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"Stealerships" Fortnine
- Thread starter bigpoppa
- Start date
A few of my clients own car dealerships and they are some of the wealthiest people I interact with.
One of my employees is related (through marriage) to one of the owners of Apex Cycle, and they are definitely not hurting for cash.
If anyone who owns a dealership, car or power sport, ever tries to pull the “woe is me” card, they are full of s**t!
One of my employees is related (through marriage) to one of the owners of Apex Cycle, and they are definitely not hurting for cash.
If anyone who owns a dealership, car or power sport, ever tries to pull the “woe is me” card, they are full of s**t!
TK4
Well-known member
The P&A (parts and accessory) side of the business, along with the service dept. can generate the income to keep a dealership afloat but they rely on the unit sales to generate the people traffic. Double edged sword.
I've worked both sides of the fence. At retail, there is more profit generated selling financing and extended warranty than there is on the machine. At wholesale, there is a warranty/service/marketing support system and warehouse full of parts to back up the product.
@Katatonic - the folks you're dealing with likely had deep pockets to begin with. If you can self-finance you get all the gravy and call a lot of the shots.
If you want to make a small fortune in the powersports business, start with a big one...
I've worked both sides of the fence. At retail, there is more profit generated selling financing and extended warranty than there is on the machine. At wholesale, there is a warranty/service/marketing support system and warehouse full of parts to back up the product.
@Katatonic - the folks you're dealing with likely had deep pockets to begin with. If you can self-finance you get all the gravy and call a lot of the shots.
If you want to make a small fortune in the powersports business, start with a big one...
When I purchased my bike last year the dealers left zero room for bargaining and they want to charge astronomical amounts for a service intervals. It's insane. The mechanics and sales people aren't getting paid as much as they deserve to be honest, so the guys at the top are keeping all the loot.
TK4
Well-known member
And paying all the bills - keeping the doors open, taxes paid and the lights on costs $$$.
No question, staff should be paid better - ask the average dealer about people turnover and training.
I’ve bought 3 new vehicles this year, 2 cars and a bike, and there is zero movement on purchase price. But as soon as you mention that you will be getting dealer add-ons (winter tire packages, extended warranty, appearance packages) and tell them that you intend to have the vehicle serviced there, their tune changes a bit.
bigpoppa
Well-known member
maybe I can use this to get better deals then
maybe I can use this to get better deals then
I’m friends with the mechanic who deals with our work vehicles and he gives me his wholesale cost when working on my personal vehicles. Both the Honda and Kia dealership are doing a winter tire package for less than my mechanics wholesale cost.
We went with an extended warranty on the Civic and got 30% off list price.
For the bike, the Honda dealer is doing the first service at no charge.
As mentioned previously, there’s zero room for movement on the purchase price of new vehicles right now but you can negotiate add-ons or service when buying.
I have spent way too many years in the auto biz. Most dealerships I have seen hover around 50/50 split between variable (sales dept) and fixed (parts and service) operations. If there is a massive offset, that department probably isn't running correctly. There is minimal money made on the sale of the car, but is made up on the back end with extended warranty/financing/etc. There is a Toronto guy with a popular radio show that used to be known (not sure if he still does it) for selling cars at effectively cost but then trying to recoup profits through extended warranty sales.
In general, most auto dealership owners are not making insane money. You would be surprised how many dealerships actually lose money year after year. For the amount of capital required to invest and the general risks involved, there isn't a huge upside for most.
Like with most other gta businesses that need lots of land, treading water until you sell the land for tens of millions is a viable business strategy. Looked at yearly sucks but over the life cycle it can make sense. The business supported the land purchase that you did not have the personal capital to make. Sure you could try buying land and renting it but a bad tenant could sink you. It's hard to lose when you are your own tenant. hell, as the land is the valuable asset and the business is just a means to an end, you dont even care if the business is losing money to pay the rent as long as there is room in the LOC.
TK4
Well-known member
"We lose money on every unit we sell, but make it back on the volume."
I wonder if they do better with used car sales vs. new car sales.
I will never get my vehicle serviced at a dealer. I had a case a few years ago where a used car I bought didn't have fresh tranny fluid in it, yet the service history I asked for indicated that it had just been done to prep the vehicle for sale.
Previous work experience has shown me that in a OEM service environment, not necessarily a car dealer, when a job like, for example, 20,000 km routine service requires checking, for example, valve lash, and the valve lash is always good on these checks, at some point the check is skipped on future jobs with no repercussions.
I will never get my vehicle serviced at a dealer. I had a case a few years ago where a used car I bought didn't have fresh tranny fluid in it, yet the service history I asked for indicated that it had just been done to prep the vehicle for sale.
