How New Car Dealers Operate 101

Lucky for you, a new car is just that a new car. The new car dealer costs are the same across the board at each dealership. Unlike a used car, you don’t have to factor in how many miles are on the car, whether it has been in an accident, how old the tires are, or what the Vehicle History Report says. New cars dealer prices are the same at each location.


Today, someone will walk into a dealership and pay $2,000 to $3,000 more than you will pay - for the exact same car. Why? Because they didn’t take the time to do their homework and make a dealer compete for the sale. We've found that the most effective way to get a new car AT OR BELOW INVOICE PRICE is to have new car dealers compete for your business.

How do new car dealers operate?

Dealer Income

There are four primary ways that dealerships make money off of customers.

* New Car Sales

* Trade-In (pre-owned car sales)

* Financing

* Service & Parts

When a customer arrives at a dealership to purchase a new car, this can be a grand slam in terms of income. If they do their job right, they will make a profit on the sale of the New Cars , the sale of Used Cars ; the Financing of your new car; and by servicing your new car in the years to come


Salesperson Income

No surprise, salespeople are paid a percentage of the overall profit of each transaction (after the new car dealer cost is subtracted). As the overall profit increases, the percentage that a salesperson is paid also increases. A car salesperson typically paid commission only. Here is an example of a sales position pay structure:


Profit $1,501+

Salesperson’s % of Profit 30%

Salesperson’s Income $450 +


The primary goal of a salesperson is to have face-to-face game time. They want you to visit the new car delaer to purchase the car and will tell you whatever it takes on the phone (if it means you will meet them face to face).


New car dealers realize that customers tend to make impulse decisions when negotiating face to face. With sites like, Yahoo! Autos and Edmunds.com you can negotiate from home. This is perfect for those that feel pressured to make a decision when they visit a dealership. These sites also give you the chance to compare price quotes from several local dealers. Read Car Quotes to get additional tips on getting dealers to compete for your business.


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