Need help with an EV doubter

[ggies07]

I was talking about the whole dealership problem with this guy I know and I said that they mark up their prices on the cars. He said "I have bought cars at less than the purchase invoice a dealer paid from the manufacturer more than once". I said the mark up was 30%. That's right, right? and are there any "hard" sources to find these facts?

Thanks!

 

[Zythryn]

Actually, sales of new cars is not much of a money maker for dealers.
I have heard they make more on underpaying for trade ins and then turning around and selling the used car at a healthy profit.

Financing and service seem to be the big money makers.
See The Surprising Ways Car Dealers Make The Most Money Off You - Forbes

 

[ggies07]

Actually, sales of new cars is not much of a money maker for dealers.
I have heard they make more on underpaying for trade ins and then turning around and selling the used car at a healthy profit.

Financing and service seem to be the big money makers.
See The Surprising Ways Car Dealers Make The Most Money Off You - Forbes

Interesting.....I swear I've heard talk on here and from Elon that one of the bad points of dealerships is that they mark up the price of the car. hmmm.......

 

[Dave EV]

"I have bought cars at less than the purchase invoice a dealer paid from the manufacturer more than once".

Very often dealers have other cash incentives to move cars for less than invoice. Invoice is a good starting point, but by no means the lowest you can go.

And as Zythryn mentions, there's other ways for the dealers to make money, for example I really detest walking into the finance office after negotiating a price w/sales for a car these days - it's like a surprise round-2 where they try to sell you all sorts of other crap you don't want/need and you're already worn down.

"You sure you don't want to switch to a lease?" (Because after 3 years you want a new car with the latest technology and we get to do this all over again!)
"You want that extended warranty?" (Because our cars are really expensive to repair and unreliable as soon as the factory warranty expires!)
"You want that underbody sealant?" (Because the factory sealant is weak!)
"How about a muffler bearing warranty?" (Those bearings always start rattling around!)
"Prepaid windshield wiper fluid refills?" (Buy in bulk and save!)

 

[Doug_G]

It depends on the car. They make almost nothing on a base model, especially for a compact car. They make significantly more on options and upgrades. Sales staff have a big incentive to sell the upgrades. Especially dealer-sourced things like rustproofing, paint protection, etc.

That said, most dealerships make their bucks on service, not on new car sales. There is a LOT of overhead involved - building, staff, inventory, etc. Your dealer will probably try to make a case that you should service your car where you bought it. The other dealers - his competitors - will happily take your money without ever mentioning that.

 

[thelastdeadmouse]

The problem isn't that the dealerships mark up the vehicles, its that the whole franchise system is so much less efficient than the manufacture selling directly that it increases the cost of the car.

 

[PokerBroker]

"You sure you don't want to switch to a lease?" (Because after 3 years you want a new car with the latest technology and we get to do this all over again!)

You mean in three years they're going to get you into a Tesla?

 

[WarrenT]

You're trying to get validation on a very general statement. Don't confuse what "some" dealerships do with what "all" do. Yes many dealerships markup the prices of their cars. But many cars are also sold at or below invoice. Dealers have countless other ways to make money without marking up the price. There is no blanket statement that applies to all dealers & markups.

As long as you aren't saying "All" dealerships markup their prices, you're technically right. But then so is your friend because it is possible to get cars below invoice as well. So markup is not a very relevant point when comparing how Teslas are sold vs. dealership model. And I don't see how it would help make your friend less of an EV doubter. What "thelastdeadmouse" said would be a more relevant point for you to convey. With Tesla selling directly to customers, you're always getting the "best price", everyone is. All the time & effort wasted haggling, negotiating & searching different dealerships for the "best deal" is unnecessary with Tesla.

 

[dsm363]

Interesting.....I swear I've heard talk on here and from Elon that one of the bad points of dealerships is that they mark up the price of the car. hmmm.......

What you may be referring to was a DOJ? Paper from a few years ago people have talked about. It says that just having dealerships adds 30% to the cost of a car but don't think they were talking about a 30% profit for the dealer. Just that it cost the consumer that much more.

 

[ggies07]

Thanks guys for all the help! This was just one reason I was trying to get across to him.

What you may be referring to was a DOJ? Paper from a few years ago people have talked about. It says that just having dealerships adds 30% to the cost of a car but don't think they were talking about a 30% profit for the dealer. Just that it cost the consumer that much more.

Yeah, I think thats what I was referring to. So that is basically saying the same thing I was, that going through a dealership is 30% more expensive than buying directly from Tesla.