Used car dealers and their profits--any experts?

In the 13k range.

I went to a used car auction with my brother-in-law several years ago. I was simply amazed at how cheap cars were sold.

I guarantee your dealer made more than $1. 13K is a good start by the previous poster but I wouldn't be surprised if it was less than that.

The used car industry is tough, especially now. I bet they paid about 16k for it.

Absolutely no way to tell based on that information.

They like to make $4K will settle for $2K and may pay 25% commission on the gross profit, so $500 on a $2K gross.

The rest of the profit goes to general manager, finance person, owner and overhead.

They do have building space and land to pay for plus employees such as receptionist/cashier, detailers, service people to prep and repair cars. Plus transportation to get the cars there and there is a daily interest cost to keep inventory.

The sales guy may have gotton a $1 commission plus a mark on the board towards a volume bonus.

They make good money on some cars if they bought it cheap and can hold firm on the sale price. But they don't make much on average and need to push volume.

If you like the car and agree to the final price that's all that matters to you really.

I've never paid more than $5501 for a car.

A dealer is the worst place to get one.

This is amusing. They likely made $750-$3k on you. Everyone's gotta profit a little you know

badgering wrote:

This is amusing. They likely made $750-$3k on you. Everyone's gotta profit a little you know

How would they profit, when I didn't go to one. Yes it is certainly amusing.

Just to clarify a couple of things: we're very happy with the car and don't question for a minute the need for a dealer to pay all his overhead and make some money for himself and his employees. What did irk us was the fact that the manager and the sales rep made statements that directly contradicted one another. For instance, the manager said that his internet price always goes up on his website the moment a car is placed on his lot for sale; the sales rep said he himself had put the price online the day we test drove the car, so that we would know what his special rate for us was (that would have been several weeks after they had initially advertised the car for sale). The manager also vetoed a price quoted to us by the sales rep before we had a chance to accept or decline it, saying that the rep had no authority to offer the price and that he'd be losing money if we paid that much. I know he's got to make money for himself and his employees, but he's expecting us to believe now that his rep got $1 and he earned about $250 TOTAL for the entire operation on the sale of a $17,000+ car. That strikes me as nonsense and I would have been much happier had he been a little more honest.

That said, we're happy with the car and fine with the price we paid. I'm just curious how much gross the dealership likely cleared and why they're afraid to let buyers know that.

Coming from someone that used to be in the business as a salesman, finance mgr aka "closer" and Store manager... There is actually a chance that they made NO money on the deal. It's all about volume for dealerships. Of course the goal is to be profitable on every car, but the reality is everyday a car sits on a lot is money out of the dealers pocket.

If the car just got there, then they most likely made some money off of you. Dealers don't make as much money as people think off of cars (regardless of the price). Where they make their real money is with warranties, financing, lo jack, GAP...etc

Tip for everyone: Always buy at the end of the month. Dealers will always be more flexible so they can meet their EOM goals. Even better, wait until the last day of the month and go in later at night. The ball is in your court!

Looks up "Confessions of a Used Car Salesman" on edmunds.com. There are a lot of liars in that business.

AutoNation is a publicly trading company with car dealerships all over the country. You can look up their financials on the SEC website.

They make about 6% on new cars and 9% on used cars, before any allocations for overhead expenses.

Most of their profits come from their repair business, as well as finance and insurance.

A friend of mine who sold cars said that if the salesman is nice to you and smiles when you leave he ripped you off and thats his goal.

Thanks for all the feedback--it's been helpful and enlightening.