Struggles of Car Dealerships in Selling Cars
Car dealers are losing money as they struggle to sell cars, owing more on the vehicles than they can sell them for. This forces them to send cars to auction at a loss to make payments and stay in business. Dealerships can lose money at auctions by failing to minimize costs and increase profits.
Factors Affecting Dealership Profitability
Selling cars at auctions can cause dealerships to lose money. For example, a car sitting unsold for a long time may get sent to auction, where the dealership loses money. As cars lose value quickly, dealers try to get customers to put more money down upfront. This lets dealers take the down payment to lower the amount needing financed.
Financial Considerations for Car Dealers
Marking up interest rates on loans is not illegal. Dealers may offer different prices depending if financing is through them. Bringing a pre-approved loan can aid negotiations. Leased vehicles also profit dealers via add-on sales. But leases have downsides like mileage penalties.