Car Dealerships and Their Profit Motives

When buying a new car, many people choose to use the services of a dealership. The dealerships usually offer a wide selection of vehicles, financing options and insurance policies. In addition, the dealership will take care of all the paperwork needed to purchase a vehicle. However, it is important for consumers to know the profit motive of the dealership and negotiate a fair price.

Whether selling a new or used vehicle, the dealership needs to make a profit on each sale. This is accomplished through sales, service, parts and body shop departments. Sales staff is usually paid on commission, with bonuses being offered for meeting or exceeding quotas. In some cases, the dealer will use special incentives (like rebates and low-interest financing) to attract customers. Often, these types of deals won’t last forever, but for now, they are an essential part of the car-selling business.

The dealership also makes money by offering different types of warranties and protection plans. It is a good idea for consumers to ask the dealership if a vehicle comes with a warranty. It is also a good idea to find out the length of the warranty and any exclusions that may apply.

Some dealerships offer certified pre-owned cars, which are lightly used and often come off a lease. These cars are usually a few years old and sell for much less than new models. Having a qualified lead in the finance and insurance department is important for profitability, as well as providing quality customer service. car dealerships

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