Insurance Agent Forum

[Macdaddy]

Originally Posted by Newby

Yes, they have always had holdback since at least the mid 70's. The salespeople usually wouldn't know it existed. Even the sales managers if they know about it are not to figure it into their dealings.

The idea behind holdback is to cover the operating expenses of a dealership. It basically keeps real stupid dealers from operating on too low of a profit margin. There are no commissions paid out on it.

Hmmm, looks like the dealership I worked at lied to me....imagine that. I primarily sold used cars anyway and made more money than all but one or two new car salespeople.

[healthagent]

I made all of my money both at Pontiac/GMC and BMW selling used. We sold both new/used and selling used is where all the money's at.

[Newby]

Originally Posted by healthagent

I made all of my money both at Pontiac/GMC and BMW selling used. We sold both new/used and selling used is where all the money's at.

The great thing about used compared to new is they can't just go elsewhere and buy the exact same car. No two used cars are exactly alike.

With new cars they can shop you to death on the exact same product.

Used is MUCH more profitable. In fact at the Honda dealership we sometimes talked about the whole Honda franchise was just to add credability to our extremely profitable used motorcycle business.

[healthagent]

Also the best thing is they don't know what the dealership paid. Most of our used cars were trades that we stole or bought from our wholesalers.

Trade-in value might have been $10,000 and we got it for $7,000 - then retail is $14,000. The customer does all their research on kbb.com and thinks we're in it for $10,000, wants it knocked down to $12,000. We still make $5,000 and at 25% that's a $1,250 commish.

As long as cars hold their loan value you're ok - like Beemers. We had some used Beemers that held their value so well that we made $10K on the front.
The problem with selling used cars is making sure they book out. All that means is the bank is only gonna loan a percentage of what the car is worth based on credit. You can try to sell a used car for $10,000 but if it's only worth $8,000 and the client has iffy credit they need a large down payment. Selling used is also a nightmare if someone buried in their trade.