How much does a dealer & salesperson make on a 2010 @ MSRP?

I am curious as to how much the typical salesperson makes when selling a Prius at MSRP, and what the dealer typically makes (after all kickbacks/holdbacks, etc...). I'd like to know how much I am paying for this "service."

Thanks.

That question's answer would be different for every single store and dealership you asked. And, every single car depending on options, and model Prius. And, then everyone's pay plan can vary.

There's not that much profit in a lower end Prius, or a Prius w/o much in the way of options/packages.

Prius margin for the II is approx 5%. It rises gently in the III and then climbs to about 10% MAX in a V package with tech (AT).

It's certainly not what it used to be in years before (2007 and back) and possibly one of the reasons many stores mark them up - to increase their profit margins. I don't do markups on the 2010 but I also rely heavily on volume and referrals so we get a lot of cars.

As for pay plan, on average, salespeople make in the range from 18% to 30% of the profit margin. Upper Sales Management is paid on the whole entire store's success.

I guess your question's hard to answer because there are way too many variables and pie pieces?

PS: Kickback? No kickback on 2010 Prius, that's for certain! For the most part, there are no secret kickbacks on 99.9% of the Toyota products.

Di

I have read in several sources that there is a "holdback" of 2% of msrp on all Toyotas. That is in addition to the difference between invoice and msrp.

It is $800 over invoice for MSRP, so that means the dealer makes at least that much if you buy at MSRP, plus any extra profit they can make when you buy invisible sheilds, rust protection, extended warranty, crazy $200 floor mats, etc. So that usually adds another thousand or more in profit if you are gullible or feel you need those options. Then there is the finance fees, that is the real profit maker, depending on how much they can get you to agree on the interest rates. My sales person said out of that $800, he will only see about $100 of it after the dealership and his boss gets their cut.

For dealers selling cars with market value adjustment price, they will make a few extra thousands selling it above MSRP.

Not enough

When compared to some of the lower package Prii, I can make the same money selling a Yaris! The MSRP-Invoice spread got cut pretty hard for the GenIII cycle. Just roughly, a package two might have $775 in mark-up vs more built out ones having more like 1500 - 1700.00 in mark-up. Of course, this doesn't include other things like hold back, but the mark-up is what a lot of salesperson pay plans are at least partly based on.

The previous generation used to have a lot more money to either try to keep for the dealership or use for bargaining. I think the whole industry is slowing moving ever-closer to a one-price model...

Isn't that MSRP-Invoice spread cut at least partly a result of price competition with the Honda Insight-II?

Looks like pay plans are the same across the country.. I always wondered about that given the different costs of living...

Yes! At least, according to conversations at our dealership, the invoice stayed the same, but Toyota lowered the MSRP to be more aggressive vs the Insight. This is just speculation, but probably not far from the truth.

FWIW, cross shoppers are telling us the new Prius KILLS the Insight in just about every way. I've got nothing against Honda (nice styling, super reliable etc right up there with Toyota) but its great to know that Prius appears to be far superior in not only our minds, but from customers perspectives as well. :rockon:

Another thing that eats into the Toyota dealer "profit" or spread between the publicly known Invoice price and MSRP is the Advertising Fee* that the dealer must pay to its regional sales office on every car sold by it.

These mandatory Advertising Fees seem to range between $400 to $1000 per car, depending on the Toyota sales region the dealer belongs to.

These mandatory Advertising Fees are the reason why you'll never buy a Toyota at or near the so-called "Invoice" price, unless there's some sort of Toyota holdback** or dealer incentive going on.

* In Toyota's case, the Advertising Fee is frequently referred to by the acronym "TDA" which stands for "Toyota Dealer Advertising". I think the 2 Toyota US independent sales regions may use a different acronym.

** DianneWhitmire in a subsequent post says that the holdback for Toyotas (but not Scions) is 2% of the "base invoice price".

Where I'm at the only cars sold at MSRP are the Prius and the Yaris. The Yaris normally won't get you even a couple hundred dollars. The Prius from what I have seen can be a couple hundred on the II and $400 plus on the higher models.

Typically you get 21% + on the gross profit. For instance a Corolla will normally get us $700-$800 gross profit. Which means less than 2 bills. Like Boo said there are a lot of costs that a dealer will incur and people don't know about, which is why most dealers add additional markup and would like to sell other products and financing with a vehicle.

For the amount of time that it will take to complete the sale, especially on a Prius (lot more to explain than a normal vehicle), not enough... But, I love my job. : )

My situation is that I am trying to get a model 4 w/ sunroof. Doesn't that have significantly more profit in it and thus more income for the dealer and the salesperson? Given this scenario, which seems to be a popular confiuration with many folks on PC, how much (ballpark) does the salesperon make?

Thanks!

So, how does the money for the financing get distributed? Let's say I get the dealer financing, but then I turn around and pay the whole loan off in a month or two. Who takes the hit from the unexpected lack of interest income? Does the sales person get paid the same amount either way?

There is a holdback on all Toyota cars (not Scion though) and it's 2% of the base invoice price, but it's also pretty equal to the TDA we have to pay on all cars. It seems to be a wash in my region. Perhaps that's why no one pays a salesman a commission on it anymore.

I always felt that a "kickback" would describe a secretive amount of money somehow - like undisclosed profit? That's why I responded as I did. The holdback is pretty well disclosed.

A salesman's commission is based on your car's profit. The financing staff makes a small commission on what you buy there and how you handle the financing. They are minimally affected (the finance staff) if you pay the car off early. Your salesman probably isn't affected at all. Toyota Financial is, though. They would lose prospective profit on the interest you were going to pay. But - that really doesn't affect the dealership much, per se.

Dianne, Is there a clone of you they can send to GST region?
So helpful, and up front!

Actually, I'd be interested in receiving a referral from anyone that has had a good experience with a Toyota dealership/Sales staff in Texas.

The salesman I bought my Camry from is no longer at my Toyota dealership of choice, and the new one I was "assigned" is not pleasant.
So, despite my loyal nature to my dealership I'm inclined to look somewhere else.

If you like your dealership but not your sales professional, assign yourself another salesperson that you DO like! I bet there's more than 1 salesperson at the dealership, right? Find someone there you like to do business with.

Dianne,

What do you mean by the "base invoice price"?

Is that the same as the publicly known "Invoice" price?

Or is it the "MSRP"?

The base.
Not the MSRP.
The BASE without freight, or anything added.

Base invoice price is the listed invoice price, before options get added.

As for 'Kickbacks', they are illegal. (kickback Definition) defines a kickback as:
"An illegal, secret payment made in return for a referral which resulted in a transaction or contract."

Why it may feel illegal when we pay some dealers what they are asking, Kickback is very different from hold-back. Hold-back in this case is 2%, and while not necessarily known about by all buyers, its is far from secret.

off the top of my head

profit = revenue (price) minus costs

revenue = sales price of the car

costs =

payment to toyota net of holdback
payment to the advertising fund
salesperson commission
salesperson benefits/indirect expenses
cost of share of rent/debt service on the dealership/showroom
cost of share of utilities
taxes
salaries (share of) for admin staff
executive commissions/comp
etc
etc

what is left is profit

seems like people here are perceiving that price minus invoice minus holdback = PROFIT