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It is the exception but one can find one dealership that is willing to sell one car at a seemingly unbelievable price. I saw one Chicago area dealership do something similar recently as well.

It is usually due to some extraordinary circumstance. It happened to me when I bought my 2010 Outback and on a rare occasion I have sold a car or two like that.
So you are saying that one person checked 20 dealerships and one of those 20 was willing to sell the exact same car as the others for $5,000 less money? I will buy they might well have discounted the car $5,000 and that was $2,000 more than the next cheapest. I spent forty years owning new car dealerships and it didn't happen! One dealer does not beat everyone else by five-grand unless there is something really wrong about the scenario.
 

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So you are saying that one person checked 20 dealerships and one of those 20 was willing to sell the exact same car as the others for $5,000 less money? I will buy they might well have discounted the car $5,000 and that was $2,000 more than the next cheapest. I spent forty years owning new car dealerships and it didn't happen! One dealer does not beat everyone else by five-grand unless there is something really wrong about the scenario.
What I have bolded is what my interpretation is of this situation.

I don't know but I can say that in my experience I have seen it happen be it to myself and others. I must emphasize that it has been an incredibly rare circumstance.

I am not suggesting that this is what happened but rather would like to share an anecdote about one new WRX that was sold at my former employer a few years ago. The vehicle was damaged in transit and we were able to have it repaired to factory spec and sold it at a much lower than normal price due to that specific circumstance.

If a business wants to sell a new car for $5000 off or even 50% off that is their prerogative.
 

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What I find extremely distasteful are the add-ons seemingly every dealership uses to increase their profit after advertising a discounted price: VIN etching, rust-proofing, ScotchGuard fabric protection, etc. Generally worthless add-ons some places claim they will not sell without and adding a few thousand back into their pockets.
Makes me wanna wretch.
 

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Anybody who realistically thinks they actually saved $5000 after shopping 20 dealers does not have a clue. You actually think one dealer out of 20 was $5000 cheaper than all the others?
There a lot of dealers that won't move on price and others that make money on volume.

When we bought our Legacy 6sp, they were hard to find. Found two premiums, 1 about 4.5 hours away and 1 ~ 3hours away. Negotiationed the price with the closer dealer because the 1st wouldn't move on price. When we were going to head up to purchase it had been sold, mentioned the one we found, they did a dealer swap and kept the negotiated price. I was amazed the further dealer was willing to lose the sale over price.
 

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It is the exception but one can find one dealership that is willing to sell one car at a seemingly unbelievable price. I saw one Chicago area dealership do something similar recently as well.

It is usually due to some extraordinary circumstance. It happened to me when I bought my 2010 Outback and on a rare occasion I have sold a car or two like that.
Yeah, I saw some crazy deals when dealers were trying to unload the 2019 OB 3.6 in the latter part of 2019 (but some dealers kept their prices high). It was a small window period though. You had to know what you wanted and pull the trigger. If you went home to “sleep on it”, the car was gone.
 

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There a lot of dealers that won't move on price and others that make money on volume.

When we bought our Legacy 6sp, they were hard to find. Found two premiums, 1 about 4.5 hours away and 1 ~ 3hours away. Negotiationed the price with the closer dealer because the 1st wouldn't move on price. When we were going to head up to purchase it had been sold, mentioned the one we found, they did a dealer swap and kept the negotiated price. I was amazed the further dealer was willing to lose the sale over price.
There are endless variable that could gave been at play here. Perhaps the dealership that traded the car was not in a position where they needed to sell that car for less. Perhaps the vehicle they got in return for trading your car was more desirable or maybe they had a pending deal on which was better than what they could have sold your car for.
 

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+1, and stop believing those published "invoice" prices are what any dealer actually pays for their inventory.
Considering everything that's new inventory is on floorplan ...

Now, I'm going to throw something at you. The invoice I can pull up is the actual invoice for the car. That's actually the size of the check the ladies in the back write to Subaru, whenever we sell a car, minus the holdback. (Which is also on the invoice, but only if you know where to look for it.) If we happen to sell a car quickly, there's also a floorplan allowance that's designed to cover the interest payments for the first 4 months a car is on our lot, too, that the dealership gets to keep.

For those of you not following me, it's pretty simple. I can access the actual vehicle invoice. I'll create some numbers, so you follow me. You come in and look at a Legacy on my lot that has an MSRP of $33,500. The actual, true invoice dealer cost, for that car is $31,000. Somewhere on that form, it tells you the holdback is $600, and the floorplan figure is $200. The car has been on my lot for 2 months. I sell you the car for $31,000 - my actual invoice, plus my doc fee, and you write a check, so no financing in involved. The girls in the back write a check to Subaru for $30,300, to pay them for the car. The dealership makes $600 in holdback money and $100 in floorplan money. They're paying me $200 as a mini for selling the car, leaving them $500.

