Amongst the concessions the Detroit Three were able to extract from theunions were ones that let the number of cars and trucks actually being sold (^)
determine the number that would be built—a “pull” model of production. Sofar, neither these manufacturers nor foreign companies have moved back
to a push strategy, nor the result is that incentives and rebates havedropped dramatically.
Why do I spend time on this? Because if you have unrealistic expectationsabout what dealer margins are, you’ll become very frustrated trying to
negotiate a good price. On the other hand, if you know what the realmarkup is, you’ll feel more confident trying to strike a deal—and know when (^)
you actually have a good one.
DEALER COST AND PROFIT MARGIN
New car dealers in the U.S. are franchises. If you think about it, they areactually the customers of the manufacturers. They have contentious
relationships with the car companies, as each party is trying to maximizetheir own profit and sell as many cars as possible, while you want to
minimize what you pay.
As of Spring 2011, there are just over 29,000 new car dealer franchises inthe United States. The bigger import brands like Honda and Toyota move
about 600 cars per year though each. The Detroit Three have morefranchises but sell fewer cars per store; the most recent numbers range (^)
from a low of about 200 per franchise at Chrysler dealers to over 450 atFord.
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