Ferrari Mailing List: Re: The clYde testimonial

[Hans E. Hansen (FList]

Sorry, Ken, but that's not even close.  I was a Chevrolet
dealer for nearly 30 years.  Of the profit on a typical sale,
only a small portion is attributable to the dealer reserve
on the note.  In fact, most of  the paper written these days
is low interest "incentive" type of financing.  On those 0%
advertised rates, GMAC would give us a flat $50 for the
contract.  Period.  That's all we made on the paper.  Excepting
that $50, ALL of the profit was made on the sale.

Hans.

On Tue, Feb 2, 2010 at 5:17 PM, Paul K Rentiers <rentiers [at] me.com> wrote:
>
> On Feb 2, 2010, at 11:11 AM, Michael James wrote:
>
>> Well, this is where Clyde and I part company, slightly - I realize that the 
>> Dealership must make a profit if it is to stay in-business.
>
> Not really. Perhaps excepting exotic cars, but in mainstream auto sales they 
> are not selling cars. They are selling paper.
>
> Michael buys a $25,000 Chevy and the helpful sales manager reduces the 
> payments by spreading them over 5 years. At 12%. Michael buys a $33,367 note. 
> The dealer then delivers the car, and flips the note to MegaAcceptance at a 
> discount. Car gone. Profit turned. The delaer makes what he can on the car 
> sale, but really doesn't care about the price too much as long as he doesn't 
> lose money. It's the note he is after.
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