Does the dealership also get SAF (Subaru Advertising Fund) and CSI money? Sure. Is that an actual part of the gross and/or net profit made on an individual car deal? Not in the least. Will a manager, at the end of the month, be willing to lose $1,000 front end gross on a car deal if the dealership can make an extra $40,000 in money? Sure. But as the salesman, I don't get paid on that.

So, how does the dealership keep the lights on, when there's not much money on actually selling a new car? Simple. We try to make $1,000 gross profit on every USED car we sell, and service and parts keep things going. The internet really HAS changed the way we can sell cars, both new and used. We go for volume now. What helps is when you can combine volume sales WITH good customer service. (And when you FINALLY get the city council to approve your building permit, so they can start building the new dealership. I may be REALLY looking forward to being in a state of the art facility, with 32 service bays, and even an actual coffee shop inside.)
 

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(And when you FINALLY get the city council to approve your building permit, so they can start building the new dealership. I may be REALLY looking forward to being in a state of the art facility, with 32 service bays, and even an actual coffee shop inside.)
I think the new Subaru dealership here opens sometime next month. Currently it is a combined Ford/Subaru dealership and I don't think either manufacturer is crazy about that setup. Now they will be separated and side by side with Subaru getting the new building.
 

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The girls in the back write a check to Subaru ...
Very informative post! Thanks.

However ...
Girls? Seriously, dude? The dealership has minor children working "in the back" and writing checks?

Jeff
 

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Considering everything that's new inventory is on floorplan ...

Now, I'm going to throw something at you. The invoice I can pull up is the actual invoice for the car. That's actually the size of the check the ladies in the back write to Subaru, whenever we sell a car, minus the holdback. (Which is also on the invoice, but only if you know where to look for it.) If we happen to sell a car quickly, there's also a floorplan allowance that's designed to cover the interest payments for the first 4 months a car is on our lot, too, that the dealership gets to keep.

For those of you not following me, it's pretty simple. I can access the actual vehicle invoice. I'll create some numbers, so you follow me. You come in and look at a Legacy on my lot that has an MSRP of $33,500. The actual, true invoice dealer cost, for that car is $31,000. Somewhere on that form, it tells you the holdback is $600, and the floorplan figure is $200. The car has been on my lot for 2 months. I sell you the car for $31,000 - my actual invoice, plus my doc fee, and you write a check, so no financing in involved. The girls in the back write a check to Subaru for $30,300, to pay them for the car. The dealership makes $600 in holdback money and $100 in floorplan money. They're paying me $200 as a mini for selling the car, leaving them $500.

Does the dealership also get SAF (Subaru Advertising Fund) and CSI money? Sure. Is that an actual part of the gross and/or net profit made on an individual car deal? Not in the least. Will a manager, at the end of the month, be willing to lose $1,000 front end gross on a car deal if the dealership can make an extra $40,000 in money? Sure. But as the salesman, I don't get paid on that.

So, how does the dealership keep the lights on, when there's not much money on actually selling a new car? Simple. We try to make $1,000 gross profit on every USED car we sell, and service and parts keep things going. The internet really HAS changed the way we can sell cars, both new and used. We go for volume now. What helps is when you can combine volume sales WITH good customer service. (And when you FINALLY get the city council to approve your building permit, so they can start building the new dealership. I may be REALLY looking forward to being in a state of the art facility, with 32 service bays, and even an actual coffee shop inside.)
Carl, I for one always find your posts to be very informative and interesting. I am afraid you are straying from your strong points when you start discussing profit margins.

The average N.A.D.A (National Automobile Dealers Association) member averaged $2396 per used unit sold and $2014 per new unit sold in 2017. This is an average of all cars sold by the members and is going to approach 17 million new and that many used.

I understand your invoice analysis and your pay plan thoughts but in reality Subaru is an aggressive dealer incentive manufacturer and bottom line numbers of profit are represented only partially when looking at invoice numbers. As well, I would hope your $1,000 per used car gross numbers are somewhat misstated and the store you work for is not performing that poorly.

While it is true the margins are nowhere near as lucrative as the average customer wants to think, they are not as low as you represent. I have owned and operated multiple stores over the years and will assure you the numbers you describe would put opening next month in doubt.
 

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I'm one of those old-fashion guys who think a dealer should make a profit and the salesman a commission. I did my homework before visiting the 2 Subaru dealers within 25 minutes from my home. Decided I wanted the Premium model in Tungsten, no sun roof. Went to the dealer that had same, test drove, and bought. My trade-in price was reasonable, as well as the slight discount (the new cars had just come out). I told them up front there would be no loan interest (paying cash) and no extended warranties being bought by me. We were all happy.
 

