$94,000 Profit On Each Car

Most? LOL we are talking about Ferrari's that sell at or above sticker price, not a Ford Mustang they discount 30% off it when you walk in the dealership.

Do you really think a Ferrari dealer makes $500 or less on a car? They sell 500 cars a year.

 

Just to add to the conversation, I have the invoice for my ‘97 355 challenge. It shows the dealer mark up to be 15%, suggested retail was 142,500.00 and dealer cost was 121,125.00.

 

My comment was in reference to people saying the dealers were making 30% on pick up trucks. Which is why I quoted that person. It wasn't pertaining to Ferrari.

 

Standard mark mp in the business is 7-9%. Then there is hold back or dealer added money.

Then you have your earned 3% money which you don't know if you get it until the end of the year depending on your csi or sales quotas.

Prior to everyone giving everything away so pre 2010. Porsche used to have the highest markup of the main line dealer at around 12%

 

Ok, just remember they also have what is called hold back that gets paid to them from the factory for every car they sell so when you see a dealer selling a car at invoice it's not what they really pay or make on a car, year-end hold back checks get cut for each unit sold.

 

To the two above posts. I was just passing along what I have for information not trying set a definitive conclusion.

 

You must've peddled cars (as opposed to owned a new car franchise) so you're not privy to the real numbers. Absolutely zero chance that a new car has only 7 - 9% on the front end plus a measly 2 or 3% holdback. If any of that were true, rather than a 3 to 10 million dollar building, they'd be operating out of a shack or construction trailer and their inventory would be parked on gravel. Of course, we know that's not the case.

 

I'm in construction and one of my repeat clients is a major car dealer name (something like 117 dealerships right now?). He tells me all the time that they're not really in the car business, they're in real estate. But all real estate has to generate revenue, and they choose to do it by selling cars there.
This perspective probably explains why he's been among the fastest- growing dealership chains in the country.



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Washed

Detailed

Peddled

Managed

Owned.

Apparently you have never worked in the business

It's service that pays for the building. And really in the new car game... Finance is what makes selling new cars worth it. (well plus the perks of being a new car franchise)

But thanks for playing

 

Ohh and I forgot.... I worked for a major manufacturer.

 

Lol Amen brother!


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They did, in 1968. Turned out to be one of the best cars they ever built.

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Gross margin for high fashion brands is generally around 60-70%. Insane for tangible goods. Ferrari's gross margin of 50% (from a quick google) is also extremely impressive comparing to other hardware products.

 

there are not many $400000 new products that someone does not make 94K or more on......

 

I

I Wish that was the case. Some cars just won't come down to 50 cents on the dollar.

 

To be clear , this article is saying that
Ferrari made this avg profit per car ........NOT a Dealership.



S

 

We’re talking about Ferrari here, right?

Service is a necessary evil , that tries its best to build on its previous years profits.

I am pretty sure sales does the heavy lifting. New,
pre-owned , and F&I.

IMO

S

 

No. The new auto business in general.

But to address your point... A stand alone Ferrari store could not be profitable and pay for it's real estate on new car sales alone. Volume is too low for many stores.

And absolutely in the past NO WAY a dealer could survive. In the 90s not a chance without service.

One hint is that USA owners manuals required 3 year majors and Europe required 5 year.

Service departments are the money maker. At a luxury dealer... It is about 3 times the profit of new car profit.

 

Luxury Dealerships in General , I can agree.
When I worked with Mercedes , we were running between 18,500 and 20,000 hours a month x $180ph ....

At Ferrari , we are one of the busier Service departments in the network , and I can assure you we don't run as many hours as MB does a month... in an entire year....yes, it is a profit center , but not as much as a lot of people imagine it to be.

s

 

As a sales manager for one of the largest automotive groups in America, I can say he is speaking the truth.

7-9% is generous. Highest factory gross percentages (non-exotic) are between Jaguar Land Rover and Porsche. Porsche is still ~10% Front End. Jaguar Land Rover has 4.5% front and 7% in the back (assuming you jump through JLRs hoops to qualify for the full 7% with CSI, CPO Sales, and about 10 other metrics).

Other brands like BMW use a volume based pro-rating holdback, so the more cars they sell the more they make per car. It's set on a monthly basis. Many BMW and GM dealers take 4 figure "net" losses per car when they roll off the lot.

There is little money to be made in front end gross anymore, name of the game is F&I, Parts, and Service. Those are the real cash cows.

 

Okay, I've heard the sob stories from Mercedes dealers earlier this year when shopping for a '20 (pre CV-19), about how their profit is 5.5% on the front end and another 6.5% on the back, and "that's literally all there is". I even had a lengthy conversation with a GM who agreed with me on the gross profit/unit on new cars (i.e. 25% off MSRP being dealer cost), yet he claimed Mercedes was different and that their profit was half other makes .

Blvckintl and Justin care to place a wager -- specifically that profit on a new 2020 MB is nowhere near the alleged 12%?

 

That's right. Cost to a dealer on a $400,000 812 would be between $300K and $320K. $94,000 corporate profit is on the $300K sale to the dealer.

 

Slightly off topic, but somewhat related question...how much dealer profit margin is generally built into used Ferrari pricing?

 

I'll place a wager and show you invoices and holdback payouts from my brand (Jaguar Land Rover). You're delusional if you think there is 25% F/E Gross in a new car, but hey what do I know I'm just a sales manager for one of the largest dealer groups in America

 

Here is auction data for 2013 458s and 2018 488s.
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