Previous work experience has shown me that in a OEM service environment, not necessarily a car dealer, when a job like, for example, 20,000 km routine service requires checking, for example, valve lash, and the valve lash is always good on these checks, at some point the check is skipped on future jobs with no repercussions.
Lots of ways to move numbers around. Separate corp. owns the land and building, rents it to the dealership for X amount. A lot (not all) of dealer principals are very smart people and didn't stumble into their positions. I have seen some real head scratchers though.
Sounds stupid but there is some logic to that, though not 100% truthful. Most consumers only know of the invoice price and the sale price, there is also something called holdback. Which is a percentage (2-3%) of the price of the vehicle paid back to the dealership from the manufacturer. Few people at the dealership actually see that profit except for senior managers. That number among other perks can vary based on performance metrics set out by the manufacturer, one of which is volume and sales targets. So some dealers do work a volume game where they sell a ton of cars at an immediate loss knowing that there is still profit to be made once the holdback is paid to them. That isn't even taking into account income generated from financing, extended warranties, and theoretical future revenue from service.
PS, if a dealer has to get the car for you from another dealer (dealer-trade), generally the original dealer keeps the holdback.
Used cars generally have higher profit margins, but lower volume. Margins generally aren't huge once reconditioning is added to the initial cost.
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If dealerships are such insane cash cows, I'm left wondering why Spoiled Sports out my way is closing their doors on April 15'th.
From what I read they are retiring but I have no way to verify that.
The family that previously owned Astlestines out in Blackstock struggled to find a buyer for years when their children didn’t want the family business. Now it’s Blackstock Motorsport. Again just what I was told by a friend of the family.
Not all businesses fail some just close up because things change.
I closed a profitable contracting business years ago because being self employed I couldn’t qualify for a mortgage on the house I wanted to buy.
I took a steady job making less money but on payroll and qualified for my house.
A few years later I bought a new truck while I still had credit then I quit my job the next day. Now I can’t borrow squat without claiming massive income for multiple years or paying higher interest than people with regular jobs. Owning a small business is not all roses. Good thing for me is I have enough debt and anything else I buy I will just pay for or live without. Sorry for the little off topic part
Well the two parts-counter workers are both aholes not many people will miss so that could be one reason why. Have you heard their automated voicemail message recently that stated workers will not listen to abusive language from customers? Yeah there's reason for all those customers with angry language. I lived 10mins from them but would drive over an hour to Deerhaven in Belleville because the service and customer support was that much better.
When I used to work at a GM dealership in the medium duty truck side almost 20 years ago the Parts department paid the running costs, sales made the profit and the service department was a necessary evil to provide warranty service to retain sales.
That being said we didn't get a whole lot of CP work in the service department. We were too expensive compared to independants. We did 70% warranty work and anyone in the business knows just how well that pays.
The car side of the dealer moved a massive amount of rental units. Like 6k + a year. It was explained to me by higher ups that sales volume was a big factor in the overall dealer rating with GM. The higher the rating the less the dealer pays for cars and more importantly parts. This also factored into how many special order models a dealer was able to get their hands on. This dealer was very well rated so any time there was a special Edition Corvette I knew there would be one in the showroom and the principal would be driving one.
That being said we didn't get a whole lot of CP work in the service department. We were too expensive compared to independants. We did 70% warranty work and anyone in the business knows just how well that pays.
The car side of the dealer moved a massive amount of rental units. Like 6k + a year. It was explained to me by higher ups that sales volume was a big factor in the overall dealer rating with GM. The higher the rating the less the dealer pays for cars and more importantly parts. This also factored into how many special order models a dealer was able to get their hands on. This dealer was very well rated so any time there was a special Edition Corvette I knew there would be one in the showroom and the principal would be driving one.
TK4
Well-known member
Having worked both sides of the fence I can tell you the nature of retail has changed significantly over the last few years. P&A people are expected to know everything about everything and have it all on the shelf - sometimes even for 20, 30, 40 or 50 year old machines, a lot of which just plain isn't available from the OEMs. And get paid sh*t wages while doing it. A lot of the aftermarket stuff is junk, which often also leads to disgruntled customers.
If you're a multi-product, multi-line shop you're screwed as is your service dept. when you can't get the stuff needed to perform repairs in a timely fashion, if at all.
I'm not attempting to justify bad behaviour or poor service, but expectations must be realistic.
I had a guy show up a day late after making his appointment, brought in his own parts and started complaining about how much it was going to cost and how long it was going to take before the job had even been started. I asked him if he behaved the same way when he went into a restaurant ? He got bent, I asked him to leave - he was fired.
afici0nad0
Well-known member
I used to avoid service done at dealerships. Once the wifey and the kids came into the picture, i dont get my service from anywhere but my local dealerships (save for the ad hoc visit to the jiffy lube if i was really lazy).
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