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    Dealer Profit on options?

    Does anyone know the spread or markup between the invoice price and MSRP on options? I have heard guesses from 10%-50%. My guess is 20% above invoice, but for a 997 I have no clue. I'm thinking if invoice on an option is $1000 then MSRP is $1200.

    Re: Dealer Profit on options?

    Do you ask the same question at every store you shop? Do you ask American Express the profit they make on each transaction?
    Cut the best deal you can, and allow all to live and eat.

    Re: Dealer Profit on options?

    it's 15% and I am sure of this. But like royal stated, it really is irrelevant. Dealers need to make a profit or we would be doing our own service in the garage. The car business is tough and the availability of inforamtion is tougher. Make your best deal and live with it.

    Re: Dealer Profit on options?

    Quote:
    ROYALPAR1 said:
    Do you ask the same question at every store you shop? Do you ask American Express the profit they make on each transaction?
    Cut the best deal you can, and allow all to live and eat.



    Sorry but I do not agree with your opinion nor tracym. If you don't know the margin then you have no idea of how low they can go and still say that they are making some money. In addition at times a dealer will sell something at cost just to move it at year end.
    The buyer should get the best deal possible and not be concerned with the profit of the seller. If the seller makes no money and goes out of business then less sellers means more profit for those that are left. I should worry about myself and let the free market take care of the rest.

    Re: Dealer Profit on options?

    In the case of Porsche, the free market does take care of itself. If you knew a dealer paid $50K for a 997 would you try to buy it for $500 over invoice? Sure you would but you wont be getting the car. We are not talking about Honda's here. Porsche only makes a certain number of 997 per month. Everyone of them sells. They don't flood the dealers and therefore the prices stay firm and the demand strong.Look on the Porsche website and check out a few dealers inventory of new. Most have only a few cars. This is by design. You can search all you want to find the cars true cost but it's irrelevant. There are more qualified buyers than cars. It is far easier to say no to a pain in the ass customer( I am not pointing that at anyone) and wait for the right customer. If you want the car and can afford it then step up, make your offer. Otherwise buy a lower price car. At the end of the day, whats the difference between $80K and $83.5? Really not much in the scheme of life. If you can't swing the difference you can't afford this type of car. The free market will not get you your $3.5k back. Buy it, drive it, enjoy it.

    Re: Dealer Profit on options?

    Quote:
    tracym said:
    In the case of Porsche, the free market does take care of itself. If you knew a dealer paid $50K for a 997 would you try to buy it for $500 over invoice? Sure you would but you wont be getting the car. We are not talking about Honda's here. Porsche only makes a certain number of 997 per month. Everyone of them sells. They don't flood the dealers and therefore the prices stay firm and the demand strong.Look on the Porsche website and check out a few dealers inventory of new. Most have only a few cars. This is by design. You can search all you want to find the cars true cost but it's irrelevant. There are more qualified buyers than cars. It is far easier to say no to a pain in the ass customer( I am not pointing that at anyone) and wait for the right customer. If you want the car and can afford it then step up, make your offer. Otherwise buy a lower price car. At the end of the day, whats the difference between $80K and $83.5? Really not much in the scheme of life. If you can't swing the difference you can't afford this type of car. The free market will not get you your $3.5k back. Buy it, drive it, enjoy it.



    To put it in 4 words :: Customers set the prices...

    throt...

    Re: Dealer Profit on options?

    Quote:
    throt said:
    Quote:
    tracym said:
    In the case of Porsche, the free market does take care of itself. If you knew a dealer paid $50K for a 997 would you try to buy it for $500 over invoice? Sure you would but you wont be getting the car. We are not talking about Honda's here. Porsche only makes a certain number of 997 per month. Everyone of them sells. They don't flood the dealers and therefore the prices stay firm and the demand strong.Look on the Porsche website and check out a few dealers inventory of new. Most have only a few cars. This is by design. You can search all you want to find the cars true cost but it's irrelevant. There are more qualified buyers than cars. It is far easier to say no to a pain in the ass customer( I am not pointing that at anyone) and wait for the right customer. If you want the car and can afford it then step up, make your offer. Otherwise buy a lower price car. At the end of the day, whats the difference between $80K and $83.5? Really not much in the scheme of life. If you can't swing the difference you can't afford this type of car. The free market will not get you your $3.5k back. Buy it, drive it, enjoy it.



    To put it in 4 words :: Customers set the prices...

    throt...



    I thought it was buyer and seller agree to a price.

    Re: Dealer Profit on options?

    Quote:
    SoCal Alan said:
    Quote:
    throt said:
    Quote:
    tracym said:
    In the case of Porsche, the free market does take care of itself. If you knew a dealer paid $50K for a 997 would you try to buy it for $500 over invoice? Sure you would but you wont be getting the car. We are not talking about Honda's here. Porsche only makes a certain number of 997 per month. Everyone of them sells. They don't flood the dealers and therefore the prices stay firm and the demand strong.Look on the Porsche website and check out a few dealers inventory of new. Most have only a few cars. This is by design. You can search all you want to find the cars true cost but it's irrelevant. There are more qualified buyers than cars. It is far easier to say no to a pain in the ass customer( I am not pointing that at anyone) and wait for the right customer. If you want the car and can afford it then step up, make your offer. Otherwise buy a lower price car. At the end of the day, whats the difference between $80K and $83.5? Really not much in the scheme of life. If you can't swing the difference you can't afford this type of car. The free market will not get you your $3.5k back. Buy it, drive it, enjoy it.



