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I'm sorry but you don't understand how dealerships work. You seem to think the only amount of money they make is the difference between their price from the fac
by snarf21 6y ago
I'm sorry but you don't understand how dealerships work. You seem to think the only amount of money they make is the difference between their price from the factory and the final price you pay on the invoice. I agree this number is small but that is not where the profit comes from. They make far more from the financing which today sees people getting 7 year loans to pay for a $65K SUV. They also make a ton from selling extended warranties and other add-ons, and they push this stuff aggressively (sadly). Additionally, they make quite a bit from reselling used cars. There is a lot of obfuscation in how much you get in rebates and knock-downs versus your car's "trade-in" value. The "real" acquisition cost of a used car is far lower than you might think. (One trip to a dealer's car auction will set you straight.) The markup on a used car can be far more than a new. They could sometimes make 25% or more plus they are still going to sell a lot of people extended warranties since the factory one is almost expired. Additionally, parts and service make quite a lot since, as you point out, upper middle class people "trust" the dealership and pay 3x the cost for most vehicle services. (Source: my dad has been selling cars for over 40 years)
- throwaway0a5e 6y agoAre you disagreeing or nitpicking? Pretty much none (well I guess the salesman will have a harder time throwing in free oil changes to seal a deal) of the "time of sale" stuff is effected by the switch to EVs though which is why I didn't bother to cover it in depth or make a new vs used distinction. Only a subset of service is affected. Yes, dealerships make a lot of money on service but they also waste a lot of bay-hours on warranty so it balances to a degree. Dealerships aren't so lean that that a reduction in service will sink their entire business model.