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Regarding dealer profit margins... I have no doubt Ford follow the same procedure as most other manufacturers (VAG for example) - i.e. on-target (and generally very high) rebates.
This is why so many dealers can afford to do specials such as 'invoice cost' sales, and as to why so many new vehicles are pre-registered (usually just prior to a registration change) and then sold off at discount prices - to meet targets on which the rebates eclipse the off-invoice profit margins.
It's all to do with volumes. The factories have set capacities for production, all of which are linked in to contracts for the on-time supply of components from various other manufacturers - there's no 'let's just slow the production line down' or 'let's just park the extra one's out the back for now' option, and their business model relies on what is produced being sold at the same rate - so (for example) 500 cars a day manufactured requires 500 cars a day to be sold - and that means heavily incentivised targets which net the dealers big big rewards when met, and keep production running at it's optimum and most cost effective.
The notion that any new car dealership can survive on a gross profit of £500-750 on the sale of a £36K vehicle (and on that basis, whatever the pro-rata equivalent would be on any lesser priced vehicle) is utterly non-sensical, remembering operational costs that involve generally grandiose showrooms, large and expensive stock inventories (including parts), heavily equipped service departments, huge forecourts, and often, further off-site storage, preparation and maintenance facilities.
This fact is borne out further by the $hitty part-exchange prices we get... for example, a used car that forecourts at £20K will most likely have been part-exchanged at £15-17K max. (depending on it's desirability) which will allow the dealer to incentivise (discount) the vehicle to a buyer but still allow them to retain a margin of £2-3K... so if the margin on a new £36K car is £500-750, and the margin on a used £20K car is £2-3K... why the hell would anyone want to operate a new car dealership, especially with all the franchise rules, regulations and restrictions that major manufacturers impose!
As per [MENTION=21204]kapiteinlangzaam[/MENTION]'s post, the volume production costs of vehicles (alike many other supposed high ticket items) are far lower than most people would believe, and the higher the volume the lower the cost.
So when a car dealer (violins playing gently in background) tells you they only make £??? on a vehicle, and even shows you the manufacturers invoice, quickly take a deep breath and enjoy the fresh air... because it's very soon to start smelling of bull$hit.
This is why so many dealers can afford to do specials such as 'invoice cost' sales, and as to why so many new vehicles are pre-registered (usually just prior to a registration change) and then sold off at discount prices - to meet targets on which the rebates eclipse the off-invoice profit margins.
It's all to do with volumes. The factories have set capacities for production, all of which are linked in to contracts for the on-time supply of components from various other manufacturers - there's no 'let's just slow the production line down' or 'let's just park the extra one's out the back for now' option, and their business model relies on what is produced being sold at the same rate - so (for example) 500 cars a day manufactured requires 500 cars a day to be sold - and that means heavily incentivised targets which net the dealers big big rewards when met, and keep production running at it's optimum and most cost effective.
The notion that any new car dealership can survive on a gross profit of £500-750 on the sale of a £36K vehicle (and on that basis, whatever the pro-rata equivalent would be on any lesser priced vehicle) is utterly non-sensical, remembering operational costs that involve generally grandiose showrooms, large and expensive stock inventories (including parts), heavily equipped service departments, huge forecourts, and often, further off-site storage, preparation and maintenance facilities.
This fact is borne out further by the $hitty part-exchange prices we get... for example, a used car that forecourts at £20K will most likely have been part-exchanged at £15-17K max. (depending on it's desirability) which will allow the dealer to incentivise (discount) the vehicle to a buyer but still allow them to retain a margin of £2-3K... so if the margin on a new £36K car is £500-750, and the margin on a used £20K car is £2-3K... why the hell would anyone want to operate a new car dealership, especially with all the franchise rules, regulations and restrictions that major manufacturers impose!
As per [MENTION=21204]kapiteinlangzaam[/MENTION]'s post, the volume production costs of vehicles (alike many other supposed high ticket items) are far lower than most people would believe, and the higher the volume the lower the cost.
So when a car dealer (violins playing gently in background) tells you they only make £??? on a vehicle, and even shows you the manufacturers invoice, quickly take a deep breath and enjoy the fresh air... because it's very soon to start smelling of bull$hit.
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