Profit margins on new cars?

[Sae]

Does anyone know of any sites links which have any realistic numbers as how much car manufactuters make on new cars these days?

Or does anyone in the business want to divulge how commission and profit is split between main dealer and supplier from a typical sale? This is just the actual car?

E.g. Even though you get places like motorpoint that seem to offer already quite sizeable discounts, how much margin is there still to be had?

 

[Sae]

So, it appears that from various forums, most people seem to say that profit margins are at least 15-20%+ on luxury cars.

From recent investigations, I would add that dealers these days probably make the bulk of their money from finance deal plans -pcp/hp - most dealers are at least double rate of banks and loan companies. Then dealer add on products such as gap cover, protection cleaning products like autoglym/swissvax, and then to compound this all the extras are also rolled into your finance deal so your paying 3 yrs interest on absolutely everything over and above.

Car buying is just a Whole new ball game

 

[Darren Slone]

My friend is one of the top men for a Mercedes Franchise and heads up 3 dealerships, I was recently looking to get a GLC as my next company car, the maximum discount I could get was 12% by special arrangement,that left them with just over 1% in the car

 

[pvr]

Not sure how it is possible to get 22% of a BMW on just about the entire range. They must have a rather large mark up.

 

[metal licker]

So, it appears that from various forums, most people seem to say that profit margins are at least 15-20%+ on luxury cars.

From recent investigations, I would add that dealers these days probably make the bulk of their money from finance deal plans -pcp/hp - most dealers are at least double rate of banks and loan companies. Then dealer add on products such as gap cover, protection cleaning products like autoglym/swissvax, and then to compound this all the extras are also rolled into your finance deal so your paying 3 yrs interest on absolutely everything over and above.

Car buying is just a Whole new ball game

Think you getting the new and secondhand market jumbled up together because most PCP deals on new BMW's (only dealership I've dealt with recently) are better than banks etc can offer but worse on a secondhand car. As for the products you mention you don't have to buy them at source or at all !

 

[Ducklakeview]

Average percentage profit in a brand new car is circa 10-12.5% depending on the manufacturer. HOWEVER, dealers receive "incentives" for meeting sales targets set by the manufacturer, which are different targets to those set by the dealership. This incentive takes the form of further discounts on registered vehicles. Depending on the manufacturer, these can be upto a further 5-20% over and above the std discount. THIS is the reason you see big discounts on pre-registered vehicles. However, the additional discounts are given retrospectively AFTER the vehicles have been registered, so if you walk into a dealership that is at the start of its sales target period, you'll often find that you will only be offered the minimum "slice" of that first discount. This will increase as they move towards their sales cutoff for that period. Some dealers who know they will hit the targets, will "front" some additional discount from the backend commision, in order to shift vehicles.

There can also be other incentives from the manufacturer, such as further discount if you take their finance or warranty products. A friend of mine got a straight £12,500 off a new A7 a couple of years ago, just for taking the min finance from Audi, he px'd a RR Sport, so ended up with a cheque back for £7,500 as well, as the px exceeded the max deposit allowed on their HP, he then took the balance over the min period of 24 months.

Manufacturers will also do deals with leasing companies, and the likes of big car supermarkets, particularly on "aged stock" or run out models, at the end of the day the manufacturer wants to shift units, and most aren't bothered who buys them. This is one of the reasons main dealers struggle, although workshop & service are usually more profitable for a dealer than the actual selling of the cars.

I worked as a business manager for a large multi-franchise dealership, so know how the system works.

Mike

 

[Fishy Dave]

It's impossible to give a definitive answer as every manufacturer operates differently and they change their offers yearly/quarterly or more! Speaking for Toyota/Lexus (some years ago) the front end profit was tiny, just a few percent, it was all about hitting targets and then getting the additional back end bonus per unit, then you've got your finance target/bonus and many other bits including customer satisfaction, all of which results in a percentage or amount per car sold. The industry has a problem now with so many cars sold at a loss or pre-registered just to hit target at the end of the year.