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How Car Dealerships Make Money (Explained by a Former Car Dealer)

179K views · Mar 11, 2020 · Autos & Vehicles

CarEdge

725K subscribers

Comments · 249

@CarEdge · 6 years ago · pinned
What else do you want to know about the inner workings of a car dealership? Let me know and we'll be sure to cover it in the near future. Thanks for watching.
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@BluezFan91 · 5 years ago
This explains a lot. I haven’t been in a dealership in 8 years. I had heard they make money off the loans but guess I just figured they had to chose the lowest rate as like some fair business practice. But today they only offered me a 8.99% which was double what I expected. Then told me I could not buy the car with my own bank loan. Had to be secured by them which seems a little unethical. Of course they changed their numbers as I was walking out but I just find it all so off putting now.
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@mchristr · 6 years ago
The real cost of car ownership is interest paid and the depreciating value of the asset, plus maintenance. Live below your means, save money every month, pay cash for a car.
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@matthewd.1474 · 6 years ago
Keep making videos, the general public needs to know the real deal.
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@ed5308 · 6 years ago
The service department makes the dealership a fortune.  They use a labor book.  I had to replace a side mirror assembly on my Honda Pilot.  I called the dealer the assembly was $325.00 and the labor was $ 150.00 to put in.  I went on Amazon and got same assembly for $55.00 and someone else I knew install it for $ 50.00.  Stay away from the dealership if you can.
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@kimdavis5631 · 5 years ago
Wow, this is the most comprehensive explanation I’ve ever heard. You are a great educator Ray! Thank you 🙏
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@billconserva1461 · 6 years ago
Spot On Sir! I spent over 50 years in sales, the greater majority in the Automotive and Truck business and you telling it like it is.
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@charliesimpson2974 · 6 years ago
Bought my first new car in '69, next in '72 then used  till '77. None of the new cars needed service, except the '72. It was a Vega. Blew a head gasket (aluminum block and heads) at 14,000,   Chevy replaced the engine for free with an improved aluminum block with steel sleeves in the cylinders, still aluminum heads. Blew another head gasket at 26,000. Same deal, Chevy replaced the entire engine again (free to me). Drove it til 76. At the end it was using half a quart of oil for every fill up. Traded it for a used '76 Civic which I later found out the Consumer Reports rated in their Top Ten Worst Used Cars (along with Chevy Vega) and boy were they right. Bottom line, I only use dealer service if the car is in warranty.
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@J0hnny0 · 6 years ago
Never EVER buy any backend...Always negotiate you rate down at least 1%, because your dealer is most likely quoting you 2% higher than they can close.
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@stevevlahos1 · 6 years ago
When I used to sell VW’s in 05 the dealer would receive a “bonus” from the manufacture based on if he sold X amount of cars for the month.  He would make say $100 per car if he sold 10 cars that month and it would go up from there. Some months it would be as high as 300 a car so if we were 1 car shy of hitting our goal we would do anything to sell that final car even at a loss to not miss out on the bonus money. <br><br>It’s a crazy job. To stressful.  Glad I don’t do that anymore.
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@johncoll4456 · 6 years ago
In this day and age I don't understand why people buy new cars, buy any car at a dealership, or get their cars serviced at a stealership.
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@jpt1537 · 1 year ago
Great Video, thanks for explaining. Very straight forward and easy to process. Much better than when there is banter, jokes and cut aways. Sometimes the banter gets in the way of the message.
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