'Not a great business model'
The writer has worked in both new- and used-vehicle sales.
To the Editor:
This is in response to Keith Crain's Oct. 1 column, "The no-dicker sticker is back."
Most dealers don't realize they could run a major public corporation with the skills required to run an auto dealership profitably.
But as someone who generated some high per-vehicle gross profit margins and volumes in my day, I am shocked at the decrease in margins for new vehicles.
The Internet makes it difficult in many cases to make gross on new vehicles and to "steal" the trade any longer.
And why should dealers be put in a position where they must "steal" or undervalue a trade-in just to make money selling their core product?
It's not a great business model. It makes for a lot of unhappy customers.
The franchise system will not disappear any time soon, but the profit options on new vehicles are only going to get slimmer if it's up to the factories.
Also, a host of proposed and pending state and federal loan regulations will soon crimp the aftersales market, particularly if the new burst of lopsided subprime lending leads to big write-offs and losses for banks that have received federal funds.