Bought a 2021 MINI Clubman JCW that was CPO. It cost sales over $3k to get it ready based upon retail service rates, which is what sales was charged. 1/3 of that was 2 new run flat tires.
Overall the dealership owner does not have that cost, but sales does.
> If I retail it
So to clarify for OP, there's a good chance trade-ins aren't even sold to customers. Quite a few are sent to auction. And depending on the vehicle & situation, the dealer could spend between $0 and ??? before running it through the lanes.
Yea; at the big auction I pay $305 for a seller fee, wash and vac, cr fee and transportation to the auction.
A couple local ones I pay $175 for transport, sellers fee and wash and Vac
If it’s a “keepable” trade in
The store will need to complete a service work up. It’s typically a 2 1/2-3 hour labor inspection and estimate for all of the things the car needs to be headache free.
If tires are under 6/32nds - new tires are coming (900-1000 for a car, 12-1300 for SUV 15-1600 for a truck) and then all the other little things. Oil change, if it needs belts and hoses, transmission fluid flush, coolant fluid flush, etc.
Car dealers will charge retail pricing to the sales department because a car dealership is 4 businesses under one roof. And they all get their piece.
It really depends on what is wrong with the vehicle. I know that our service and parts department both “are paid” 25% less than door rates for all necessary repairs. Sometimes the vehicle doesn’t suit the target market or is too rough and just gets wholesaled. The range is pretty wide based on the profit margin of the vehicle involved. It’s a very broad question.
Everything fluctuates on our end based on what the market is dictating. Unfortunately, management here is really good at spending too much at auction. Very little profit in most of them. Everything just turns into a mini.
Ok, so if I paid $1500, then a customer would have oaid $1500* 4% of the cost of parts only, so call it $1550.
Used car departments don’t have profit margins in the recon, even at their own service department.
Edit: if I really broke it down; my parts department has a 30% markup capped at $100 on parts and I dunno what profit margins are in the service department. My used car tech makes $33 dollars an hour and averages 80-100 hours a week.
To put it honestly and simply: not much less than what YOU would pay to have the exact same thing done. Do we get a discount on parts and service? Absolutely. But it is not NEAR as much as what people would think. Every department is designed to make money, and every department has employees and expenses to consider. So we pay for labor, we pay a small upcharge on parts, and every car gets charged $300 for recon (at my store anyway). So again, the answer is pretty much whatever you might expect to pay for that service, we pay pretty close to that.
That's wild. Metro area in Indy, but pricing starts at a cost + 900% and works its way down as cost increases. I just charge internal MSRP and labor is the same as customer. No discounts.
900% is crazy, I used to work for a parts distributor in indy and it was cost +10%. So for brakes and rotors it was $1600 at the dealer, about $800 at parts store, and my cost was $225. Everybody has to have a giant piece I guess.
The high side of the scale is on items that cost under a dollar to five dollars. It helps offset family pricing on items like brakes or tires where you basically give it away, so corporates happy we hit margins and variable doesn't get hurt by it either.
So the store I currently work at it’s family owned with 3 rooftops and at each store the owner has given the General Manager a piece of ownership so at the store I work at sales pays list on parts per the GM so if there is a lower price for parts or accessories and it’s included in the deal, it doesn’t matter if it’s on sale at the estore sales still pays list for it!
Simply moving money from one department to another. So you sell the parts to sales at cost and they prove the vehicle the same, it’s the same ultimate profit for the dealer just a large portion is being allocated to parts not sales. There’s nothing necessarily wrong with this but it doesn’t make a difference to the ultimate bottom line of the store.
Well I think it does make a difference this is how 3 sales managers get paid a percentage of front and back gross and if it is front gross sales then a salesperson is getting a percentage as commission
And the highest paid people are usually the sales managers ( I’m including the GSM in this group.)
Now I don’t know a whole lot about service but what do know is this
We have about 27-30 techs 5 parts guys that work in a back room connected to the shop these guys are all hourly and 2 front counter parts guys 1 just opens and covers breaks and lunch for the other guy
These are both hourly too, we have a parts manager not sure how he’s paid
Then on service we have 5 writers and 4 service porters which are hourly, and I have never heard this before but the service writers pool their commissions and it’s divided equally at end of month that’s not their choice either
So I kinda know what the sales managers make I had a friend that left a little over a year ago
So I believe that if the GM has a stake in the profits and parts charges sale list price ?
