Independent dealers closing down?

whiterebel

copacetic wrote: »

I think we all need your logic explaining, not a word of your posts makes any sense.

We have the 2nd cheapest price Factory to dealer, and while VRT is and was high, not the highest in the EU, yet we managed to have the second highest price to consumer in the EU. Some of the discrepancy seems to have been removed with the new CO2 based VRT system.

-Chris-

Why do you think that the factory sold us the cars cheaper than (pretty much) every other territory? So we could make more money than everyone else, or because we'd be uncompetitive without the support?

E92

whiterebel wrote: »

We have the 2nd cheapest price Factory to dealer, and while VRT is and was high, not the highest in the EU, yet we managed to have the second highest price to consumer in the EU. Some of the discrepancy seems to have been removed with the new CO2 based VRT system.

And what exactly has this got to do with dealers? Even if your theory were true, why did most manufacturers pass on any VRT savings in July to the consumer, and some even managed to better the amount they were supposed to be giving off? They hardly did it for the good of their health.

Standing up for dealers for me is akin to defending diesel, but you started off on a rant about dealers and have now suddenly changed track and are criticising dealers for something that the manufacturer does. Even before your rant changed direction and completely avoided the issue, it's hardly the dealers' fault that people were prepared to pay over the odds for a car.

It's called economics in action.

whiterebel

E92 wrote: »

And what exactly has this got to do with dealers? Even if your theory were true, why did most manufacturers pass on any VRT savings in July to the consumer, and some even managed to better the amount they were supposed to be giving off? They hardly did it for the good of their health.

Standing up for dealers for me is akin to defending diesel, but you started off on a rant about dealers and have now suddenly changed track and are criticising dealers for something that the manufacturer does. Even before your rant changed direction and completely avoided the issue, it's hardly the dealers' fault that people were prepared to pay over the odds for a car.

It's called economics in action.

Where did I blame manufacturers? Started off blaming dealers, still blame dealers. And the dealers woudl want to be pretty stupid to not pass on a Government measure to reward people for going green - I think even John Gormley might have reacted to that? After all if it dropped VRT, it doesn't affect their margins, does it?

-Chris-

whiterebel wrote: »

I have no idea where you work, and you really need that logic explaining?.... better that you show your 1.5-2% if its actually your business?

Ok, I'll play along seeing as there's nothing good on TV.

I just googled car dealer profit and found this article where they say...

Sunday Business Post wrote:

Gross profit margins for dealers have fallen to between 3 per cent and 5 per cent. For every new car sold at €25,000, the salesman’s cut is only around €1,000 and €400 after overheads.

Another of the family’s companies, Motor Services Limited, which owns some of Dublin’s best-known dealerships, including Ballsbridge Motors, Park Motors and Grange Motors, made an operating loss in 2005 of €649,000 from a turnover of €217.5 million.

...and those are 2005 figures when times were good!


Here's a 2005 article from the Irish Times giving figures from the last published accounts of the major car importers/dealers. I've given highlights below incase you don't have time to read it:

paraphrased by me from the Irish Times via BusinessPro.ie wrote:

According to James Treacy, managing director at BusinessPro, average published profit margins for car dealers are less than 1 per cent with distributors having margins of over 4 per cent on average.


Distributors:

O'Flaherty Holdings made €45.5 million profit on a turnover of €828 million in 2003 (5.5% profit).
Frank Keane Holdings made €21 million profit on a turnover of €204 million (10.2% profit).
Ford made €4.3 million on a turnover of €275 mil*lion (1.6% profit).
Convest, the main holding company for the Gowan Group, made €15 million profit on turnover of €234 million (6.4% profit).
Glencullen Holdings distributing Renault and including other businesses made €7.2 mil*lion on a turnover of €214 million (3.4% profit).
The Scanveco and DAF Dis*tributors made €844,000 on a turn*over of €101 million (0.84% profit).


