Re: Our friends at AofA

[Osman Parvez <oparvez1@nycap.rr.com>]

Steve Bigelow wrote:
> 
> "Geoff Jenkins" <jenkinsg@pilot.msu.edu> said:
> 
> >Given that (according to The Economist, which did some research on all
> this) a well-run large dealer can
> >now make more profit from the service & maintenance of newer cars (as
> opposed to parts etc for older >ones) than from sales of new or old
> vehicles,
> 
> It has always been my understanding (well, since I've been running my own
> business's) that new car dealers _generally_ don't make SQUAT on new car
> sales. (Oh God, please don't let this turn into a dealer bashing thread!)
> Some one on this list bragged about a 5% over list A4. So the "profit" is
> what, $1300-1500? The saleman gets (I'm guessing) a couple-three hun,
> leaving a grand to support all the rest of the dealership, inventory,
> staff, (even if you never see them, or even use them, they still like to
> eat) the building, taxes, insurance, benefits, yada, yada, yada.......
> 
> What do you figure the monthly tab is for all of that? Not cheap, I
> suspect.
> 
> Steve Bigelow, damn glad I run mine out of my home.
> Discreet Dungeons
> Ottawa Ontario
> '84 5ks "Audrey", proper German silver, Husco armrest/cupholder
> '82 Coupe (previous)

For those who don't know, I used to work for the dealer. Let's
see..Sales department was 8 full time employees. 6 get typically 20-30%
of gross profit (minus dealer pac). The 20-30% figure is dependent on
how many sales that month so far. 1-4=20%, 5-7=25%, 7+=30%.

Typical sales on Audis alone were grosses between 3-5%. If we got 5%, we
were VERY happy. Sorry whoever thinks they got a smoking deal at 5%
over. You got a very good deal, and should be happy if your dealership
treated you right. But in terms of penny pinching, 3-5% was the norm.
For those math stricken we are talking about $1000 deals on 23-37K cars. 

The sales staff is self supporting, I never took anything out that I
didn't put in. However, the support staff wasn't. That included
secretaries and operators. Then there is the chain of management above,
which can go very far at some dealerships depending on size. 

Steve is right about some of the costs. I can't imagine the bill for
"keeping the lights on" so to speak. Don't forget the advertising and
sponsorships to promote products. One month we blew $20,000 on a new A6
promotion alone! 

Scary costs and fees associated. The Service department definately has
to pull its weight, and probably pulls more than the sales department.
But just as the salesmen don't earn if they don't sell, the techs don't
earn unless they aren't turning wrenches. 

I hope this doesn't turn into a dealer bashing thread either. But there
were times when I couldn't see how the place was staying in business. 
-- 
Osman Parvez
Albany NY
89 200q 175K (Happy Clutch)
85 Mr2 77K (In Storage)