It is not in a dealers best interest to sell vehicles that require less costly services for the life of the car which is a big ongoing revenue for many dealerships.
Sales people do not have that long a perspective. The article does talk about 100-200% turnover every year, which is again horrible practices coming back to bite them, but the sales person is only interested in immediate commission and bonus
“On average, barely 5 per cent of a dealer’s profit comes from new car sales. The majority (about 50 per cent) comes from parts and service, while the remainder comes from finance and insurance (30 per cent) and the balance is from used cars (15 per cent).”
In the US it appears to be very similar.
“So where does the majority of a dealership’s profit come from? It’s not from car sales, at least not directly. It’s from the service and parts department, which accounts for the other 49.6% of the dealership’s gross profits, according to NADA.”
It is not in a dealers best interest to sell vehicles that require less costly services for the life of the car which is a big ongoing revenue for many dealerships.
Sales people do not have that long a perspective. The article does talk about 100-200% turnover every year, which is again horrible practices coming back to bite them, but the sales person is only interested in immediate commission and bonus
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In Australia, Deloitte’s shared this breakdown.
“On average, barely 5 per cent of a dealer’s profit comes from new car sales. The majority (about 50 per cent) comes from parts and service, while the remainder comes from finance and insurance (30 per cent) and the balance is from used cars (15 per cent).”
In the US it appears to be very similar.
“So where does the majority of a dealership’s profit come from? It’s not from car sales, at least not directly. It’s from the service and parts department, which accounts for the other 49.6% of the dealership’s gross profits, according to NADA.”
https://www.edmunds.com/car-buying/where-does-the-car-dealer-make-money.html