Dealer Cost | GTAMotorcycle.com

Dealer Cost

-Maverick-

-Maverick-

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Let's just take a simple motorcycle like a 2020 DRZ 400. You see them for sale brand new for ~ $8000 plus all the other BS. The dealers act like they're making pennies on them. Is this true? What is a dealer paying Suzuki for a 2020 DRZ 400?

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It's the overhead. Bricks and mortar. That's why the Harley Davidson motorcycle catalog is 20 pages and the Motor Clothes catalog is 450 pages.
 
Wingboy said:
It's the overhead. Bricks and mortar. That's why the Harley Davidson motorcycle catalog is 20 pages and the Motor Clothes catalog is 450 pages.
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In the simple example tho, I don't even think Suzuki has a motorcycle clothing catalog. Just wondering if anyone actually knows the dealer cost on a 2020 DRZ 400. From that example, it'll be pretty much across the board.

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MLadin said:
Let's just take a simple motorcycle like a 2020 DRZ 400. You see them for sale brand new for ~ $8000 plus all the other BS. The dealers act like they're making pennies on them. Is this true? What is a dealer paying Suzuki for a 2020 DRZ 400?

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Dealer cost is a complicated beast. There is the invoice cost that is likely quite close to MSRP. I know one car dealership that will sell cars for $300 over that number. Then you get the kickback at the end of the year for volume, moving unwanted vehicles and whatever else they toss in the formula. This is where a lot of the profit comes from, but trying to find out how much of that cheque was tied to a single DRZ 400 is not easy.
 
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Its a bit complicated to come up with an absolute number.
Dealers usually have to finance their inventory, either directly through the distributor or an outside source.
Its called floor plan, and the longer a machine sits, the more it costs. That cost is spread out across the entire inventory.
Its about timing. If you want something that's just been newly released its not likely you get a better price because its in demand.
Margins are generally tighter on low end machines. You have to sell a lot of EX400s to match the net profit on one H2.
The manufacturers can drop the dealer net (end of season non-current selloffs), so even if inventory is price protected, they've been paying finance costs on the original, higher price all along.
If you finance through the dealer or buy extended warranty dealers can make more money on these points of sale than the machine itself.
As was mentioned, there's more room to move on accessories at point of sale.
So to sum up, as a percentage of dealer cost - it depends...
 
I see, so their profit on a 2020 DRZ 400 could be as little as $500? Hard to believe that keeps the lights on in the dealership.


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MLadin said:
I see, so their profit on a 2020 DRZ 400 could be as little as $500? Hard to believe that keeps the lights on in the dealership.


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It doesn't. I've always heard profit margins on new bikes is very low. They push warranties/financing (kick backs from banks)/accessories/service hard for a reason. New bike sales is a small part.
 
Somewhere around 20 years ago the owner of Machine Racing told a group of us that the profit margin on a PW50 Yamaha was zero. They sold them for what they cost.

The context; he was talking about reconciling profitability with customer demand regarding new bike pricing for competition bikes.
 
dealers get to hang out the shingle of a manufacturer and advertise the brand
they have exclusive distribution for the brand in their area
they gain a few things for this, beyond the $500/bike on a new sale

margin comes from parts, service, accessories and used sales
the internet of course is eroding margins on most of these things

high new unit sales/market share are rewarded with discounts off dealer net
and better parts wholesale pricing

I've heard that it's possible to make a small fortune running a bike dealership
after starting with a big fortune
 
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New bike sales, similar to new car sales, don’t keep the lights on.
Much better margins on used cars, service, warranty, spare parts and accessories that all tie into it.
New unit sales make money primarily by volume. It’s the return business where most dealers make money.
 
J_F said:
dealers get to hang out the shingle of a manufacturer and advertise the brand
they have exclusive distribution for the brand in their area
they gain a few things for this, beyond the $500/bike on a new sale

margin comes from parts, service, accessories and used sales
the internet of course is eroding margins on most of these things

high new unit sales/market share are rewarded with discounts off dealer net
and better parts wholesale pricing

I've heard that it's possible to make a small fortune running a bike dealership
after starting with a big fortune
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I see what you did there, clever. Seems like a hard way to make money. Manufacturers should sell direct via website and have corner garages for repair. Save the greasyness of having to deal with the Herb Tarlek's of the world.

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Many many years ago I used to audit Ensign Motors in Mister-and- Mississauga and I think is typical of auto/bike dealers yesterday and today. New sales made about 10% of the profit, parts made about 35% of the profit and service 55%. I have had discounts of 25% on high-end vehicles and as little as 5% more recently on a new compact. But when you figure in all the extra-cost BS about $500 for dealer administration and PDI inspection, you end up paying basically list price.
 
MLadin said:
I see what you did there, clever. Seems like a hard way to make money. Manufacturers should sell direct via website and have corner garages for repair. Save the greasyness of having to deal with the Herb Tarlek's of the world.
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People new at buying bikes and buying them new generally need and want a dealership service dept. Also, warranty, recall, etc being left up to 'corner garages' sounds like a great way to get defrauded and/or get your brand trashed because Billy the Apprentice couldn't be bothered to use locktite.

Or you can do the Telsa method where yes, they direct sale and direct sale the service at ridiculous rates and restrict part sales too.
 
CSC sells consumer direct too. I got into a big online argument with their flack guy Joe Berk about potential problems with that business model - owners doing their own PDIs, safety recalls, general repairs and doing them wrong, stuff like that.
Well, they're still in business but haven't exactly set the world on fire.
Current New Inventory | CSC Motorcycles
 
I've had nothing but trouble recently trying to buy new...dealers trying to fleece every dollar they can. Maybe 'cause it's off season. But you'd think they'd want to move inventory off season. I said F it and am buying slightly used.

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MLadin said:
I've had nothing but trouble recently trying to buy new...dealers trying to fleece every dollar they can. Maybe 'cause it's off season. But you'd think they'd want to move inventory off season. I said F it and am buying slightly used.
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They have to pay what the distributor will sell to them for. If you walk in off the street and try to lowball, you'll get the cold shoulder.
What did you try to buy and what were you offering to pay ?
 
TK4 said:
They have to pay what the distributor will sell to them for. If you walk in off the street and try to lowball, you'll get the cold shoulder.
What did you try to buy and what were you offering to pay ?
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I was looking for a 2017 and up GSX-R 1000 offering $15,000 all in and a 2017 and up DRZ400SM offering $8000 all in.

Suzuki has kind of blown it with the new GSX-R. While it's a great bike, it's way overpriced and thus dealers are sitting on a lot of new non-current stock. Especially 2017's.


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MLadin said:
I was looking for a 2017 and up GSX-R 1000 offering $15,000 all in and a 2017 and up DRZ400SM offering $8000 all in.
Suzuki has kind of blown it with the new GSX-R. While it's a great bike, it's way overpriced and thus dealers are sitting on a lot of new non-current stock. Especially 2017's.
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Okay, let's do some quick math - 2018 GSXR1000 MSRP is $18,699, DRZ400SM is $7,699.
2017s aren't shown on Suzuki's website, but likely aren't all that much cheaper.
Let's say you can talk the dealer down to 15% off both machines (which I doubt), that's $15,895 and $6,545 respectively.
Add in say $250 for freight and pdi on each one plus HST that comes out to $18,240 and $7,678 plus licencing.
So, $23k isn't going to get you both bikes, more like $26K+, dealer won't sell to you below cost.
How's that look compared to what you were quoted ?
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