Car Dealers Add-On Services Emerge as Biggest Profit Generator - Duh!
Editor's Note: As a car buyer you have researched, shopped, and fought for every buck you get off of MSRP...so don't bask in your victory and let your guard down after the sales price is agreed to...the dealer will sell you an extended warrantee (negotiable) or paint protection (pissing money away), seat cover protection (pissing money away), and the real big one financing (absolutley negotiable...shop around before you agree to the dealers finance deal)..we believe in capitalism and that your dealer deserves to make profit on your transaction....BUT it's your job to know and continue negotiations so your hard fought for sales price is not negated by a screwing from the dealer's F and I guy after you think you are finished negotiating...Buyer Be Aware!.
Public Auto Retailers Increases In F&I Profit Per Vehicle:
- AutoNation, of Fort Lauderdale, Fla., rose 6.3 percent, or $110, to $1,851.
- Group 1, of Houston, rose 5.2 percent, or $88, to $1,785 at its U.S. stores.
- Sonic, of Charlotte, N.C., rose 10.8 percent, or $155, to $1,597.
- Lithia Motors Inc., of Medford, Ore., rose 4.7 percent, or $133, to $1,400.
- Penske Automotive Group Inc., of Bloomfield Hills, Mich., rose 3.1 percent, or $37, to $1,250.
Washington DC April 8, 2019; As dealers’ profit margins on new-car sales shrink, they are relying more on selling extended warranties, paint-protection plans, and other add-on services pushed by salespeople in the finance office, reports The Wall Street Journal.
"Where dealers really keep their head up is boosting interest rates from the bank and throwing in products like extended warranties," said Earl Stewart, owner of Earl Stewart Toyota in North Palm Beach, Fla.
Dealerships made an average of $908 per new vehicle last year on their finance and insurance business, far more than the $420 (plus manufactures holdbacks and volume bonus's) they earn off vehicle sale, according to research firm J.D. Power.
Last year, 46 percent of new-car buyers purchased an extended warranty from the dealer, for example, up from 40 percent in 2013.
Nearly 84 percent of new-vehicle buyers last year arranged dealer profiting financing through a dealership, according to J.D. Power.Complete WSJ Story