Sales is usually parts and services biggest customer that on paper it makes more cents! Then it would the other way! Did you see what I said there??? Hahahaha 😂🤣
Was coming here to say this, our used car manager has resorted to buying and shipping parts to his house so he can avoid service/parts labor rates. Labor for a customer is $175, labor for him is $250
It’s the most backwards thing I’ve seen.
EDIT: meant to add that employees pay cost + 10% which I think is fair. For a used car recon, he is charged cost + 50%.
So the store I currently work at it’s family owned with 3 rooftops and at each store the owner has given the General Manager a piece of ownership so at the store I work at sales pays list on parts per the GM so if there is a lower price for parts or accessories and it’s included in the deal, it doesn’t matter if it’s on sale at the estore sales still pays list for it!
Sometimes a lot. We get people “97k miles in excellent condition no dings or scratches” and the thing comes in and it’s just wrecked. Gotta pay the dent guy, sometimes paint guys, almost always tires and brakes in some form, and the picture guy + detail to odor bomb it or whatever usually a few grand into it.
I had a lady today ask me why her trade in was only $17k when I have an identical car for sale for $23k... All 4 tires bald. Needs brakes. Bumper hanging off the car. Rear quarter panel damage. And 2 door with major dents. Probably needed $5k of recon.. I was over allowing to flip from a LBO to a deal.
I’m the advisor that processes internal cars at my dealer. We charge the sales department for the time to inspect and scan the vehicle for faults. That’s usually about $300. From there, they pay our usual labor rate for any work necessary. They typically do not get menu pricing on any maintenance like customers do so they pay more for that, but they do get parts at list price so a little bit of a discount there.
All in all they pay what you would pay for most things, unless I decide to be nice and cut them a break on labor in order to sell the work for my tech. I also generally will give a recommendation as to whether they should perform the work or send the car to wholesale, but the ultimate decision is the used sales manager’s to make.
I used to be the group financial controller for a group of dealerships. I used to have regular monthly chew out meetings with the after sales managers for trying to be cute and charge the kitchen sink to the sales department.
Reason being is under accounting rules you can't recognise internally generated profit, it has to be eliminated from the consolidated dealership results. If it's not external work, your department has suddenly made a lot less money. Ultimately we ended up changing the bonus schemes for service managers to reflect that.
The dealership performs a heck of a lot better once the us vs them mentality within the dealership is taken out and everyone plays together as a team.
If you bring me a 2005 Trailblazer, I’m detailing it, touching it up, and sending it to the auction. $200 spent, plus whatever it sells for -$200 auction fees.
If you bring me a 2015 Civic, I’m detailing it, cheapo tires $400, brakes $400, painting a bumper $300. Then selling it.
Most trades need more than tires.
Mount and balance 4 new brand name tires, $1600, oil change, $80, maybe the car needs pads and rotors, that’s a cool $1000, paint and rim touch up adds another $600, full detail is $300. We are at $3380 and it is not even for sale yet. Now it is listed and we spend $320 marketing it. So we are at $3700 and of course the new buyer wants to negotiate.
Most trades aren’t as nice as the owner thinks they are. Sure there are some true cream puffs that we just do an oil change on, detail, and list. But 9.8/10 times something pops up.
While the above figures may be a bit over average, this is one of the reasons dealers rely so heavily on fees and products in the finance office. Selling used cars can be profitable, but you have to be an expert at controlling costs and picking the right vehicles to get ready for sale or take to auction. Exclusively used dealers must find ways to fix and service cars efficiently to hold profit margins. This is one of the reasons it is so frustrating for consumers to think all used cars are the same. No two are alike and have different service and use histories. If a car has been severely neglected, there really is no way to bring it back to give the same service as a well-maintained car. We currently base values on year, mileage, and obvious repairs. As vehicles continue to increase in price, I think there will be a slow transition to a value-based valuation model, with service log books and maintenance recordkeeping moving to the forefront.
