curious about pricing

30

Asked by Apr 04, 2012 at 10:17 PM

Question type: Shopping & Pricing

this might be a little dumb but, i was wondering about new car offers from manufacturers......
for example, lets say that ford is offering $3,000 cash back on the taurus..........that would mean that the manufacturer is actually giving the rebate to the customer and giving a $3,000 credit to the dealer in return?......the dealer is not actually losing anything, because the manufacturer is reimbursing them for giving the customer the discount.....so, then the dealer can knock off extra money on his part.........is this correct or incorrect?  also, i heard that the sales managers actually buy the cars from auctions and put them on the dealer lots.....that would mean that the price can very slightly from car to car?  ........has anyone ever actually found out what the mark up is on a new automobile once it hits the dealer's lot?  this seems to be a life long secret..........is it possible that it could be $6,000 or higher?..........

2 Answers

8,365

to answer your question, the rebate comes from the manufacturer, so yes, the dealer is not losing anything. They can discount the car additionally or show the discount as extra trade value if you are trading. It is NOT true that the dealer buys the new cars at auction- they buy directly from the manufacturer, so they all pay the same for the car- that being said, there are other costs involved such as advertising, that can make a diffierence in the price from dealer to dealer- typical advertising can be from .5% to 2.5 % of the cars sticker price minus destination charge. That is what pays for all the car ads you see on TV. New cars do not have 6000 of markup unless you are talking a very expensive import (mercedes, etc.) it has gotten so competitive that some models have only 300-400 of room to play with. As a general rule, the more expensive the car and the more options, the more markup there is. I hope this helps.

30

ok......that was helpful thank you

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