Prisoners in the enemy camp - Page 5
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Thread: Prisoners in the enemy camp

  1. #41
    crv|oc Rank: Member
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    Quote Originally Posted by kloker View Post
    They never lose money on any car, used, or new.
    That is not true for used cars. Dealers can over value a trade in, they can overpay at auction, they can spend too much money reconditioning it. A lot of variables in play, but making a profit on a used car is not guaranteed

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  4. #42
    crv|oc Rank: Senior
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    Quote Originally Posted by FirstK24 View Post
    That is not true for used cars. Dealers can over value a trade in, they can overpay at auction, they can spend too much money reconditioning it. A lot of variables in play, but making a profit on a used car is not guaranteed
    Yes. While this is absolutely true, it does go both ways. Dealers often make more profit on used cars than new ones.
    2019 Acura RDX Advance Pkg
    Previously owned Hondas:
    2018 CR-V Touring 2WD (Traded 1/22/19 for '19 RDX)
    2014 CR-V EX-L Navi
    2001 Civic EX 5 Spd

  5. #43
    crv|oc Rank: Freshman
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    Quote Originally Posted by JB in AZ View Post
    Yes. While this is absolutely true, it does go both ways. Dealers often make more profit on used cars than new ones.
    Dealers run their operations based on averages evening everything out such that they meet their operating line of profit. So.. like so many things in real life.. they will do better on some used vehicles and worse on others. The used car market is fickle and changes all the time... so it's generally always a gamble on a used vehicle for the dealer on a trade-in, but they will come out profitable at the end of each quarter if they have their business properly dialed-in.

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  7. #44
    crv|oc Rank: Junior
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    Sorry to distract from all the discussion about dealer business models, but, I'm going to address the original post:

    Quote Originally Posted by jdcrv View Post
    While having the wife's RAV4 serviced today, I found it interesting to see 3 CR-Vs on their used car lot. Two of them were Touring. Wife said probably due to new model RAV4. I reminded her the CRV model is only 2 .5 yrs old. No skin off my nose here, just something that made me go hmmmmm?
    Some of those CRVs may well have been traded in on a Toyota, but it's possible they were obtained to tweak prospective buyers a bit. I can just hear the slick "lying liars" in the sales department claiming that they are getting a lot of CRVs traded in because it's an inferior vehicle. Some buyers sitting on the fence may well fall for this pitch. Good old psychological mind games.
    2017 CRV EX 2WD - Lunar Silver
    2007 CRV LX 2WD - Borrego Beige

  8. #45
    crv|oc Rank: Senior
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    Several years back I was looking at a new GMC p/u at our local Cadillac/GMC dealership. I wanted to trade in my mint condition Saturn Vue (Honda 3.5L V6). The salesman said they would not take my Saturn Vue in trade because it was a Gray Market Vehicle. Sorry lying scumbags.
    2017 stripped EX-L - unmolested by the dealership
    Built July 2017, Indiana USA

    MAN LAW - raise your hood once a week and have a look

  9. #46
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    Quote Originally Posted by jdcrv View Post
    While having the wife's RAV4 serviced today, I found it interesting to see 3 CR-Vs on their used car lot. Two of them were Touring. Wife said probably due to new model RAV4. I reminded her the CRV model is only 2 .5 yrs old. No skin off my nose here, just something that made me go hmmmmm?
    Well, I was just looking at the local Honda's dealer used inventory and he had 42 used Toyota's in inventory including many 2016-2017 models. They had loads of Camary's, Highlanders, trucks, vans, etc. So....what does this mean? (nothing actually.....)

    So I looked at the local Ford dealer, right next to my Acura dealer, and they showed...for real.....142 used Toyota's in stock up to 2018 models. They had more of these than any other make with used Jeeps being #2.
    Strange? Not at all. Many, if not most, car dealerships in larger cities are part of a "dealer group". When I look at the Ford dealer's website and see all those used late model Toyota's, no big surprise as the same principal owns a Toyota dealership.

    It is common, not rare, to find many used cars of a different make on the lot. People just want something different sometimes, even if it is a Ford!

  10. #47
    crv|oc Rank: Silver robbyg's Avatar
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    Quote Originally Posted by JB in AZ View Post
    Yes. While this is absolutely true, it does go both ways. Dealers often make more profit on used cars than new ones.
    Yep that is very true! They are like the Casino, sometimes they lose but on average they always win. The pluses on each end is that the new car buyer will come in for service work for the first several years. The used car buyer typically puts more money in their pockets up front but will probably never come back and spend anymore money.


    Rob
    2018 White Diamond Pearl 1.5T AWD Black Leather, Panoramic Sun Roof, All LED Lighting and Made in Thailand.

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  12. #48
    crv|oc Rank: Silver robbyg's Avatar
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    Quote Originally Posted by hans471+ View Post
    Well, I was just looking at the local Honda's dealer used inventory and he had 42 used Toyota's in inventory including many 2016-2017 models. They had loads of Camary's, Highlanders, trucks, vans, etc. So....what does this mean? (nothing actually.....)

    So I looked at the local Ford dealer, right next to my Acura dealer, and they showed...for real.....142 used Toyota's in stock up to 2018 models. They had more of these than any other make with used Jeeps being #2.
    Strange? Not at all. Many, if not most, car dealerships in larger cities are part of a "dealer group". When I look at the Ford dealer's website and see all those used late model Toyota's, no big surprise as the same principal owns a Toyota dealership.

    It is common, not rare, to find many used cars of a different make on the lot. People just want something different sometimes, even if it is a Ford!

