hyperion667

Just wondering if anyone can corroborate:


the salesman that sold me my S class told me they only make 200-300
per sale and that selling cars isn't as 'good' as it used to be.......


first off: I think the guy is full of it, and second.....why would you sell
Mercedes Benz for 100K plus, and then only get 200-300 dollars?


can anyone shed some honesty onto this super shady world or car sales?

meldour

They wouldn't stay in business if this was true. They make at least 10k

hyperion667

it's insulting to think they think I'd believe something so asinine.....and that's right to my face.....like I'm supposed to feel sorry for them??

meldour

My dealer Keenan Mercedes of doylestown PA, has built an incredibly beautiful dealership. Looks like the Versailles in France. You think he'd be able to do that if he was making $200-300 per vehicle sold??

They make tons of money. I can't believe they're lying to you like this.

Worth the wait

Maybe he meant that is what his commission is?
My local dealer has money to burn!

hyperion667

yes, was speaking of commission

JulianH

That's his commission.
The S we bought has an MSRP of $104,615. The invoice on that is $97,357.
Even if they sell the car at invoice, Mercedes dealers get what is called holdback. That is estimated to be about 3%, but who knows.
If they sell the car for $102,500, from invoice, that is a profit of: $5143. Then you have holdback. That is another 3% let's say. That is another $3k. So they make about $8,000. Most likely more. Their profits are largely kept secrets. That doesn't include other stuff they get out of you like extended warranties and coatings and things that like from the finance office.

If you are trading a car in, they are going to make profit on that as well.

The dealer I went to had a board for the salesmen in the manager's office. It listed cars they had sold. Some names had .5's next to them, like 4.5 for 4.5 vehicles sold. I'm guessing the more expensive vehicles count as 1.5 of a sale instead of .5. If they sell more cars, they make extra commission. It was something like $100-$300 more per car if they hit their sale goal. I doubt they make much on commission. I think the less the dealership makes on the car, the less the salesmen make on commission. So there is an incentive for them to sell the car for more money.

JulianH

Now if you load the car up with more options, their profits are insane.
They are only taking a couple grand off an S class regardless of options!
So let's run these numbers again for a loaded S550:
MSRP: $132,500
Invoice: $123,200
Edmunds TMV Price: $130,000.

Their profit on this car is $130,000-$123,200 + (123,200*.03)=$6800+$3696=$10,500.

I don't know how accurate these numbers are, it's all a secret. They probably make more than that.

But you can't find their profit without knowing their expenses. They have to pay all their employees, rent, etc. Also they do not actually own the cars. They borrow money to pay for the cars. So there are finance charges there that accrue each month. The longer a car is on the lot, the more interest they have to pay on their loans.

bzliteyear

i think dealers and salespeople also get bonuses for high customer satisfaction, but of course they never reveal those (unless they're bad and then they come back and ***** about it to you about why you told the truth about poor service).
Sadly, in CA, most of the MB dealers are spoiled and think their cars are "special" when in reality it's the same car that every MB offers nationwide. This is why for a while, it was difficult to buy MBs from outside one's zip code. Now that it's gone, it's a matter of which dealers are best about getting the cars that people want. I still think most MB dealers don't really "know" how to manage a successful business. Usually it's either handed down from family, or they hire an "experienced" GM who's been doing it wrong for years - thus why this business continues to have a bad reputation, despite MB spending hundreds of millions of dollars advertising(because corporate can't control the dealership experience for consumers).
PL

SLpat

The dollar amount of $300 is a good average for the amount the sales rep makes. They do get add ones for volume, but that isn't significant. They also get deductions if they have poor survey numbers. Overall if you are at a dealer that sells 300 cars a month with 12 sales reps they average 25 cars per month or about $7,500 per month in commission.

Tifoso48

Rule of thumb:

Service and Parts cover all costs and overhead at a well run dealership.

