Car dealerships are in the business of selling cars and trucks, and they make their money from sales, financing, service, and other fees. In addition, they’re in fierce competition for customers and must be able to offer competitive pricing and service. Car dealers also have overhead costs that include showrooms, lots, staff, and inventory holding.
The biggest profit center of a dealership is the parts and service department, which keeps in stock a large number of items that go towards the repair or maintenance of vehicles. These items can be as small as a new battery or as large as a new engine. The Parts and Service department is often a key focus of a dealership’s advertising and promotional activities.
Many if not most dealers are working hard to attract more customers in this new, more crowded and challenging market than ever before. The competition is stiff, and the dealer’s reputation is important in attracting repeat business. Some dealers even survey their current customers to gauge customer satisfaction.
Car dealers must be able to offer lending institutions something that individual consumers can’t; volume. This is why many car buyers opt to have their loans arranged through the dealership’s finance department. This allows the dealer to charge a higher interest rate and makes the lender money. However, you should always try to get pre-approval from an independent lender before committing to a dealership loan. This way, you’ll have a better idea of what your credit score is and will have a stronger position in negotiations with the dealership. car dealerships