How much gross profit a dealership makes will vary depending on the salesperson's experience, how badly they need to sell more cars, and so on. to answer this question with 100% confidence based only on the information in your question would require an interview of not just you but also representatives from all of the dealerships in your area where you may have bought or leased either new or used vehicles.
nonetheless, there are plenty of things that can be inferred from publicly available data points about car sales. a quick google search turned up this helpful thread discussing how car dealerships make money which claims that “new vehicles are at least two-thirds markup..” the article cites more sources for purchase price secrets, too if you want
what is the average profit margin on a new car?
new cars have an average margin of around 5%.
the margin on new car sales is calculated as the difference between the wholesale and retail prices, or 5%-25%. the wider margin usually comes from luxury vehicles. vehicles that are old and therefore less costly to buy used typically generate a narrower margins. this is because relatively few people want to spend $20,000 on a $5,000 used vehicle. bottom-line: buying new isn't always your best choice if you're looking for savings based on shrinking margins.
how much do dealers make on new vehicles?
new vehicle dealers make about 8% to 10% of the cost of a new car.
since new cars are usually bought with loans, people don't pay out an entire car to the dealer until it's time for them to turn in their vehicle and exchange it for a new one. this means that there is always some leeway as far as deciding how much they will give back or not at the end of the loan, and also gives dealers room to negotiate prices on used vehicles with customers.
dealerships do tend to advertise certain deals up front with discounted interest rates and whatnot, but higher interest rates only mean less money for balloons and champagne these days (or else higher monthly payments). so if two vehicles have
how profitable is a car dealership?
it depends on the dealership. in general, car dealerships are businesses that always strive to maintain a higher gross profit margin due to the nature of the vehicle merchandising industry. a business may have been doing something incorrectly or might have been engaging in unethical practices that led them away from this goal and caused a decrease in profits. a dealership can also see an increase in profits if they take on less risk with their loan programs, default rates, and leases. you would need to contact your local bank or credit union for more information on these topics as they often offer financing options to both new and used car purchasers as well as those who own their current vehicle outright.”