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Anybody who realistically thinks they actually saved $5000 after shopping 20 dealers does not have a clue. You actually think one dealer out of 20 was $5000 cheaper than all the others?
Well, I bought my 2019 for $5000 less than any **** head dealer in South Florida was willing to sell it for. Also, could have saved more going out of state but didn’t want the hassle so yea I have a clue and I did in fact save $5k on my 2019 OB Limited. I saved three times that buying my 911 out of state and shipping it. But what do I know.
 

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I think the new Subaru dealership here opens sometime next month. Currently it is a combined Ford/Subaru dealership and I don't think either manufacturer is crazy about that setup. Now they will be separated and side by side with Subaru getting the new building.
A "combined Ford/Subaru dealership"?

That is NOT a marriage made in heaven! 😅

Kia/Mitsubishi seems to be a popular combo in the southeast, but the temp Ford/Subaru combo is unique.
 

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A "combined Ford/Subaru dealership"?

That is NOT a marriage made in heaven! 😅

Kia/Mitsubishi seems to be a popular combo in the southeast, but the temp Ford/Subaru combo is unique.
Yeah, I don't know how common it is but it has been that way here for quite a few years. Quite a few years back we had a separate Subaru dealership but I can't remember exactly when the combined venture came about. The same owner's group also had a Chevrolet dealership and also acquired a Dodge franchise when the local Dodge dealership went out of business. For a while the Chevrolet and Dodge franchises were under the same roof but they immediately began building a second structure on the existing property and at least they have separate facilities.

There is also a Toyota/Honda/Nissan dealership that just moved into a new facility here as well.
 

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Yeah, I don't know how common it is but it has been that way here for quite a few years.
I think it has become more common as many dealerships are becoming part of larger groups like Auto Nation.

In my neck of the woods there is a combined Mercedes/Audi/Subaru dealership.
 

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Girls? Seriously, dude? The dealership has minor children working "in the back" and writing checks?
Well, not only is that what they call themselves (yes, it's accounting, etc.), but I'm of that age that I'm not particularly politically correct AND I'm also old enough to be the father / grandfather of most of them. (Or at least their older brother. I'm nearly 60 - so trying to get me to change my language choices in a lot of ways just isn't going to happen.)
 

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Well, not only is that what they call themselves (yes, it's accounting, etc.), but I'm of that age that I'm not particularly politically correct AND I'm also old enough to be the father / grandfather of most of them. (Or at least their older brother. I'm nearly 60 - so trying to get me to change my language choices in a lot of ways just isn't going to happen.)
Nothing politically incorrect about your post.
I think his"dude" comment was worse than that!

People need to lighten up dude! Haha

Sent from my SM-G960U using Tapatalk
 

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Carl, I for one always find your posts to be very informative and interesting. I am afraid you are straying from your strong points when you start discussing profit margins.

The average N.A.D.A (National Automobile Dealers Association) member averaged $2396 per used unit sold and $2014 per new unit sold in 2017. This is an average of all cars sold by the members and is going to approach 17 million new and that many used.

I understand your invoice analysis and your pay plan thoughts but in reality Subaru is an aggressive dealer incentive manufacturer and bottom line numbers of profit are represented only partially when looking at invoice numbers. As well, I would hope your $1,000 per used car gross numbers are somewhat misstated and the store you work for is not performing that poorly.

While it is true the margins are nowhere near as lucrative as the average customer wants to think, they are not as low as you represent. I have owned and operated multiple stores over the years and will assure you the numbers you describe would put opening next month in doubt.
The biggest thing that skews the numbers you mention is that there are dealers that regularly get what we in the business call head rippers. Let's just say that you sell 10 cars, and 9 of those cars show a gross of $1,000, and the 10th one is a head ripper (seriously, anyone who actually pays MSRP on a vehicle with a $25,000 mark-up deserves it - and I'm looking at Jeep / RAM purchasers) that makes $11,000, suddenly you're at a $2,000 average for those 20 vehicles.

Keep in mind I said we TRY to make that. There's lots of times we make a LOT more than that. And my question is, are they also including back end numbers with that, because that's store profit as well. If we make $1,000 up front, then between financing and warranty, they make $1,500 in the back, we consider that $2,500 a copy. And it really helps my paycheck when I get $3,500 in the front and $3,500 in the back. (Hey, I have to make a living, too.)
 

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A "combined Ford/Subaru dealership"?

That is NOT a marriage made in heaven! 😅

Kia/Mitsubishi seems to be a popular combo in the southeast, but the temp Ford/Subaru combo is unique.
On the surface, it may not seem like a good idea. However, most people are not cross shopping those makers. So, the dealers are not in there directly competing. On the flip side, each dealer can catch the “not buying foreign anymore” customers, or the “not buying domestic” anymore customers.
 
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