I heard on the news about a very old and well established new car dealership in San Francisco that was going to stop selling new cars.
Yes you read that correctly. They are going to stop selling new cars.
See, the dealership wasn’t going to close their doors due to a lack of business. Nope. Instead, they were going to stay open and ONLY sell used cars.
So why would a big flashy new car dealership resort to selling ONLY used cars?
Because the profits have always been made when selling used cars! Its true. New car dealers make very little money on new cars and that is why they so aggressively push new car buyers to buy things like expensive extended car warranties, fancy aftermarket options bolted on by a third party (like a super duper “sports” package or whatever), rustproofing, new car paint sealant, fabric protection, extra points stuffed into the financing, bogus fee’s, etc.
They also make their money when you come in year after year to service and repair your car using their ridiculously over-priced auto repair services.
And that is also why new car dealerships just LOVE used car trade ins. They consider trade-ins to be like taking candy from a baby. What?! You mean there are actually people that will give their old car away for a fraction of what its worth instead of spending a few hours cleaning it up and selling it themselves? Yes, crazy but true…and it happens everyday!
I just did a Google search using the term: car dealers stop selling new cars and came up with a few articles about other new car dealerships that have stopped selling new cars and are now selling only used cars.
Remember: Good economy or sucking economy – the profits are in used cars.
Please leave your comments below.
Steve, could you possibly post an article sometime in the future regarding title fraud or the unethical practice of “washing” a title. thanks much.
Good info. thanks again for all the data. Very helpful. !!! Henry
Hey Mike,
Sure I can do that and thanks for the suggestion for a new post. Anyone else want to chime in with suggestions then just leave a comment here too.
Thanks.
Steve
Great viewpoint Steve,
I’ve seen this here in Arizona too. They’re still WAY overpriced though so there’s a lot of opportunity to undercut the dealers. They still have to pay for those big flashy showrooms, huge employee base and all the other overhead that goes along with a big dealership.
I’m thinking of picking up a struggling all around mechanic shop too, adding another stream of income. I’m thinking of offering free or discounted labor to everyone who buys a car from me for a year, or free oil changes or something to help build the relationship and a clientele base.
What do you think?
Phil
Hey Phil,
Thats right! There will ALWAYS be room to sell used cars cheaper than anyone with a car lot just because of the fixed overhead they are always having to deal with of course.
I think your idea of offering free or discounted labor for a period of time to every buyer is an excellent idea! Yeah, anything you can do to set yourself apart from the rest will work. I hope you will keep us posted with your progress.
Steve
http://www.Buy-And-Sell-Cars-For-Profit.com
Interesting, why aren’t the manufacturers offering more incentives to the new car dealers? In today’s times, the new car’s are not as appealing so the manufacturers need to step up their game.
Hi LaRita!
The car manufacturers are hanging on by the skin of their teeth right now and actually are offering all kinds of incentives. If you’re into buying a new car now and have good credit (or cash) and decent negotiation skills…AND…don’t fall for any of the B.S. in the finance department, then you can get a killer deal on a new car right now. I’m pretty sure that the “stimulus plan” is supposed to blow billions into the manufacturers so expect to see even more incentives soon too.
Even with incentives, that still doesn’t change the fact that new car dealerships make higher profits from the sale of their used cars.
Steve
I’ve seen this same thing take place in my own home town where there have been several new car dealers that now only sell used cars.
Excellent job.
In new car dealing car dealers had to get all the registration and warranty work to be done fully new. This might be an issue so they are now selling old ones.