    To put it in 4 words :: Customers set the prices...

    throt...



    I thought it was buyer and seller agree to a price.



    Customers set the prices = Through "DEMAND" ..

    Buyer and seller agree to a price = Yes but theres a bottom due to the "DEMAND" , in other words they know there going to shift the car near the sticker price to the next due if you up and go..

    They hold the cards (due to demand ) so until this changes , forget big discounts..

    throt..

    Re: Dealer Profit on options?

    Quote:
    tracym said:
    At the end of the day, whats the difference between $80K and $83.5? Really not much in the scheme of life. If you can't swing the difference you can't afford this type of car. The free market will not get you your $3.5k back. Buy it, drive it, enjoy it.



    Gotta agree with that.

    Re: Dealer Profit on options?

    Quote:
    greggr107 said:
    Quote:
    tracym said:
    At the end of the day, whats the difference between $80K and $83.5? Really not much in the scheme of life. If you can't swing the difference you can't afford this type of car. The free market will not get you your $3.5k back. Buy it, drive it, enjoy it.



    Gotta agree with that.



    I think you guys are mad! I'd rather have the 3500 bucks in my pocket than the dealers. I didn't get to be able to afford a Porsche by using your logic. I would strongly adivse against either of you going to work on Wall Street.

    Re: Dealer Profit on options?

    Who wouldn't like the money in their pocket? But....Would you rather stand on the curb with $80K in your pocket and watch someone else drive your car and enjoy it for $83K? Not me. My point is not to throw money away, my point is to be realistic. If the only way you will buy the p-car is to screw down the dealer to the point he makes nothing then you are going to be waiting a long time for that car. I would rather get the best deal I can live with and get the car. I own my business. The customers that get the best deal from me are the ones who don't bust my nuts over price. I can't offer good customer support, knowledge staff, service etc. for free. I understand we need to be competitive with our peers but at the same time we need to make money to pay the rent, elec bill etc. I think we all get a little blinded by the facts because these cars are so expensive. Just because the car is $100k does not mean the dealer is making huge profit. In the scheme of things the dealers are making a pretty small margin % wise. They have to make up for it with volume. Porsche is not a volume line however so that make up for it on service, options etc. Trust me, like in most business it's the manufacturer that is making the money, not the dealer.

    Re: Dealer Profit on options?

    you got to pay to play... someone once told me.

    I agree if its 3500 bucks standing between me and my machine... to hell with the 3500.00 that could be my agents rent anyway.

    just drive baby!

    Re: Dealer Profit on options?

    Quote:
    greggr107 said:
    Quote:
    tracym said:
    At the end of the day, whats the difference between $80K and $83.5? Really not much in the scheme of life. If you can't swing the difference you can't afford this type of car. The free market will not get you your $3.5k back. Buy it, drive it, enjoy it.



    Gotta agree with that.



    That was my thinking when I put in my order for a 997S two weeks ago. I wasn't going to let my dream car slip away because it was $2,900 more than I originally wanted to pay. Given my age when I expect to take delivery (58), it may be my only Porsche, so I figured go for it.

    Jim

    Re: Dealer Profit on options?

    I think the point 993 is trying to make is simply that you should go into the negotiations with as much information as you can, and that includes what the dealer invoice is. Only then, can you make a smart decision as to what to offer the dealer. For example, lets say they made 25% profit by selling at MSRP (I know they don't, but humour me). If you didn't know this, you might offer 5% off and think you were getting a great deal, whereas in reality, they might be willing to sell for 15% off. I agree with 993 that $3500 is better in my pocket than in the dealer's. If it's asking too much, they'll simply say no to the offer. Even $100 is better off in my pocket than theirs. But...I wouldn't hold out over a measly few grand if they said no to the offer.

    When I purchased mine, I thought 3% off was a reasonable offer. Through a friend of mine, I found out that I'd be able to get 5% off at another dealer. I found a 3rd dealer that had an inbound car with all the options I wanted, so I made an offer of 5% off and they accepted. If I'd have known how much the dealer made on the car, I probably would have asked for more than 5%, seeing how easy it was to get the 5% discount.

    Re: Dealer Profit on options?

    don't listen to these guys. they paid list and would like to see everyone in their boat. 4-6% is a chunk of change that is better served in your pocket.
    when the 996's were going at 8-10% discount the dealers weren't closing up.
    if and when you get out of the car the numbers will be a lot better with some good up front negotiation.

    Re: Dealer Profit on options?

    A Carrera coupe costs just 20% more to make than a standard model Boxster.

    Thats what Weidiking revealed two years ago in a interview published in the Financial Times.

    Profit? overall its 25% for the company, but that includes a large chunk from financial hedging and consulting services.

