Where Does the Car Dealer Make Money?

[Old School]

http://www.edmunds.com/car-buying/w...ar+dealer+make+money&mktid=ob61762871&msite=w


GOOD READ..

"Follow the money," is good advice for someone trying to understand the
hidden side of any business. Nowhere is this more important than on a car lot.
Rows of shiny new cars on a dealer's lot make consumers believe that's where the
big money is. But if you follow the trail of dollars, it leads in a surprising
direction. And knowing where the profit is will make you a better shopper.

 

[hawkeye]

Great info-thanks:0008

 

[krc]

A very good read.

Thanks :0008

 

[THE KOD]

Holdback is usually either 2 or 3 percent of either the invoice or the sticker price of the car. On a $20,000 car that's either $400 or $600 that is held out of the initial deal until after the car is sold. This allows dealers to sell a car at invoice price and still make a profit. Check the holdback percentage before going shopping but don't try to negotiate on holdback, since dealers consider this money sacred. Still, knowing it is there will help you press for a better price.

Dealer cash is even more significant. When a car isn't selling well, the manufacturer will sometimes offer an incentive ? often as much as $2,000 ? but only let the dealer know about it. This is like a wild card in negotiating, and it lets the dealer claim he's taking a loss while still actually making a nice profit. Dealer cash is listed on Edmunds.com under Latest Incentives.

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this is all you need to know really