Ferrari Mailing List: Re: The clYde testimonial

[Paul K Rentiers (rentiers]

OK but in the long term scheme of things leeaving aside recent  
insanity woyuld you not say the paper was the profit?  Similarly  
McDonalds is a real estate company. Think about it. K

Sent from my iPhone

On Feb 2, 2010, at 7:26 PM, "Hans E. Hansen" <FList [at] hanshansen.org>  
wrote:

> 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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