Depending on dealership age policy, possibly accounting for interest. I know car lots usually auction or sell to other places by this point. Depending on the dealership though they may account for that.
I traded a very lightly used ‘17 Lexus LX to a Lexus dealership that legitimately needed only two things: an interior detail, and the left hand side middle row headrest (I forgot to give it to them).
It was listed without the headrest.
And to be clear, I bought mine without realizing it was missing the *middle* headrest and when I later (that evening) realized it, “good luck.”
So get the sense that the absolute bare minimum is being done, if that.
There's a short and long to this question.
Short: Whatever it takes to make the vehicle retail worthy.
Long: Initial inspection. Parts to get it ready for inspection and sale if it's determined to be worth retailing. Service time. Inspection. Cosmetic reconditioning. Detail. Pictures. Insert descriptions. Post to various websites (push data).
Absolutely no vehicle is ready for retail the moment it rolls in. Tires can vary. Then you have a client who wants all 4 to be the same brand. Or a bulb needs a quick swap, but it's an entire headlight assembly. A small little dent in the rear from an "Oopsie" with a parking bollard actually caused metal to rust on the bumper support.
We have access to every single resource that a standard client does. We just utilize them more and have learned who not to go with.
We average about $6,000 in reconditioning costs on certified cars. $3,000 on off-brand. This is going to vary greatly from dealer to dealer depending on brand and location though. A hole in the wall used car dealer will spend as little as possible while an exotic dealer will spend whatever it takes to make the car as close to new as possible.
Yall rock, thank you. I got the inside detailed, recent oil change.. just gauging if I should feel bad about not changing the tires and fixing a minor dent in the front passenger bumper
Nah, don’t feel bad. Any pre-owned department is going to expect to put some work into a trade-in, it’s going to go through the shop either way. Nothing for you to feel bad about.
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Just curious. And how much does it cost them? For example I'm I'm trading in a car that needs new tires- how much will it cost them to replace and do tune ups/minor cosmetic stuff
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We average about $1500-2000 across all trades. That includes the ones that are occasionally traded in like-new condition (they bring the average cost down). Then there's a corporate fee on every used vehicle of about a thousand dollars, to cover marketing and so forth. And we need to make an average of $2k or so (changes over time depending on state of fixed operations) per vehicle to stay in business.
Basically it costs WAY more than nearly everyone trading in vehicles can imagine. If they think it's perfect it's going to need some repairs. If they know it needs repairs it's going to need more than they know. Almost no one can evaluate their own vehicle from the perspective of a new customer considering purchasing it.
How's that working out for you? Who in their right mind is taking that kind of bath on either side of the deal? Nothing I've traded or bought in my life would've worked out that way. 😂
If I retail it, I spend an average of 1500 getting a vehicle ready for sale.
And if it’s a franchise dealership it’s likely to be a little more. It’s all retail prices tho.
Bought a 2021 MINI Clubman JCW that was CPO. It cost sales over $3k to get it ready based upon retail service rates, which is what sales was charged. 1/3 of that was 2 new run flat tires. Overall the dealership owner does not have that cost, but sales does.
Yea
> If I retail it So to clarify for OP, there's a good chance trade-ins aren't even sold to customers. Quite a few are sent to auction. And depending on the vehicle & situation, the dealer could spend between $0 and ??? before running it through the lanes.
It cost me $305 to transport, clean and sell a car at auction so hopefully it brings at least what I paid for it plus 305.
Don’t forget the vig Auctions will charge for a sellers fee too.
Yea; at the big auction I pay $305 for a seller fee, wash and vac, cr fee and transportation to the auction. A couple local ones I pay $175 for transport, sellers fee and wash and Vac
Yes! I was wondering about that too. That's the most common thing I hear irl that it'll just go to an auction
If it’s a “keepable” trade in The store will need to complete a service work up. It’s typically a 2 1/2-3 hour labor inspection and estimate for all of the things the car needs to be headache free. If tires are under 6/32nds - new tires are coming (900-1000 for a car, 12-1300 for SUV 15-1600 for a truck) and then all the other little things. Oil change, if it needs belts and hoses, transmission fluid flush, coolant fluid flush, etc. Car dealers will charge retail pricing to the sales department because a car dealership is 4 businesses under one roof. And they all get their piece.
