What is going on? After 18 years with Honda, I just don't have any answers.
There was a rare day when you wrote a minideal of $500 gross and you wondered how a dealer could take such a small profit on a $20,000 vehicle. Oh, well, at 25 percent commission, you can still feed your family.
Then came the holdback, 2 percent or 3 percent of sticker price, or about $600 given to the dealer to help offset the everyday cost of doing business. Everybody was happy, the dealer, the salesman and the customer. Then comes the sliding of the scale.
All of a sudden it seems that dealers are in a contest to see who can lose the most money. I mean, the dealer isn't even asking for a profit. Maybe the dealer is lucky to recoup half of the loss in F&I.
We're selling Honda here, not distressed merchandise. According to the National Automobile Dealers Association, it takes more than $1,200 just to get the car out the door.
Am I crazy for thinking the factory is kicking back something other than holdback and advertising? Well, I hope they are thinking about doing the same for the salespeople who once made $250 commission and are now making $50.
It will take General Motors, Ford and Chrysler decades to fix the damage they have caused with rebates and 0 percent financing. Maybe the factories need to put a minimum price into play.
Let's not forget: Volume times zero profit still equals zero.