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

I'm still amazed at the "tone" of many of these postings. The "stealership" name tag, kick-backs (indicating some underhanded dealings) and just general nature of describing the business amaze me. I can't imagine the conversations you might have as you walk through the mall critizing the record store, Victoria's Secret or Starbucks where you overpay for everything and don't complain.

Many of these dealerships have large buildings with huge bright heated and cooled showrooms and large mechanic shops and some large body shops. They have cars on the lot for you to drive, they have salespeople, finance people, mechanics, accountants and clerks, and management people to make this as painless of an experience as possible. I know what it costs to heat and cool 3500 sq feet, so when I imagine what dealerships have in these building to maintain and run I know it is expensive. They borrow a lot of money (or inherit) to open these businesses. Most of us don't begrudge any other business man risking his life savings from becoming rich. Typically where there is great risk there is great rewards. However every sales person and other employee are out there just trying to make a living. Pushy sometimes? Yes, but none the less trying to get by. As for the risks? My neighbors brother just lost his Chevrolet Dealership. This has been in the family for generations. It was their 401K plan, you work it or you sell it to retire. When the value goes to "$0" overnight you have to wonder why you pumped so much money into it. I know another local LARGE Chevy dealership in this area where I was told the dealership profit for the month was $xx. It was just a little bit more than my monthly salary. There are probably 50 to 60 people working there. The only car they have on the lot that will sell is a Camaro. They won't get many in and they want over MSRP. Do I blame them???

Very few cars are like the Prius. Even it will not sustain this interest long term. If you totaly ignore rare situations like this and see what's going on for the dealers you'll see they are struggling to survive.

MSRP_ what's the big deal. We really complain if a hot car sells for more than MSRP. It's simply an arbitrary number. Toyota dropped the MSRP on the Prius II to compete with the Insight. No body complained about that. But if they did not drop the Invoice then the dealer just ate that competitive edge that Toyota gained. I'm surprised that what we are not seeing is an over MSRP pricing on the II's and a discount on the V's. Most of you here, or at least a large percentage would gripe but still pay a couple thousand for a Prius over the Insight. I'm guessing most of the general population that is looking at Prius would do the same. The Insight reminds you that you are in a cheap car every time you sit down in it, so only people looking for a cheap car want it. The "cheap" Prius does not remind you every time you sit in it that it's cheap. Basically it's the same car utility wise and comfort wise as the IV, just without some do-dads.

I love a bargan and my dealer is giving me a discount. He has too because he knows I consider the Fusion a great buy (I get X-Plan pricing and the Tax Credit). The Prius is higher but I want it. He wants my business. Even though he knows he can sell my Prius to someone else at MSRP, he also knows I've bought 10 Toyota's from him and if I decide I want a Sequoia when the 2010's hit the floor he knows I will come to him first. He'll still have to deal but he knows I will favor him because to the relationship we have.

Build a long term relationship. You complain because your salesperson won't call you. Mine called me the other day at work. He was just in a break session where they were training him on the 2010 Prius and he had gotten to look over a V real well. He sounded as excited as I am about the V telling me I was gonna love that I waited on it. He just called to tell me that. He called me from Colorado while he was on a trip to tell me when he found out about my allocation. I stop in and see them when the new models come out because I like to stay up on the changes. Several of the people know me by name and often when I recommend his dealership to others I go in with them. It helps my friends get a deal, special attention and keeps my face in front of them too.

They know they don't have too many loyal customers today and they value the ones they do have.

BTW, I don't work for a dealership, I just buy a lot of cars

 

I am no huge fan of toyota dealers as a group, but if you look at what the average dealership makes in NET profit at the end of the year, most would be shocked. Do a little research but the 08 average was less than 1% of sales. The imports as a group do a little better, but 3-5% is about the max.

Those whose belly ache about "Stealerships" ask yourselves, how much does the business I work for/run make as a percentage of sales? My guess is it is a good bit higher, so who is stealing. Ask yourself does my company have the cost of its goods/services published?

Realtors are my favorite group of price complainers 6-7% with no investment in inventory????? Nice racket!

The big barrier is cost of entry, anyone can pass a real estate examine and open an office with minimal risk of capital. Its in the millions to even think about a dealership.

My only beef is the service or lack there of. If you find a good dealer reward him/her with your business, dont beat them out of every last dime and expect them to be price competitive with the schmucks!

 

KBB list prius 1225 invoice at $25131 Msrp 27350 thats $2219 plus other kickbacks!!

 

IMO, given the spread between Invoice and MSRP, dealers do not make what I would consider unfair profits on a car sold at MSRP.