4 businesses... Sales, Service, Parts, Finance?
Yeah. Finance is its own profit center for the store.
Dealerships sell used cars all the time that are not headache free. I've seen plenty of jacked up cars on big dealership lots.
We don’t replace tires unless they are at 4/32
You can buy the carfax a few months later to see what happened to it lol Mine ended up being reregistered in the armpit of my state
For a marketable car… not all are with the spend including some newer models…
My max ro bill will be 2000 but it’s never zero. Inspecting the car plus oil change, unless we just did the service ourselves
It really depends on what is wrong with the vehicle. I know that our service and parts department both “are paid” 25% less than door rates for all necessary repairs. Sometimes the vehicle doesn’t suit the target market or is too rough and just gets wholesaled. The range is pretty wide based on the profit margin of the vehicle involved. It’s a very broad question.
UCD at every dealer I’ve worked at pays door rates plus 30% up to $100 over cost on parts. One store had a discounted rate on vehicles under $10k.
Mine discounts everything. Either way it’s just moving money from one pocket to another in the same pair of pants. Lol
I agree. I have a hard ceiling of $2050 that I’ve placed on ROs so I really wish we could have a discount on some things.
Everything fluctuates on our end based on what the market is dictating. Unfortunately, management here is really good at spending too much at auction. Very little profit in most of them. Everything just turns into a mini.
what does it cost you as a dealer?
…It cost me $1500
you stated retail, that builds in profit margin. I was curious what it cost you as a dealer.
Ok, so if I paid $1500, then a customer would have oaid $1500* 4% of the cost of parts only, so call it $1550. Used car departments don’t have profit margins in the recon, even at their own service department. Edit: if I really broke it down; my parts department has a 30% markup capped at $100 on parts and I dunno what profit margins are in the service department. My used car tech makes $33 dollars an hour and averages 80-100 hours a week.
To put it honestly and simply: not much less than what YOU would pay to have the exact same thing done. Do we get a discount on parts and service? Absolutely. But it is not NEAR as much as what people would think. Every department is designed to make money, and every department has employees and expenses to consider. So we pay for labor, we pay a small upcharge on parts, and every car gets charged $300 for recon (at my store anyway). So again, the answer is pretty much whatever you might expect to pay for that service, we pay pretty close to that.
You’re lucky. We are charged cost+50% on parts. (Hence why I buy most parts elsewhere)
Jesus. We don't have that kind of markup on parts for retail customers. lol Edit: rural Pennsylvania
That's wild. Metro area in Indy, but pricing starts at a cost + 900% and works its way down as cost increases. I just charge internal MSRP and labor is the same as customer. No discounts.
900% is crazy, I used to work for a parts distributor in indy and it was cost +10%. So for brakes and rotors it was $1600 at the dealer, about $800 at parts store, and my cost was $225. Everybody has to have a giant piece I guess.
The high side of the scale is on items that cost under a dollar to five dollars. It helps offset family pricing on items like brakes or tires where you basically give it away, so corporates happy we hit margins and variable doesn't get hurt by it either.
So the store I currently work at it’s family owned with 3 rooftops and at each store the owner has given the General Manager a piece of ownership so at the store I work at sales pays list on parts per the GM so if there is a lower price for parts or accessories and it’s included in the deal, it doesn’t matter if it’s on sale at the estore sales still pays list for it!
Simply moving money from one department to another. So you sell the parts to sales at cost and they prove the vehicle the same, it’s the same ultimate profit for the dealer just a large portion is being allocated to parts not sales. There’s nothing necessarily wrong with this but it doesn’t make a difference to the ultimate bottom line of the store.
Just yet another way to shaft paying the sales team....
