How Much Profit Do Dealers Make Selling Luxury Cars?

[@tomjenike6836]

Zach just finished a car purchase for my wife and I. Just can not recommend these guys enough. An absolutely painless process. They worked with my mechanic and the dealer to make the whole car buying process easy and fun. We got the car we wanted and paid the price we anticipated. Thanks!

[@officesuperhero9611]

I cannot get enough of your videos. Ray is a treasure trove of infomration. Thank you for sharing.

[@Kevin19700]

Richard Spot on Richard! My thoughts exactly!

[@jmcascardo]

In the NY and NJ area, where I have worked for over 20 years in the car business, it's so competitive in the luxury car market (BMW, MERCEDES, AUDI) , that most salesman make just flat commissions on this cars. Anywhere from $200 to $500 per car. We are talking about cars that have MSRP's from $50000 to $100000. It's all about volume!

[@Rick-se5qm]

Brings back memories when we were in the market for a MB SLK350, at the time it was a new model for MB. Visited a DC Metro MB dealer who said they were none in inventory. One customer car just arrived for us to look at but nothing to test drive. He pulled out a computer printout of all the MB cars that were on order and asked if we would like to be added to their list. Oh BTW we do not discount cars. Since I never paid MSRP for any car we visited another dealer in a nearby state with two in stock, we purchased one for about $1500 under MSRP. A few days later the DC MB salesperson called and was shocked that we bought a car off a lot that may have been test driven by others!

[@mikerodriguez4608]

The big publicly-traded multi-marque dealer groups make on average about 6% gross profit on auto sales.

[@tkwasiisaac8818]

Absolutely loved this video! Thank you for your content.

[@jws3925]

I know dealerships go out of business but personally I have never run across a dealership owner that wasn't a wealthy person so I don't feel a bit sorry that they make little on selling new cars. I've seen a lot of your videos and it is always......oh the dealers aren't making hardly any money on selling new cars. If it is all about just moving metal so they can get the holdback, the monthly bonus and potential service and warranty work, why do they make buying one so hard. Sell the damn thing for true cost and happily collect the behind the line money. I am trying right now to purchase a new Honda Civic for my daughter. I know they have over running supply but the dealers still won't budge much at all. Talking to 4 dealers and they are all in the same ballpark pricewise. Blah, blah, blah.......we'll give you this dealer discount and the factory incentive-----what a deal!! Then they just make it up with bogus fees. One honda dealer had separate fees for "tire fee" and "battery fee". Altogether they had 6 different fees. What the heck, you want tires,, well then there is a fee for that. Oh, you want a battery for that car, well, there is a fee for that. Games, games, games all in the name of profit. Florida has got to be one of the worst states in which to purchase a car.

[@johngage1397]

how do you ever get satisfied with a vehicle , is it possible ? I'm 56 and I've probably had 30 vehicles and pissed away too much money trading and trading

[@Tounge73]

i looked through previous videos and didnt see this topic but if covered already please let me know which video it is in. I was wondering if yall could talk about certified pre-owned vs regular used cars at dealerships. Is the extra expense worth it? Is a CPO more reliable or i guess its better described as less of a chance of having issues than a regular used car?

[@wyhop6071]

Paying MSRP is crazy but paying over that is absolutely insane! I’d never pay either figure. I’d just as soon walk out and never return to that dealership!

[@wyhop6071]

@@ahmedtoma6963 Oh, we’ll see about that, my friend! The entire story is yet to be written.

[@wyhop6071]

@@ahmedtoma6963 As I said, this entire situation is far from over. Unless ABSOLUTELY NECESSARY, I’d never buy a vehicle in this current market but if you must, prepare yourself as best you can!

[@positively_broad_st3780]

Ray, you're formerly with Acura. What percentage off MSRP can reasonably be achieved with an ILX and a TLX?

[@zilith]

You guys are so much fun to watch. Keep making great content. Subscribed and thumbs up. I am wondering your thoughts about extended warranties. I have found they sell you these extended warranties as though they will cover anything. Then we something breaks they want nothing to do with fixing it.

