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Originally Posted by [b Quote[/b] (chaxy @ Aug. 10 2004,17:29)]the sheet that showed their margins and price breakups. * 
If this sheet is to be believed then how do these dealers make money from such low margins ?? * |
Hey Chaxy.
Your XL sheet is more or less correct.
I got a cash discount of 35000/- for my Optra 1.8 LT.
Now this is the area where they can really bargain with the customer. If you see the dealer's profit margin column, it's 39100/-. This may vary from place to place but the difference wont be much. Unless there is some offer from the dealers you know the total price of the car (in my case for example) 987644/-. You have to add insurance and road tax after that which would be your on road cost of the car.
Let's say there are no offers kinda situation. You go to the showroom, have a test drive, like the car and start talking about the cost. Salesman will tell you 987644/- is the ex- showroom price. you calculate road tax and insurance and add to that showroom price... and suddenly you realise that you're actually paying much more than the company quoted price. So the only area where you can negotiate is the ex-showroom cost. Because your road tax and insurance remain unchanged.
If the particular car has a great demand, then dealer wont offer you more than couple of thousand. For him it's making little less money than otherwise he would be. But his invesment amount is back with him and much faster than he had anticipated. In my case I had asked for a black which they had in stock. Now, black is not exactly a popular colour in this country. So when I asked them for discount.. very promptly they offerd me 12000/-. I told them that I'm not interested in that amount and not interested in buying that car also.
For them a slow moving black car sitting in their stock and not moving plus blocking their capital also. So they'd rather make less money and clear their stock. Exactly after a day they called me and offered me 22000/-. Now there is no logic to this offer. However much they can make from that 39100/- is welcome.
Since I knew this dealer margin game, I told them 35000/-. They got back to me within an hour and accepted the figure.
For them it was roughly 5500/- profit from a car which wasn't probably moving because of the colour.
Your XL sheet also has a freight and insurance cost of 5925/- for each car. They order cars in bulk and do get a hefty discount from insurance also. This could be a huge amount depending on the car's cost and number they're ordering. This is a substantial amount which they pocket.
In your case if they get a bulk booking, they're more than happy cause their stock is clearing that much faster.
Also don't forget one more area where they make money... known as authorised service centre.
Hope you got the picture.