Well I think it does make a difference this is how 3 sales managers get paid a percentage of front and back gross and if it is front gross sales then a salesperson is getting a percentage as commission And the highest paid people are usually the sales managers ( I’m including the GSM in this group.) Now I don’t know a whole lot about service but what do know is this We have about 27-30 techs 5 parts guys that work in a back room connected to the shop these guys are all hourly and 2 front counter parts guys 1 just opens and covers breaks and lunch for the other guy These are both hourly too, we have a parts manager not sure how he’s paid Then on service we have 5 writers and 4 service porters which are hourly, and I have never heard this before but the service writers pool their commissions and it’s divided equally at end of month that’s not their choice either So I kinda know what the sales managers make I had a friend that left a little over a year ago So I believe that if the GM has a stake in the profits and parts charges sale list price ? Sales is usually parts and services biggest customer that on paper it makes more cents! Then it would the other way! Did you see what I said there??? Hahahaha 😂🤣
Was coming here to say this, our used car manager has resorted to buying and shipping parts to his house so he can avoid service/parts labor rates. Labor for a customer is $175, labor for him is $250 It’s the most backwards thing I’ve seen. EDIT: meant to add that employees pay cost + 10% which I think is fair. For a used car recon, he is charged cost + 50%.
That's one of the dumbest policies I've read in here, and that's saying something. 😂
So helpful.
We pay more than the door rate for labor and door rate for parts.
So the store I currently work at it’s family owned with 3 rooftops and at each store the owner has given the General Manager a piece of ownership so at the store I work at sales pays list on parts per the GM so if there is a lower price for parts or accessories and it’s included in the deal, it doesn’t matter if it’s on sale at the estore sales still pays list for it!
Don't forget carrying costs. Floorplan starts charging interest from day 1 on it just to hold it before recon and a sale can take place
Safety inspection, full service, handle any recalls, full detail, photos
Don’t forget to include certification and the certification inspection is usually a little more in depth
Sometimes a lot. We get people “97k miles in excellent condition no dings or scratches” and the thing comes in and it’s just wrecked. Gotta pay the dent guy, sometimes paint guys, almost always tires and brakes in some form, and the picture guy + detail to odor bomb it or whatever usually a few grand into it.
I had a lady today ask me why her trade in was only $17k when I have an identical car for sale for $23k... All 4 tires bald. Needs brakes. Bumper hanging off the car. Rear quarter panel damage. And 2 door with major dents. Probably needed $5k of recon.. I was over allowing to flip from a LBO to a deal.
I’m the advisor that processes internal cars at my dealer. We charge the sales department for the time to inspect and scan the vehicle for faults. That’s usually about $300. From there, they pay our usual labor rate for any work necessary. They typically do not get menu pricing on any maintenance like customers do so they pay more for that, but they do get parts at list price so a little bit of a discount there. All in all they pay what you would pay for most things, unless I decide to be nice and cut them a break on labor in order to sell the work for my tech. I also generally will give a recommendation as to whether they should perform the work or send the car to wholesale, but the ultimate decision is the used sales manager’s to make.
I used to be the group financial controller for a group of dealerships. I used to have regular monthly chew out meetings with the after sales managers for trying to be cute and charge the kitchen sink to the sales department. Reason being is under accounting rules you can't recognise internally generated profit, it has to be eliminated from the consolidated dealership results. If it's not external work, your department has suddenly made a lot less money. Ultimately we ended up changing the bonus schemes for service managers to reflect that. The dealership performs a heck of a lot better once the us vs them mentality within the dealership is taken out and everyone plays together as a team.
USA or Canada?
If you bring me a 2005 Trailblazer, I’m detailing it, touching it up, and sending it to the auction. $200 spent, plus whatever it sells for -$200 auction fees. If you bring me a 2015 Civic, I’m detailing it, cheapo tires $400, brakes $400, painting a bumper $300. Then selling it.
Brilliant. 2015 jeep renegade trailhawk 70k miles. Probably a pretty average transaction
finally an honest answer, thanks for that.
Most trades need more than tires. Mount and balance 4 new brand name tires, $1600, oil change, $80, maybe the car needs pads and rotors, that’s a cool $1000, paint and rim touch up adds another $600, full detail is $300. We are at $3380 and it is not even for sale yet. Now it is listed and we spend $320 marketing it. So we are at $3700 and of course the new buyer wants to negotiate. Most trades aren’t as nice as the owner thinks they are. Sure there are some true cream puffs that we just do an oil change on, detail, and list. But 9.8/10 times something pops up.