The sale of cars produces the profit.

hyperion667

thanx for these insights Gents

Khan28

Automotive sales can be rewarding but I don't think he was lying to you when he said what he makes. The dealership (big used car dealership) I bought mine from the salespeople there make $250 per car regardless of the car or selling price. If they sell a $12k car or a $35k car they get a flat rate of $250 so they better be averaging at least 20 cars per month in order for it to be worth their while because they're working a lot of long and unproductive hours and have to work every Saturday since that day tends to be the busiest. Other dealerships pay usually 25% of the gross profits towards the salesperson although in some cases that doesn't amount to a lot of money because sometimes they had to sell the car at cost in order to garner a sale. Some dealerships have salaried employees and they get bonuses based on performance which I feel more dealerships should use that sort of system since it takes the "pressure" component out of the mix when it comes to them making a sale with a customer.

I always wondered if on scale the new car sales/leasing consultants make as much a the pre-owned sales consultants because when you go to a MB or BMW dealership there are like 10 to 15 people working in the new department but 3 or 4 working in the pre-owned department.

absent

0.5 means half the sale, means the sale was split with another salesman.
New car sales are NOT profitable in general, bring 7-8% max on certain hot models, most of the other mass produced cars (MLs,C,E Class,etc) lose money after you add the floor plan and other expenses.
Most dealers have the most profit from service department first and used car sales second.
New car sales are to them a necessary evil to maintain the franchise and profitable warranty work.
Lots of misconceptions in the above posts.....

bzliteyear

I know everyone says dealers make money in parts and svc, and lose money in new car sales. However, I think that's all accounting BS - they allocate bloated costs to new car sales on purpose. As example, my buddy who was general sales manager had to pay their svc dept $1,100 for after market gadgets that had a cost of $50. In this case, sales made $100 profits and svc made $1,050. If sales mgr was allowed to buy same item from 3rd party, would have made $1,000 vs $100. This is just example, but you get the idea on this multiplied by thousands of cars.
PL

hyperion667

I simply could not live with myself having to treat people the way they treat people......
and calling it 'the job'......


doesn't have to be that way IMO

SaffsDad

What kills me is when my sales guy tells me he is making 200 dollars on my deal yet he has a collection of Panerai watches, Louis Vuitton shoes/belts, etc...

schuk

That`s it! Most people don`t realize but the real rip off is in service.

schuk

Holdback is paid to the dealer only if car sold at invoice or close.

Sales commission varies from dealer to dealer but averages min $200-300 per new car and $50 per used if sold with no profit. Salesman does`t get paid on a holdback.

schuk

Exactly, 1/2 is a split with another salesman (sold during absence?)

If car sold at MSRP salesman gets 25-30% of profit ($1-3K).

A lot of times manufacturer offers dealer incentives ($500-3,000). No ton 2015 S-Class though

hyperion667

another reason I strictly go to an excellent indy shop.....stealer for something warranty related



www.cwperformance.com

TomS

Here's a sincere question...with the advent of new technology on the 2014 S550 , do you trust the independent shop to be fully trained on what to look for when they are checking everything?

A related question...if the shop does find something, now you have to go to the dealer for them to check to out. There has to be a cost of your tone to do that.

I would be willing to go to indy shop but our good one is 30 miles away so it's an all day thing for me as the local dealer brings a loaner to my house, takes my car, and drops it off when done. I have never been able to justify the opportunity cost difference in my time.

Tom

SaffsDad

So, I received a phone call from my sales guy that he wasn't going to get his 200 dollars (or whatever it is as the number kept changing during the whole purchase process) because of my survey response. I told him I was being honest with what I stated.

Should I feel bad? I'm sure he must be getting something. ( I did pay msrp. )

TomS

Did you stick it to him for the sales process in your survey? Just curious. If he deserved it, then there is no better way for him to to learn

SaffsDad

I didn't stick it to him. I responded accurately and didn't give out all 10s. I cited to them that even when signing the car off to me, the pdf certificate they sent me had my signature forged because they really didn't demo the features to me and rushed me out. I told this to him today and there was silence on the phone.

I feel bad if he didn't get anything, but on the other hand, they did make me 'suffer' this time around. I won't go back to that stealership again. Buying a Mercedes should be a positive experience - this time around it was not.

Does corporate even realize how screwed up this whole process is?? If I get more calls like this, I will be calling mbusa to complain.