[@CarEdge]

Thanks for the kind words! Yeah... Warranties are tricky because of all the fine print and all the mark up that the dealer has in them. We'll certainly cover this topic in a future video. Great question!

[@jamespn]

I went into an Acura dealer and they had a new small SUV and the salesman said that this model was in high demand and there are no discounts from MSRP. I left the dealer and a week later, the salesman called me back and said that he could offer some money off of full MSRP, I told him that I wasn’t interested in the vehicle. I was turned off by the arrogance of the salesman and I almost felt sorry for the guy when he called and had to eat a little bit of crow.

[@tourist9862]

Can I get corolla hatchback se 2020 for 18K out the door including sales tax new or am I crazy? I'll wait till August

[@arkansascowboy3156]

Majority of us car salespeople make nothing but mini deals on sales now due to the lack of profit in this market.

[@fastvmax1]

Can you guys touch on the warranties that dealers push and is any of it worth it? Thanks. love your videos.

[@arkansascowboy3156]

This is just not the case anymore. There’s no more gross to be made much anymore. The car game has completely changed

[@Mike323_]

How has this effected gt500 & C8 Corvette

[@pudendajohnson1932]

Did he say servicing the customers?

[@Kenscialoia]

Do they ever bring out a fake invoice as a sales technique?

[@CarEdge]

I can't speak for all dealerships but I never witnessed that in my 43+ years in the business.

[@michelswerissen6544]

Just recently had experience with dealership ,offered to buy luxury car ex manufacturers fleet car so I'd still be the first owner,change over figure I was willing to pay 15000 cash my trade in much younger high end model ,they tried to screw me for an extra 2000 dollars, the manager scenario, I said thanks very much and walked out they lost my business 15000 dollars in cash and I'll never go back or recommend them to anyone.

[@RedRepair]

How much should I pay for dealer added extras . I will throw out a 2020 Jeep the Rubicon already comes with all these upgrades, then the dealer throws on another $10,000 more . Larger tires and wheel extra $2500. I state that I can get those retail installed for $2000 anywhere , and the tires and wheels you took off have a retail price of $1600, so I should get an offset , the after market fenders are cheaper than the factory’s, the tire carrier for the larger tire is also cheaper than the original. I go threw line by line showing the price difference. The $10,000 ends up being $3500 (if that ) . I even asked for the parts that was taken off - no deal . I’m confused- parts that are already on the vehicle are taken off but I’m not given a price offset or parts while paying dealer retail for the new parts and they keep the old parts ? How do I figure out a percentage of their true value to come up with a fair price ?

[@davidhughes1890]

Who you find a good dealership/salesman, stay with them. My family has purchased 17 autos in the last 36 years at a local mom/pop place.

[@jaswinderbhatti3352]

I love lease man 😀

[@rvmorgan47]

After listening to you talk, I don't know how anyone can sell a car with a straight face that he knows that even after his best deal he is driving a car off the lot that is not worth 80 % of what he just paid for it.

[@AL-pu7ux]

Is the margin greater for american luxury brands compared to german luxury brands?

[@ryandixon1102]

Another channel is saying they’re making 30% on msrp , so offer 20% off and no bunk fees

[@keyranger9749]

Great video !!! I continue to learn so much from Dad and son!!!!

[@thomasmargolis3313]

You have this consistent ability to inform and make, certainly me, smarter. thanks.

[@richardrybarczyk5522]

Hey what drives the auto dealerships is greed, why make $17,000 when you can try for $22,000. Just simple greed.

[@dehoyosrudolph8885]

Richard Rybarczyk The reason they keep doing business this way, is because someone else will buy that vehicle, @ the inflated price, so they don’t care!

[@larrylucas5731]

Enjoyed the coffee talk...

[@CarEdge]

And we appreciate your viewership, Larry.

[@vicmultani7582]

New car sales bring in used car trade ins for retail sales---.

