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I used to work with a company that worked with dealerships, and I learned some pretty surprising (to me) details. For example: In most cases, the dealership bu
by ergothus 11y ago
I used to work with a company that worked with dealerships, and I learned some pretty surprising (to me) details.
For example: In most cases, the dealership buys the cars on the lot from the manufacturer via vastly short term loans. When the above article mentions the cost of sitting inventory, I assume that is what is being discussed. This isn't like inventory in a store, where the main concern is that it is losing value with age and occupying floorspace, this is actively costing INTEREST, in addition to deprecating with age and requiring lot space.
I'll also second the other comments that talk about Parts & Service as the primary income. User/Certified Pre-owned come in a distant second, and new cars (aside from certain brands) are at best a thin margin, sometimes a loss-leader.
While my management was very gung-ho about our customers, I saw nothing to convince me that the average dealership offers any value-add to the consumer, and where there is value-add it's destroyed by the laws that discourage competition and encourage industry practices that aren't good for the consumer.
- dragontamer 11y agoIMO, parts & service is significant value-added for consumers. For DIY, having a place to pick up a specific hose or brake rotors is always nice. There are online shops of course, but if you're shopping for OEM parts it seems like online prices aren't too much better. For those who don't have mechanic skills, knowing that the dealership is trained to _only_ work on your model of car is extra assurance that they'll do it correctly. (EDIT: Not a guarantee of course, but any extra assurance is helpful)
- jbigelow76 11y ago* knowing that the dealership is trained to _only_ work on your model of car is extra assurance that they'll do it correctly.* Semi-tangential: https://www.youtube.com/watch?v=Ii8rC6CPCvM https://www.youtube.com/watch?v=Ii8rC6CPCvM
- Vendan 11y agoIt may just be that my cars are old, but the dealerships don't have parts for them. On the other hand, there's 3 auto part shops less then 10 minutes from me that have the various parts I've needed on hand and ready to go.
- jandrese 11y agoDealers are really only guaranteed to have parts for a vehicle until it runs out of warranty. Even then they're likely to have to call back to the warehouse for anything unusual.