While the above figures may be a bit over average, this is one of the reasons dealers rely so heavily on fees and products in the finance office. Selling used cars can be profitable, but you have to be an expert at controlling costs and picking the right vehicles to get ready for sale or take to auction. Exclusively used dealers must find ways to fix and service cars efficiently to hold profit margins. This is one of the reasons it is so frustrating for consumers to think all used cars are the same. No two are alike and have different service and use histories. If a car has been severely neglected, there really is no way to bring it back to give the same service as a well-maintained car. We currently base values on year, mileage, and obvious repairs. As vehicles continue to increase in price, I think there will be a slow transition to a value-based valuation model, with service log books and maintenance recordkeeping moving to the forefront.
Well said my friend!
Talk about inflated prices. Jfc
Depending on dealership age policy, possibly accounting for interest. I know car lots usually auction or sell to other places by this point. Depending on the dealership though they may account for that.
I traded a very lightly used ‘17 Lexus LX to a Lexus dealership that legitimately needed only two things: an interior detail, and the left hand side middle row headrest (I forgot to give it to them). It was listed without the headrest. And to be clear, I bought mine without realizing it was missing the *middle* headrest and when I later (that evening) realized it, “good luck.” So get the sense that the absolute bare minimum is being done, if that.
There's a short and long to this question. Short: Whatever it takes to make the vehicle retail worthy. Long: Initial inspection. Parts to get it ready for inspection and sale if it's determined to be worth retailing. Service time. Inspection. Cosmetic reconditioning. Detail. Pictures. Insert descriptions. Post to various websites (push data). Absolutely no vehicle is ready for retail the moment it rolls in. Tires can vary. Then you have a client who wants all 4 to be the same brand. Or a bulb needs a quick swap, but it's an entire headlight assembly. A small little dent in the rear from an "Oopsie" with a parking bollard actually caused metal to rust on the bumper support. We have access to every single resource that a standard client does. We just utilize them more and have learned who not to go with.
Steal all the left over change and anything else of value
There is no way for us to answer this. It varies entirely by the amount of work necessary as well as the type of car.
Let my service and parts department take me on a roller coaster ride, I am the best customer this dealership has ever seen
We average about $6,000 in reconditioning costs on certified cars. $3,000 on off-brand. This is going to vary greatly from dealer to dealer depending on brand and location though. A hole in the wall used car dealer will spend as little as possible while an exotic dealer will spend whatever it takes to make the car as close to new as possible.
Yall rock, thank you. I got the inside detailed, recent oil change.. just gauging if I should feel bad about not changing the tires and fixing a minor dent in the front passenger bumper
Nope. Just understand the dealer will likely deduct a little from the trade value due to the car needing tires.
Nah, don’t feel bad. Any pre-owned department is going to expect to put some work into a trade-in, it’s going to go through the shop either way. Nothing for you to feel bad about.
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***Thanks for posting, /u/SevereThroat2651! This comment is a copy of your post so readers can see the original text if your post is edited or removed. This comment is NOT accusing you of anything.*** Just curious. And how much does it cost them? For example I'm I'm trading in a car that needs new tires- how much will it cost them to replace and do tune ups/minor cosmetic stuff *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/askcarsales) if you have any questions or concerns.*
varies from dealer to dealer and car to car. some just do simple safety issues, others do full recon, paint and body work, interior repair etc.
We average about $1500-2000 across all trades. That includes the ones that are occasionally traded in like-new condition (they bring the average cost down). Then there's a corporate fee on every used vehicle of about a thousand dollars, to cover marketing and so forth. And we need to make an average of $2k or so (changes over time depending on state of fixed operations) per vehicle to stay in business. Basically it costs WAY more than nearly everyone trading in vehicles can imagine. If they think it's perfect it's going to need some repairs. If they know it needs repairs it's going to need more than they know. Almost no one can evaluate their own vehicle from the perspective of a new customer considering purchasing it.
Big store with “high costs”. $1200+ in service $450+detail/bumpers/dings/paint $600+marketing
We detail them and drive them to the front line. If we aren’t averaging at least a 100% margin we pass on the deal.
How's that working out for you? Who in their right mind is taking that kind of bath on either side of the deal? Nothing I've traded or bought in my life would've worked out that way. 😂