How much do car dealerships actually mark up new cars & trucks?
My question comes from a conversation with friends over the government bailout of the automakers. One of my friends used to be part owner in a GM dealership that went down a few years ago. He said that the dealership would usually get an invoice from the manufacturer that would include at least a 50% mark-up. There would also be a MSRP sticker posted on the vehicle that would have a 100% mark-up on the price that would give the dealer plenty of room for haggle and still make a strong profit. So,,,,, what is the truth?
- Dan BLv 71 decade agoFavorite Answer
It varies as to the demand for the car. The markup is a closely guarded secret. Several years ago, when Suburbans were selling for $30k, the dealer was clearing about $10, per sale (that's profit after expenses). So, 30% is not unusual (to me).
The dealer can show you his invoice. I put on an invoice ANY price I want you to see. Their invoice paperwork isn't worth the paper it's written on. I'm not sure Consumer Reports get's honest information from the manufacturers.
The dealer's objective is to get the most he possibly can from the customer. The customer's objective is to get the price of the car down as low as he possible can. I'll guarantee you, the customer loses every time. There are add-ons after the negotiated price that jacks it back up to the original asking price (dealer prep, shipping, doc fees, and any imaginative fee the dealer can think of - floor space fee, economic recovery fee, mistress fee).
- KarinLv 44 years ago
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You are in a Dream Spot, you just don't know it yet! If you were buying a Ford I would tell you to go to Sam Pack's Ford Country in Lewisville. I just recently bought a truck there and had a really good experience. They will quote you on a fair price and treat you right (No, I do not work there). However from what you write it seems like you are approaching the car-buying task from the wrong end. You or your mom should really read the information Consumer Reports has on the subject, but I can sumarize it for you. - You've probably already test-drove vehicles so you don't need to visit anymore dealeships. - Zero in on one or two models you are sure you like (remember the options) and use Consumer Reports New/Used Car Price Service to get the price that the dealer actually paid for the vehicle it's trying to sell you by calling 1-800-888-8275. They charge $14.00 for the service but hey, I saved $4800.00. on my new truck. - Let's say your vehicle cost the dealer $10.000. A fair asking price for de dealer should be a mark up of 4% to 8%. That means you should start at $10,400 and stay as close as $10,800 as you can. Forget the "$15,000 MSRP" that price is just there to make you think you are saving money when they say "I'll take $2000.00 off the MSRP just because I want your business". - Call dealerships around and ask them to give you a quote. Don't mention that you can give money down, don't mention that you are financing on you own, don't mention that you have a trade in (if you do). That keeps them honest on the price (and little room to play around with it). If they refuse to give it to you or they say you need to come in so they can work on the best price, hang up, call again and ask to speak to a different salesperson. If they give you the same BS hang up, that dealership doesn't want your business. - Try to buy towards the end of the month or the week. That's when they are the most desperate to sell. - Decide on your best quote. If it's still too high, open up and tell them you know how much they paid for the vehicle and state your price. If they really want your business, they'll come down on the price at least half way. Keep in mind the closest dealership. You'll want to service your car where you bought it and the dealership knows that, and will probably at least attempt to beat your best quote. - When you have agreed on a price. Get it in writing (fax helps). Now you can take a look at the dealer's financing which may or may not be cheaper than your own. Now you can bring up your trade in and your down payment. Never negociate the monthly payment. If you mom has good credit she can probably get pre-approved for a loan before she goes to the dealership. That helps a lot. I hope this helps. Remember car buying is a game you need to know how to play. Believe me, they are more desperate to sell you a car than you are of buying one (especially if it's a new one). Make them play your game and you'll come out on top. Good luck!
- 6 years ago
There is no way that these dealerships aren't making a complete killing selling cars. And its apparent that the secret will be very closely guarded. Most dealerships occupy a huge piece of land with a large facility. You cant support that kind of overhead making a few hundred on a vehicle. They must make thousands to tens of thousands per transaction to stay in business.
- Anonymous6 years ago
The markup is not really based on % its based on what the demand on that car is for example the Toyota yaris is only marked up 50-300$$ as for the fees (doc exc...) the dealership does not get to keep them contrary to popular belief the fees go to the state and the manufacturer so its really not a ploy now when it comes down to the sticker price u can always get less then that . here is an example of mark up a few years ago when gas prices hit the roof the Toyota prius got marked up 4000 dollars but when the price of gas went down the markup dropped down to 1000 so when you look up prices on the web just know that if demand for that car went up then it will be priced hire however if the went down so did the price
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- KathleenLv 44 years ago
Your grandma and her passenger should hire an attorney to file a suit against the owner of the vehicle, the Toyota Dealership and the driver. The grandmother's vehicle should be paid by the insurer of the other vehicle right away, if causation has been stipulated. In many states, to file a suit for personal injury, the claim must be filed at a Superior Court within 2 years of the accident. Hire an attorney. Good luck.
- jayLv 71 decade ago
There is no way your friend was a part owner with a statement like that. There is usually not more than 10% markup in a car. Any other discounts are offered by the mfg, not the dealer. No dealer owns a car for 50% less than the MSRP. Anyone who tells you different has no clue how the business works.Source(s): bmw client advisor
- 1 decade ago
Say your looking at a $20,000 car msrp. Okaythey probably bought it for $10,000 maybe even less because I bet u can lower it down to say $17,000. And the only reason they will do this is because they got it for so cheap. I mean they still made a $7,000 profit. Whatever the people said isn't true bc if u bought a car for what the sellers bought it they would make NO profit would make them go broke. And they r in the business to make money. So what ur friend said about 100% markup I believe. And some are are marked up even more.
- BratsoLv 41 decade ago
The true is that you can ask to see the FOB invoice and you can buy a car for $100 to $500 over invoice MSRP sticker is all the extras dealers use to make more money not a good idea to go that way.because you can get the same things a lot cheaper if you ge it yourself like wheels tires paint protection and more ...They make money on financing you and loud you up in the finance department .
They are in business to make $$$$ more $$$ if you are not aware of all this things and tricks they use to pretend you are the guy to buy today.
So if you are looking to buy do your homework .and you will be a happy owner of the car you like to drive.
- buttersLv 41 decade ago
not that much cuz thats crazy talk. invoice is what the dealer paid for the car from the manufacture. but they get incentives and holdbacks from the company if they sell a certain volume of a car and/or a certain model. the dealers also make money from the loans/interest they gave u.
- 4 years ago
As much as the money grubbers can. The sky is the limit.