Over the years, car dealers have
become synonymous with less than honest sales tactics. Consequently, the
information that dealers provide during a sales deal is usually not taken at
face value. With the seemingly sly nature that car dealers have been associated
with, consumers think that the dealers profit much more than they actually do.
Recently, the National Automobile Dealer Association (NADA) conducted a survey
examining the profits of car dealers around the country. The survey found that only one
and a half percent of car sales yielded a profit, while more than 20% of
dealers reportedly lost money. Another finding in the survey was that
foreign auto dealers are faring somewhat better in the current market place
than dealers of domestic cars.
Needless to say, car dealers have many new challenges.
Consumers have more choices than ever, and the economy and price of fuel has
contributed to an abrupt shift in buying habits and demands. For example, among
dealers selling domestic makes such as San
inventory of full-size trucks and SUVs like the F-150 and
Expedition generally had no trouble selling in recent years, but in
recent months have been increasingly difficult
to move off the lot, even with attractive incentives. Instead of new
gravitating towards large vehicles and sport utility vehicles,
now looking to small, efficient cars and crossovers. Those dealers that
sell brands with a full lineup of economical and even green offerings
therefore reaping more of the benefits.
But even dealers with plenty of
hybrids or high MPG models are not on stable ground as nationwide car sales are
down overall, with June marking the lowest point in auto sales in over a decade.
In such an adverse environment, car dealers such as our Ford San Antonio example are changing their ways in order to stay
profitable. Dealers are reducing the amount of new hires, reducing customer
perks and the availability of loaner cars, and streamlining operations to help
In addition to generating less money
than whats perceived by consumers, much of the money auto dealers do make on a
vehicle goes back into the dealership. Like most businesses, income needs to be
reinvesting back into the business to help it grow, whether it means new
facilities, employee benefits, or increasing inventory. Revenue from an entire
sale is not simply pocketed by the sales person involved.
dramatic changes in the automotive industry have caused car dealers to
have vastly different operating strategies. Rather than new cars being
the main profit center, dealers are now promoting service centers more
and more as they now provide a more steady flow of income. In addition,
Used Cars Richmond and other dealers are focusing on their used car inventory more so than their new vehicle inventory.