    Profit on options? Some are so high, its impossible to calculate, such as programming the PCM when the hardware
    is already installed in the car. $560.00 Leather covered sunvisors? Very funny HUGE profit there! The retail street price of the short shifter kit is only $250.00 from the OE<. Porsche charges $750.00 retail for it. Some mechanical
    parts, such as engines and differentials have 200-25-% markup form the factory to dealer retail price.

    Even the dealers get raped on some of this as the factory skims the most creme of the Porsche options profit matrix.
    Dealer markup on options is probably 20 percent.

    Let us hope Porsche doesnt look at the oil companies as the next profit model goal to achieve.

    Re: Dealer Profit on options?

    My 2 cents. I'm all for getting the best info on a vehicle first, beng "armed" if you will, and feeling you made the best deal you could. I also think that (bought into the hype?) if you're going to get a Porsche and plunk down 100,000 large that some of one's thinking and expectations need to be modified. For example, I could buy several Japanese brands of cars that would give me better gas mileage on cheaper octane, probably give me less trouble, I could buy for maybe $500 over invoice, etc., but what's the point. Been there, done that. It's time for my 2nd Porsche after 45 years and it's just going to cost me to "play" like I want to play.
    This wasn't intended to offend anyone by the way and I hope it didn't.

    Re: Dealer Profit on options?

    As I posted earlier, the only people making real money on these cars is the mfg. If you haven't heard Porsche stock is through the roof in the last few years with record profits in the billions. The dealer on the other hand is not in the same boat.

    I don't think anyone is saying that go pay list or that 4-6% off is too much to ask for. I would actually think 5% off is the minimum to call it a good deal. From reading the board it appears that many have recieved 5+% off. Tell me this, how many guys were able to negotiate 8% or 10% off? I have not heard anyone say that they recieved 10% off a 997. That appears to be over the threshold the dealer is willing to give a car away for. With so many buyers and so few cars why would they. If you as a dealer know that you are only getting 10 cars over the next few months why discount? I am sure you take care of your repeat clients but guys walking in asking for 8-10% off.....Are guys walking out of the dealer empty handed.

    Re: Dealer Profit on options?

    Quote:
    tracym said:
    it's 15% and I am sure of this. But like royal stated, it really is irrelevant. Dealers need to make a profit or we would be doing our own service in the garage. The car business is tough and the availability of inforamtion is tougher. Make your best deal and live with it.



    LOL... spoken like a true Porsche salesman.

    Re: Dealer Profit on options?

    Your kidding right? I am not in the car business if that's what you are getting at.

    Re: Dealer Profit on options?

    Here are some hypothetical numbers - which are not too far removed from reality - regarding dealer profits. Dealer profit margins on a low-sales volume car are high. According to the Kelley Blue Book, a 997 or 997S, without options, has roughly a $10,000 gross margin between MSRP and dealer cost, the Boxster S has a gross margin of about $6,600, and the Cayenne S (the normally aspirated V8) has a gross margin of about $7,000.

    If a Porsche - Audi dealer has $3,500,000 in equity in his dealership (above the average for all new car dealers in the country of $2.6 million in 2004) and if he earns above the average net return on equity - say 35% instead of the 24% earned by the average U.S. dealer in 2004, then he nets about $1.225 million.

    Sales of new Audis, used cars, and profits from the financing and service departments would probably account for a large part of the total profit - say (and here's a scientific wild-a** guess on my part) roughly 2/3 rd's, or $820,000. That leaves my "guesstimate" net profit of roughly $404,000 on the sale of new Porsche's, some of which are 911's, some Boxsters, and some Cayennes. If a dealer sells 10 of these per month (3 911's, 5 Boxsters, and 2 Cayenne's), then he makes an average net profit of about $3,400 per car. He probably makes more on the 911's and less on the Boxster's and Cayenne's.

    As far as getting a handle on how much the factory is making, that is a bit tougher, as Porsche does not split out its profits by model line or give enough data to make a quick estimate. When they issue their annual report for the 2005 model year (which ended on July 31, I think, but which has yet to be posted to their web site), I'll take a stab at those numbers and try to come up with something useful for the group.

    Jim

    Re: Dealer Profit on options?

    Getting back to the original question 993 asked:

    It does not appear that Porsche openly discloses it's "dealer invoice" costs for options. There's about $10,000 spread on the car itself, but the options are a mystery. My best advice is shoot for a 5-6% discount off MSRP, and move forward happily from there.

    This shouldn't be a debate over free-market economics..., and besides, I've never met a dealership owner (and I know my share of them) who didn't live like royalty.... They do just fine, and make a pile of their dough in the service department and on the trade-ins and used cars.. If their employees starve or the dealership folds, it's because of the owner, not the customers...

    Re: Dealer Profit on options?

    I have been thinking about the possibility of buying a 2006 Cayenne S. Here is what I discovered. The MSRP for the vehicle is $57,200 with an invoice cost of $49,904. The MSPR for the options I wanted was $6370 with an invoice cost of $5417. So in this case it appears the dealer makes about 13% on the vehicle and 15% on the options.

    Phil

     
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