mark-up in car business now. it may happened 20 yrs ago especially p5 from japan. Dealer has 6% mark-up only because mazda headquarter set it up to gain market share. So respect your sales consultant, don't ask for crazy discount if you expect a good buying process.