Especially at the small spreads between Invoice and MSRP for lower trim and option level cars. For a lot of lower priced cars, that spread is almost tiny -- e.g., the spread for a base Honda Fit with automatic transmission is only about $550.

 

As a former Realtor, I would hope that you are not lumping all of them into the same group. While there may have been some Realtors who were able to command 7% commissions a few years ago during the bidding wars, most of them today work hard to get a buyer to agree to 4.5 - 5 % commission.

While that sounds very high on a $200,000 home (as an example), as it close to $10,000, please keep the following in mind. Most agents need to provide 2.5% commission to the buyer's agency. So, if they are charging their sellers 5%, 1/2 goes away off the top. After than, there is a split with their office. In many case, that split will be at least 50-50 for the 'house' and the balance to the agent. So right there, you are talking about a 1.25% commision on the house, making that $10k only $2,500.

If the agents got to earn that alone, and had no expenses, that would be a great deal. Now, for a little reality check. According to the National Association of Realtors, the average Realtor, across all states, sells an average of 8 homes per year. This takes into account the 70% of them who work the carreer part-time, as well as those who simply try it for a few years, etc. If you average all Realtors who have been in business over 5 years, the average jumps to 14 per year. Still, let’s be optimistic, and use the higher average of a ‘seasoned’ Realtor.

If they sell 14 ‘average homes and condos’ over the course of a year, at an average price of $200k each, earning ¼ of the 5% commisions that would be a gross income of $35,000. This is before income tax, which as a self-employed person, would be close to 50% total taxes. In addition, most sellers want the agent to advertise their home, show it to buyers, hold open houses (usually with food), etc. I can tell you that many home will stay unsold for many months, costing agents cash from their pocket daily.

Yes, I agree that sometime, they get a great deal of money for a day’s work. I loved it when I sold the home in one day! However, too many of them, you will list and show for 6 months or more, only to have the seller give another agent your listing, meaning that you will owe money on the deal, cause without a closing, you get Zilch.

I am not looking for sympathy here, but that is one reason I no longer sell homes (the other is that I took the job when I was laid off from my normal work)

I know that this has nothing to do with Prius, but I wanted to say that in defense of “Stealerships and Realtors†being lumped together.

 

+1

 

That's less than 10% markup in a car that's nearly 30K at window. The state of CA makes more in sales tax on our cars than we make as a business!

 

I don't think the profit on new car sales is excessive. What is excessive are the prices they charge for servicing the car. Which is why I have never gone to a dealer for an oil change and never will.

 

This has turned out to be an interesting thread. I really enjoy my job and it's unfortunate that we have a bad reputation. I will finish this month with 20+ cars (best month this year) and 90% of these customers are referred or returning customers. You cannot treat people badly and continue to receive business.

I can understand that a lot of people have had bad experiences, but not all dealerships/salesman are out to rip you off. I know I have learned something from PC and I'm glad we have a very knowledgable community.

 

LOL, well as usual the poster probably did not give all the details. I don't think, if he knows the full story that it's just the real estate agent he's complaining about any more than just the car salesman rather than the dealership.

There are a lot of millionaire realestate agents. There are a lot in small towns just scraping by.

The whole thing is what stinks. My brother-in-law sales realestate. and the problem is too many people taking the cuts, and sometimes for nothing. 1/4 to the agent that gets the listing and never has to do anything else and 1/4 to his agency that never has to do anything else. 1/4 to you to show the home, find the buyer, attend the closing, etc.... and then 1/4 to your agency for doing nothing other than giving you their "name" and providing the blanket insurance you need. I know I'm over simplyfing the=is and there are other costs, but it's a system that is able to take advantage of the fact that when people change jobs or whatever and they have to move they need some assistance. But $15,000 on a $300,000 house is more than I want to give for that help.

I sold a house I had my daughter in myself. It was only $100K. A realtor called and wanted to list it. When I told her I was selling it myself, she said "Good Luck" in a very smart tone. They have a lot of houses listed here and they are not moving. I put the sign out, had a call that day, set up a meeting on the next Saturday. In the meantime while cleaning it up someone from out of state stopped by. Wanted to look around. The house was dirty and needed painted. She bought it the next day. I didn't even have to finish cleaning.

That saved me $5,000 and who knows if she would have sold it as the ones near it are still listed. (And I got out of it what I wanted).

Car dealers are a lot different. They have significant overhead in staff and facilities. They also have to finance I believe the cars on the lot. The next time someone wants to sell my house for me, I'll let them if they go ahead and give me my money upfront.