12-04-2018, 03:49 AM
The scenario Olyrider described there is 100% correct. The thing many people fail to realize is that sales of new vehicles is not the bread and butter of most dealerships. Rather, it's the profits derived from the parts department, and, especially, the service department. In the age of the internet customers often arrive at the dealership armed with the true invoice cost including dealer hold-back on their new car or motorcycle, so the dealer often doesn't make much on the sale of new vehicles. This is not the case, concerning parts and service. That's where the dealership makes its money, along with the "back end" profits (tacked-on interest-rate points on financed deals, product warranties, GAP insurance, etc.) provided by the F&I (Finance and Insurance) department.
As one of our sales managers likes to describe it to customers during price negotiations, "See the size of this building? See how much larger the service department is? That should tell you all you need to know about where the money is being made in this operation, and it ain't in the sales department."
As one of our sales managers likes to describe it to customers during price negotiations, "See the size of this building? See how much larger the service department is? That should tell you all you need to know about where the money is being made in this operation, and it ain't in the sales department."