Comment by 15155
2 days ago
> they make no money from cash buys because of that economic perversion.
This is completely false. This might be surprising to learn, but for normal car dealerships (not buy-here, pay-here or used car dealerships) a huge amount of their compensation rides on receiving holdback payments from manufacturers, as well as per-unit bonuses that often have cliffs.
Cash buyers paying invoice price are welcomed (if they aren't too big of a headache) because they push a dealership over or at least closer to the next sales-volume bonus cliff.
Holdback alone is worth more than any realistic origination fee.
What I heard is that they make no profit. I'm sure they'll make revenue, but if they simply sold all cars at the cash price, they will be losing money, especially dealerships. But if you're certain they do make profit, not just revenue, then you sound like you know more about the industry than myself, so I'll concede that point.
The dealership customarily earns 2-3%+ in quarterly holdback payments from the manufacturer. They sell you a $100k car at invoice, later that quarter they're getting a $3000 payment - this is pure profit, the deal was long-since done and they didn't take a loss at time of sale.
Dealerships are also earning miscellaneous per-car bonuses which are also profit, which go up based on overall volume: if they sell 50 cars, they get $200/car, if they sell 100 units this might jump to $500/car - just a random example.
If a car is in high-demand or really uncommon (in reality, not sales-speak, and a customer has no other options), they can afford to not sell a car at invoice - but this is an exceptional circumstance.