[@ladawnemalone2955]

Is there still this type of mark up on used cars or lease vehicles

[@donaldlee6760]

At 13:44 you mention the reconditioning process cost dealers ~$1,800, however on Jalopnik the author wrote an article about an "insane" $1,365 reconditioning fee. link - jalopnik.com/check-out-this-dealership-s-insane-reconditioning-fee-o-1814078471 The author, Tom McParland later writes, "Obviously, that reconditioning fee is bullshit". Is $1,800 the true cost? Scotty Kilmer has also been critical of certified CPO cars, claiming the additional cost is (substantially) less than the value provided to the customer. Scotty has a funny video where a dealership was selling a CPO car with oil that was both extremely dirty and dangerously low, showing the engine was burning excess oil.

[@CarEdge]

What I was talking about was our average reconditioning cost internally to get a car lot ready for retail sale. What the Jalopnik article is referring to is the practice that some dealers use to advertise low prices and then jack them up with, how can I put this, bullshit charges once a customer is interested. This is at best deceptive and at worst perhaps consumer fraud.

[@donaldlee6760]

@@CarEdge - this is a great explanation. I wonder if in a future video it would be worthwhile to discuss these types of costs that a dealer must incur which explains why used cars at dealers must sell for more than private sale. I'm still interested in what a "true" reconditioning involves. I think many people are under the impression that it's little more than a quick wash, vacuum, and cursory mechanical check by a junior tech.

[@highereducation3028]

Do you have any idea how much margin would be on a 93,000 hellcat red eye?

[@johnh8705]

Has to be huge considering the base model is $30k.

[@BKMaster6]

G wagon in the thumbnail. That’s my dream car

[@CarEdge]

I know where you can buy one for MSRP of $147,000...

[@officesuperhero9611]

@@CarEdge +$5000 above MSRP? LOL

[@BKMaster6]

Where?

[@ScottiMac0007]

Hey Ray and Zach! Some states cap Registration and Title fee charges, for example MD is $300. Does the $300 include the actual cost of the title and registration or is the $300 the maximum processing charge the dealer can charge for the service of handling this for you?

[@tim4269]

It is just dealer profit.

[@CarEdge]

The cap for the processing fee in Maryland is $200. Title and registration fees are state fees and are not marked up.

[@Ryan-hq5dv]

Thank you. 🙏🏼

[@tkwasiisaac8818]

Please I beg you make a video talking about credit, and basic finance. Just because your credit karma says one number doesn't mean that's your auto score actually is.

[@CarEdge]

We can certainly cover that in the near future! Thanks so much for watching and suggesting.

[@twin2482]

How does the buying experience compare in the US vs other countries? Do all countries have hold back, volume bonus, etc?

[@seawalkarrg]

You guys from Balmer hon?

[@CarEdge]

Jason, Zach here. I'm just south!

[@tommyguns1184]

what is a reputable site that can give you msrp?

[@joestouts3671]

This site is very good at giving you MSRP on what dealers should be paying. www.car-buying-strategies.com/

[@CarEdge]

Tommy if it's a new car than look at the Monroney label. More on that here: yourautoadvocate.com/guides/monroney-sticker/

[@ty5967]

I'd pay sticker too if I could get a 2020 G63. Good luck!!! Fact is that there's an 18 month waitlist and $50K dealer mark up for the G63. Maybe a month or two, things will soften up due to the corona virus.

[@overbuiltlimited]

Re: The people who say that you should just buy private party, of which I am one; you are assuming that every used car needs $1,500 or more in “reconditioning” costs. This is totally untrue. I’ve purchased many cars private party and none of them would have cost a dealership a dime to “recondition.” The key is having patience and finding a pristine example with excellent service history. Not that difficult if you learn about the model you are looking for so you can spot the duds and get a PPI.

[@lahmarket]

Don't forget to ask about "Trunk Money" in Mercedes Benz. Ask your salesman friend about that money.

[@maschngon]

I just bought a 2020 Tacoma off road through costco buying program. Sticker price was 45k dealers said I get $400 under invoice. Out the door five years finance zero percent was $45k how do they make money under invoice supposedly. No many down as well