does anyone have the dealer's invoice cost on the evo ? (minus the destination charge)
i wanna know how much they make off msrp. also, if anyone knows what the holdback is, that will be helpful.

 

Although I don't know why it matters, gross profit at MSRP is going to be around $1,900. Holdback on a Mitsu is about 2% IIRC.

 

it matters because people ***** about the dealership making too much money... but they don't know how much is being made. also, when you buy a car...don't most publications like consumer's report, kelley's, etc. tell you to know the cost and negotiate from cost, not msrp ?

 

I thought I saw about $2k of profit listed between invoice and sticker on the sheet my salesguy had. I am paying something like $30,052 (or whatever it is with big wing and no sunroof). I thought I saw about $28k for the invoice price. Add 2-3% ($500 or so) more for holdback.

$2500 for almost no work is pretty decent....

 

It's a different ballgame when the car is a low-volume, high-demand specialty vehicle though. No dealer incentives, less incentive to sell it at all if it's bringing a lot of traffic into the showroom, etc

 

I should have my hands on the invoice for you all as early as next week (ahhh, this car drives just like I wanted)

 

It depends on exact equipment but around $1,900+/- is about right for an Evo (I figure about $1,960 for an A61 once you include the Association Fee), or about what it is for a Montero Sport XLS.

That number is a LOT lower than it would have been a few years ago.

For a little perspective, due to competition pressures and also to pay for all these money-saving finance incentives that were not available a few years ago but are taken for granted today, the difference between Invoice and MSRP has been declining at a pretty steep pace. Going back a few years the markup between Invoice and MSRP on a $21k Galant was more than the markup is today on a $30k Evo. 3000GT's - which were comparable in price to the Evo today around $3k markup. The arrival of the Internet has only modified that situation further - but that's a different discussion.

Now one may look at the markup on an Evo and think that's still pretty steep - although at around 6.5% it is rather low by industry standards but not forgetting $580 or so in holdback - but lets recall that this is not all profit, nor is there "almost no work" involved.

We can divide a dealers cost to sell a vehicle into several categories. What follows is a bit generalized by you'll get the idea.

1. Variable Selling Expense: This includes salesperson commissions & incentives, delivery costs, policy adjustment, demonstration expense, advertising and interest.

2. Fixed Overhead Expense: This includes the New Car Departments share of the dealer principals, new car managers and clerical staff compensation, other salaries and wages (such as the detail crew, lot porters, etc), payroll taxes, employee benefits, pension, company vehicle, equipment, office supplies, outside services, legal and auditing services, database management, telephone, employee training, bad debts, postage, dues, contributions, rent, leasehold amortizations, facility maintenance, equipment repairs, property taxes, depreciation buildings and improvements, insurance building and improvements, heat, light, power and water, equipment rental, etc, etc.

As you can see there is more cost to selling a vehicle that you might think. That cost has to be accounted for by making money on retailing vehicles obviously. Most of that has to be made up by selling the car for more than Invoice. Holdback (which many people seem to enjoy incorrectly identifying as a "kickback") is the manufacturer witholding a fixed amount of a dealers profit - essentially becoming an interest-free loan to the manufacturer. GM started the practice in the 50's as a way to make sure dealers paid their parts bills. This is reimbursed to the dealers on a monthly or quarterly basis depending on the manufacturer.

Also, contrary to what some think of floorplan expense it is not paid as the vehicle is sold but monthly or quarterly on all units in stock. Floorplan expense is calculated on a dealer financial statement as the cost of interested divided by the number of units the New Car department delivered during the accounting period.

Car buyers can consider themselves lucky. There's not many purchases in this country where the customer can get within a few hundred of knowing what the seller paid, and then negotiate to that amount many cases. You think a car dealer making a 6.5% gross profit is bad? You have no idea how much markup there is for other things you buy ALL THE TIME!

On average a New Car dealership today will have about a 2% profit margin (see: http://www.nada.org/Content/Navigati.../NADA_Data.htm which is quite fascinating). Think about this from a dealer principals perspective - you risk your cash to set up a business only to get a 2% return on investment. How many of you want to invest your cash and get only a 2% return? I've got savings accounts that do better.

 

Just as food for thought, I work for a major distributor, and we sell at about 20% gross margin. Of the margin about 17% goes to sales comission. A bit goes to transaction, etc etc. After all costs (remember someone gets paid a few hours to prep the Evo), they wouldnt make much. 6% is really low margin on any product. Its funny how people really complain about it on a car, but they go and buy stereo stuff at Best Buy (ok not all of you so dont argue with me). Best Buy probably has about 25-30% margin on everything they sell. Maybe even more.
Its funny how I hear people at work ***** and complain about gas prices increasing a few cents, but it doesnt matter that they blew $400 the night before at a strip joint.

The funny thing is though that the dealers that charge MSRP or close are generally the most customer service oriented ones, and the ones that would actually deserve the extra money for the service they provide.
The ones that are marking it up, probably have no clue as to why this car would be in demand, and really probably don't deserve an extra cent.

 

It's all about "perception of value".

 

who needs gas when you have naked ladies in front of you right

 

Heck, if you have gas while you have naked ladies in fron of you, they'll move away from you.

Overload
Colorado

 

we have the highest customer service rating in the u.s., top 20 out of 600plus dealers and we are marking it up, its just opportunity cost, i have 6 this month, regardless of whether i sell them, that means in order to do best, i need to get as much for them as possible, its pretty simple... if i sell it and someone else comes in willing to pay more, we lost money, its just like ebay... mitsu actually allocates these cars based on sales and customer service ratings, dont get me wrong, not trying to rip anyone off, but its the name of the business, and we all know this is an emotional purchase, i cant rationalize it any further than that, but dont hold it against the dealer to ride the waves when theyre big, i hope you all get great deals, i know youll love the car its all we had hoped for, watch www.vishnutuning.com for upgrades that wont be seen by the dealer and will get you well over 300 horsepower for prices you wont beleive, all dyno proven, and not dyno jet guessing, real 120,000 dollar all wheel drive dyno, good luck to all

 

Mark F made some great points.
Don't confuse markup and profit, they are two totally different things.
Some costs are currently sky rocketing for business, for example insurance and fuel. This all eats away at profit.

Perception...
I think some people would have been happier if made the MSRP $37000 and gave big rebates. They would have happily paid $34000.

 

thanks for the great feedback, especially Mark for the insight. I wanted to offer the dealership here what I'd consider a fair deal but that was impossible until I knew all the variables.

 

The markup is about $1600 for a non sunroof and $1800 for one with a sunroof. Keep in mind that after the dealership places it's PAC (price after cost), this is the owners profit before any sales people get paid off of what is left over for actual sales profit. No matter how much a vehicle sells for the sales people only get paid on "gross" profit while the dealership always gets the rest. A typical commission is about 10% of the total "net" profit the dealership makes. This means that is someone buys a EVO for MSRP the sales person would get about $275 for the sale. It is not like it was back in the older days with the huge commissions. The manufacturers have decreased the profit margines because they have raised the cost of vehicles while the MSRP's have not increased the same.