Car Dealership Profit Sources
Car dealerships make money in several ways:
- Selling Vehicles: New and used vehicles contribute significantly to profit margins.
- Additional Products: Offering aftermarket products like extended warranties and maintenance plans.
- Financing: Providing financing options to customers, earning money through interest.
- Service and Parts: The most profitable department for dealerships.
Profits Breakdown
- New Vehicle Sales: Account for 58% of total sales but only 26% of gross profits.
- Used Vehicles: Average gross profit is $2,337.
- Finance and Insurance: Generate the highest profits, about 37% of gross profits.
- Service and Parts: The real money makers for car dealerships.
Increasing Profitability
Five strategies for making the dealership more profitable:
- Recruit Top Talent
- Strengthen Online Presence