Generally , dealerships make the most money sellingused cars . In a nutshell , there is a fate more variation among used cars than among new cars , do it harder for emptor to comparison shop and loose for dealerships to hide profit .
obstinate to democratic feeling , the profit margin on most new cars is quite little . Dealerships typically make more money selling more expensive railroad car , such as SUVs and luxury cars , but eminent - volume models are strategically price to contend with other shuffling and models , as well as with rival dealerships . The Internet has help machine shoppers make gumption of industry terminology like " dealer invoice , " which is what the dealership pay the manufacturer for the railcar . There are also legal philosophy that influence which selective information must be record to the customer — hence the ubiquitous window sticker . The math that fail into new car pricing used to be somewhat closelipped , but now it ’s all out in the open , and a well - educated shopper has a sound sense of how much the dealer stand up to gain from a cut-rate sale and a strong position for negotiating [ source : Popular Mechanics ] .
Used cars , however , are a different ballgame , because they ’re not acquired or sold on an even play field . derogation varies by yr , model and neighborhood , and a franchise is under no responsibility to disclose how much it paid for the elevator car . As such , used car guides , such as Kelley Blue Book and NADA Guides , can put up guidelines for sensible trade - in , sweeping and retail pricing , but they ’re not to be taken as gospel . As long as the auto count like it ’s in proficient precondition and the price seems fairish compared to similar vehicles on the market , the customeris usually none the wiser . dealership incline to get these used cars cheap , too , by picking them up at auction sale or by lowball trade - in offers to client eager to get into fresh cars .
Though there is more profit baked into used elevator car pricing , dealers still make money by selling raw cable car . Many customers take their novel railcar back to dealership for service , a personnel casualty leader while the car is under warrantee but profitable in late years [ source : Henry ] .
The finance section is another chance for the dealer to mark . Once the damage of the car has been negotiate , the person at the finance desk starts his or her own set of sale pitch . Some dealerships urge customers to buyextended warrantiesor add other services to the car leverage . They ’ve also been known to qualify the customer for a loan at one pace and then quote the client a slightly higher rate , pocket the difference [ source : weather ] . It ’s fair for a railway car franchise to make a net profit . But some techniques , though sound , are still shady , and it ’s still up to the customer to be open-eyed .