    The lady in charge of my regional Honda Dealership also manages the following dealerships at other locations. Porsche, VW, KIA, BMW. All of them are owned by the same guy. She told me that by far Honda is there largest money maker, followed by VW.


    Rob
    2018 White Diamond Pearl 1.5T AWD Black Leather, Panoramic Sun Roof, All LED Lighting and Made in Thailand.

  13. #49
    crv|oc Rank: Junior
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    Quote Originally Posted by Mike728 View Post
    Mostly hype and propaganda? No, it's based on FACTS. Facts that you personally don't agree with, but still, facts. https://www.nada.org/WorkArea/Downlo...id=21474857318

    Your added "opinions" are based on nothing more than your non qualified perceptions. If I'm wrong on this, please enlighten me with some actual reputable data.

    No, they are based on real world knowledge gained from having done it for a living for a couple of years and a lifetime of having close relatives still in it. If you had any actual experience of it, your tune would be in a different key. You are reading an in-house industry publication, which, in all industries, is designed and published to encourage that industry to flourish. Their "facts," as you call them, are generated by them, which means they make them up. Just as the AMA keeps the medical profession in the big money (in America only), the NADA and Kelly Blue Book are their blatant price-fixing guides. The entire new/used auto pricing structure is an artificial construct, made up by them, solely for their benefit. And as part of that fallacy, every single number and statistic you see is literally made up by them. They've had nearly a century to perfect it and have done it well. So well, that you, the average consumer, think it's how it's supposed to be. And as long as it works for them, it will not change. You are proof that it still works just fine.

    Honda is a manufacturer, not an independent dealer, which is the focus of the report.

    Yes, Honda is a carmaker, and no, there are no "independent" dealers. Dealerships are franchises, and are tightly controlled by carmakers. As part of the franchise agreement they are connected by, they must comply with and conform to a long list of requirements and methods dictated by the carmaker. It's why they are all so similar.

    Sports teams? I have no idea where you are going with that comment. Is this something that's common in TX? I've certainly never heard of it being a "thing".

    It is a thing, all over, not just in Texas. The man I worked for as a car salesman was Red McCombs, in San Antonio. He's an old codger now, as am I, but I worked for him back when his business was small enough that we knew each other personally. His wife and my wife had the same first name. He is currently worth in excess of 1.6 billion dollars, and has owned, at various times, the Spurs, the Nuggets, and the Vikings, as well as F1 racing teams, etc., as well as 55 dealerships, of which he still has 8. He is just one example. Car dealerships are money generators of a high magnitude, and he is a prime example of it. Many other car dealership owners are invested in sports teams. The money is there because car dealerships are highly profitable.

    If you look in the link, above, you'll see that service profit was ~2x what sales profit was in 2018, across the board. That's actually lower than I thought. I'm sure you won't believe it, though.
    Again, these published figures are camouflage, as are all the other statistics, and are there to help hide the tremendous profits dealers make. This setup is so well-oiled that even you believe it. But think about it. A service department requires a parts department and inventory. It requires management, sales, and service people, and it requires an expensive shop full of equipment. Also, recall and warranty work are not even factored into the profit numbers in a service department, as, like you said, they are reimbursed, and so cancel out. It's also why most dealers allow the carmaker to dictate what they will and won't fix under warranty. The exceptions are dealers large enough to be magnanimous and/or who know how important customer care is to repeat business. In the end, the service department has a higher overhead than any other part of the business, and so has a higher debt ceiling to overcome before it can show a profit.

    I hope all this helps to improve your understanding of how all this works in the real world. By the way, my reason for using the red type color is to make it easier to detail and separate the various components of my responses so that I can more accurately answer you questions and so that it is easier for all to read. Please feel free to ask any other questions you may have. I'll be happy to help in any way I can.

    Disclaimer: Yes, there have been, over the years, plenty of variations on the theme, in that there have been dealerships that attempted to use a different model. But inevitably they all failed, and the model remains today as it has been for decades, because it is the most profitable one. And, for those who doubt my remarks about the NADA book and the Kelly Blue Book, as well as the website referenced in the link above, go Google them, and learn all about how they are owned by associations of dealers!
    Larry


    Now that I've learned my lesson, I'm supremely confident that next time I'll make a different mistake.


    2007 CR-V EX-L AWD Green Tea Metallic
    1991 Ford F250 Lariat Supercab LWB 4X4, 460 AT

  14. #50
    crv|oc Rank: Junior
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    Quote Originally Posted by JB in AZ View Post
    LOL! This is just so wrong! The dealer gets reimbursed by the manufacturer for the warranty work it does, and yes, recalls as well.
    The dealer does get reimbursed for recall work and for most warranty work, so they cancel out and are not really a factor in the financial numbers in the service departments. However, the service department has a large, expensive shop full of equipment, plus parts and inventory, plus management, staff, and service techs, all of whom are paid salary or hourly. If you want to sell a new car, all you need is a salesman, his manager, and the finance guy (maybe), who all get paid on commission. And the car, of course, as well as the lot. So, the overhead is much lower, and the margin is way, way higher. Add a trade-in, and it gets even higher, often doubling. All in all, the sales department carries the entire dealership. The service department is a necessary evil, not even remotely approaching the profit levels of sales. All this together should give you at least an inkling of just how much profit is in those cars. It's a lot more than you think, and does not remotely resemble the hype in the article. Sorry to disillusion anyone, but that is the reality. Don't drink the Kool-Aid!
    Larry


    Now that I've learned my lesson, I'm supremely confident that next time I'll make a different mistake.


    2007 CR-V EX-L AWD Green Tea Metallic
    1991 Ford F250 Lariat Supercab LWB 4X4, 460 AT

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