The public often makes the mistake of assuming car dealers make their money on the sale of a new car. It makes sense; they’re big ticket items and it’s easy to assume that someone is profiting when you pay a few tens of thousands of dollars. But as you know, selling cars has a very thin profit margin, and only about 30 percent of a dealership’s gross profits come from the sale of new cars.
Dealerships make most of their money from their two other major departments: Finance & Insurance and Parts & Service. According to Edmunds, the average dealership saw 37 percent of their gross profits come from Finance & Insurance and 44 percent from parts and service.…Continue reading