Interesting is it true??

[formare]

Danm good point raised here fbodfather - do the facts you quote really mean that the USA automobile industry is loosing $720million dollars each year at the consumer transaction level?


Edit - the wsj states that nearly 8 million new vehicles were sold last year... That would put the loss at about a a trillion and a half dollars every year. That for the last 5 years .....

7.5 trillion dollars have been lost at dealerships in the us since 2006. OMG the USA is truly and for real bankrupt....


http://online.wsj.com/mdc/public/pag...autosales.html

Originally Posted by Berean

I don't believe for a second that dealers have an average LOSS of $180 per vehicle and have had an average LOSS per vehicle since 2006.

I understand it may look that way on paper, but that's nothing more than accounting tricks for tax purposes. They probably shift expenses (loss) against new car inventory because there's a tax advantage for paying taxes against service profits vs merchandise profits I would guess.

If it were a true loss, dealerships would be closing every day until either the profits increased or everyone was out of business.

Again, there's no way 4 million cars are sold in the US each year resulting in and actual LOSS of $720,000,000. It doesn't work that way.

[bthomp01]

I absolutely buy that a dealership loses money on every new car sold. I'm huge into games and it's no different in that industry, the retailers like GameStop make zero dollars per new game system sold, and make a miserable margin on new game sales, or even a loss (as prices are reduced on existing inventory).

They make all their money in used games/system sales, and accessories. The markup in those areas is pretty substantial, but the analogy fits. The dealership doesn't make their money in new car sales, they make it used sales and accessories (parts/service). The numbers are bigger, the model is the same. Get the customer in the door, treat them well and even though you won't be taking home a big paycheck on the new sale, hope they come back for all their service and parts needs.

[Cristoff]

Originally Posted by formare

Carsdirect.com. Just pray you never need factory authorized service if the dealers die off.

Where do you think that CarsDriect.com gets their cars?

Answer: A dealership - I do about 10-12 deals a month with carsDirect.

If any of you think I am unskilled labor, I invite you to come do my 70+ hour a week job for one week. Then you can speak with some knowledge.

Until then, just keep bashing us and then buy anyway.

[justa25thTA]

Originally Posted by Cristoff

Where do you think that CarsDriect.com gets their cars?

Answer: A dealership - I do about 10-12 deals a month with carsDirect.

If any of you think I am unskilled labor, I invite you to come do my 70+ hour a week job for one week. Then you can speak with some knowledge.

Until then, just keep bashing us and then buy anyway.

How does working 70 hours a week translate into unique skills? Does this mean if I wash dishes for 80 hours a week I have more skills than you?

[Berean]

Originally Posted by justa25thTA

How does working 70 hours a week translate into unique skills? Does this mean if I wash dishes for 80 hours a week I have more skills than you?

[MiracleAces]

Originally Posted by justa25thTA

How does working 70 hours a week translate into unique skills? Does this mean if I wash dishes for 80 hours a week I have more skills than you?

You'd probably be more skilled washing dishes, yes.

[Cristoff]

The hours don't translate to the skills, but the SKILLS do. I get so tired of people who know nothing of a business bashing it like they knew what was involved.

I'm pretty much done defending the good people here that work at good dealerships. You guys and your 25 year old impressions of what the car business is is just sad.

Go ahead and believe what you want to believe - I can't stop you. The Auto industry isn't even close to what some of you think, at least not since 1985.

[My 5th]

Remember, there are lies, damned lies, and statistics.

To allocate only the New Car Sales Revenue against ALL expenses is deceptive. That would mean the revenues from the body shop, parts, service, and trade-ins is ALL profit.

As a CPA, I call BS on that kind of financial reporting. Even CPA audited financials can be a bunch of smoke and mirrors. That's why there's so much shopping for Auditors by the big corporations.

[The_Blur]

I've never seen this system, and I know how several dealers do business, so this is new to me.

The truth is that most cars are marked up as much as $4,000 on the used side. New cars vary a lot, so it is always important to demand an invoice and have it explained to you.

[MiracleAces]

Originally Posted by My 5th

That would mean the revenues from the body shop, parts, service, and trade-ins is ALL profit.

If only that were true.

[formare]

I am sure you are great fellow and you drive a camaro, in now way am I bashing you sir.... But, if we believ the subosition that the industry loses 180 per car that works out to 1.35 trillion lost in 2010. Your skills are to loose one thousand three hundred and fifty billion dollars a year?

Originally Posted by Cristoff

Where do you think that CarsDriect.com gets their cars?

Answer: A dealership - I do about 10-12 deals a month with carsDirect.

If any of you think I am unskilled labor, I invite you to come do my 70+ hour a week job for one week. Then you can speak with some knowledge.

Until then, just keep bashing us and then buy anyway.

[buzzy56]

Just like many other business's the more expenses (real & marginally legit) charged against profits reduce the tax liabilities for both small and large business.Paper profit or loss can be deceptive.Just remember that GE made
$60 billion last year and paid ZERO taxes in the good old USA !Now if you believe that get on board with the IRS apparently they did.But let me tell you that I have family members in business and they write off every real expense and then some that should we say are borderline or outright non business related.My wife has been in the Antique business for 40 years.She has been encouraged to write off expenses related to buying trips by many other dealers.Hotel's,food, & car expenses.I always chose to eat those expenses as in most instances we were getting a vacation out of it to boot.Could I have wrote these expenses off legally? Yes I could have.
But my belief is this is why our country is in the shape it is in today.Individuals and Corporations take the laws and twist them beyond the limits of legality to achieve the results that they want.When you have 60 % of the business in America paying no taxes what so ever, you know ,I know, and the IRS knows that they are CHEATING .
You do not build/buy and own Three to Eight dealerships like most owners do now days by absorbing these kinds of losses . Next we will be buying are cars off shore & shipped in to us. And if you think I am really kidding just research where the majority of GM.s car sales are in the world.It sure isn't the good old USA !

[Cristoff]

Originally Posted by formare

I am sure you are great fellow and you drive a camaro, in now way am I bashing you sir.... But, if we believ the subosition that the industry loses 180 per car that works out to 1.35 trillion lost in 2010. Your skills are to loose one thousand three hundred and fifty million dollars a year?

On NEW car sales that $180.00 loss is pretty accurate.

USED cars is a completely different story.

Unless the new car is a hot ticket item, most people pay pretty close to invoice minus incentives - at least the educated ones do (i.e. people that have done their research).

It costs a dealership around $700.00 to $1,000.00 per new car to sell it. That includes flooring, detail, advertising, paying the salesperson, paying the business office personnel, building expenses, utilities, etc. There is holdback, but at least at Infiniti, that only equates to 1.5% of the BASE MSRP (between $550.00 and $850.00 usually)

Around 70% of a healthy dealership's expenses are paid by parts and service profit and the other 30% is from used cars. Most new car dealers have pretty much come to grips with the fact that new car sales are pretty much a dead profit center.

Believe me, the days of massive car dealership profits are LONG gone. Most are happy to be in the black right now. An example is that our overhead averages $340,000.00 a month. We have to sell LOTS of cars to cover that.

[Berean]

Originally Posted by My 5th

Remember, there are lies, damned lies, and statistics.

To allocate only the New Car Sales Revenue against ALL expenses is deceptive. That would mean the revenues from the body shop, parts, service, and trade-ins is ALL profit.

As a CPA, I call BS on that kind of financial reporting. Even CPA audited financials can be a bunch of smoke and mirrors. That's why there's so much shopping for Auditors by the big corporations.