How Car Dealers Make Money

Car dealerships are a staple in Rock Hill communities, providing a variety of services and vehicles to a wide range of customers. But how exactly do they make money? This article will look at the various ways that car dealerships generate income.

Selling Cars

The most obvious way that car dealers make money is by selling cars. Car dealerships typically buy cars from the manufacturer at a wholesale price and then add a markup when they sell them to customers. The markup is typically between 10-30%, depending on the vehicle and the dealership. This is usually the primary source of income for car dealerships.

Financing

Another way that car dealerships make money is through financing. Car dealerships typically offer financing to customers who are looking to purchase a car. They will work with lenders to provide customers with loans and then charge a fee for their services. This fee can range from 1-5% of the loan amount, depending on the dealership and the terms of the loan.

Service and Parts

Car dealerships also make money from service and parts sales. Car dealerships typically have service centers where customers can bring their cars for maintenance and repairs. The service centers charge for labor and parts, and the dealership makes a profit from these sales.

Other Revenue

Car dealerships also generate income from other sources such as detailing services, used car sales, and the sale of accessories. These sources tend to be less significant than the primary sources of income, but they still contribute to the dealership’s bottom line.

Overall, car dealerships make money by selling cars, providing financing, selling service and parts, and generating income from other sources. By understanding how car dealerships make money, customers can make more informed decisions when shopping for a car.