Dealers:

Motor Services made a loss of €716,000 on a turnover of €221 million (a loss! :eek:).
Windsor Motors made a profit of €2.5 millon on a turnover of €159 million (1.6% profit).
Johnson & Perrott made a profit of €5.7 million on a turnover at €125 mil*lion (4.5% profit).
Clareview Motors, owned by Irish Car Rentals made €1.3 million on a turnover of €51.5 million (2.5% profit).
JA Boland in Wexford made €1.3 mil*lion on a €27.7 million turnover (4.6% profit).
The Ray O'Brien Group made €3.2 million on €20.4 million turnover 15.6% profit apparantly...).
Carroll & Kinsella in Blackrock, Dublin lost €774,000 (another loss! :eek:).
Esmonde Motors, owned by the Murray Group, lost almost €3.9 million (and more loss! :eek::eek::eek:.

So for the dealers detailed above, that's €13.284 million profit from a turnover of €604.6 million, aka 2.2% profit.
I've had to ignore C&K and Esmonde as I don't know their turnovers. I'm sure their combined losses of €4.67 million would have brought the percentage profit down a bit.

...and incase you're not bored enough yet, here's an article written by TADA that says 1.5% also applies in Canada.





P.S. I'm no accountant, so if I'm calculating any of this wrong or making incorrect assumptions, someone please correct me.

RedorDead

Nice work Chris, think its hard for some people to fathom that dealers margins on new and used car sales go towards the huge bank loans they have on premises and on overheads such as heating, lighting, wages, administration, insurance, advertising etc etc.

When you factor it all against each other theres very little profit left at the end of it all.

paddydriver

"Another of the family’s companies, Motor Services Limited, which owns some of Dublin’s best-known dealerships, including Ballsbridge Motors, Park Motors and Grange Motors, made an operating loss in 2005 of €649,000 from a turnover of €217.5 million"

But you gotta wonder how much the directors paid themselves in that same period. <MODEDIT> unproven allegations removed <EDIT>

whiterebel

As paddydriver alluded to above, you wonder how much was taken in salaries and expenses before profit/loss was declared. In my own business I legitimately declare very low profits once my expenses and wages are taken out (And not on a massive turnover either). It is one of the problems that the highest earners pay little in taxes due to the creativity of their accountants. Still, they would want to be brilliant if those figures are any way near right. Be interesting to see who is on the Irish Rich list that has a stake in a distributor or dealership.....One springs immediately to mind, but I better not mention his names or I might get fired!!!

whiterebel

AudiChris wrote: »

...and incase you're not bored enough yet, here's an article written by TADA that says 1.5% also applies in Canada.


.

I'm not long back from Florida and they are selling brand new Corollas there for $14,000 approx, 0% finance for the first year, and 2-3% after that. I don't know how they do it at those prices. GM are offering "Employee discount" at all their dealers, cutting thousands off the price of a new GM, yet other dealers are advertising $500 off on top of the GM discount.

the other thing is, Ireland seems to be somewhat unique in the garages that are built with all the glass and steel structures. I don't recall in seeing that many of these in France, Germany, Spain or the UK? A Garage owner I spoke to reckons they are forced to do this if they want the franchise. Seems unfair if we are the only country that has that standard.

Darragh29

whiterebel wrote: »

the other thing is, Ireland seems to be somewhat unique in the garages that are built with all the glass and steel structures. I don't recall in seeing that many of these in France, Germany, Spain or the UK? A Garage owner I spoke to reckons they are forced to do this if they want the franchise. Seems unfair if we are the only country that has that standard.

Known elsewhere as all style and no substance...

copacetic

bmw or audi garages in uk or germany tend to be exactly like the newer ones here.

-Chris-

copacetic wrote: »

bmw or audi garages in uk or germany tend to be exactly like the newer ones here.

That's my experience too.


Also, Google images of any UK Audi dealership and you'll see they're the same design as here too.

http://www.audi.co.uk/audi/partner_uk/uk_847/about_us.html - see the building in the background. It's called "hanger style" and would be the same design as the Irish dealers (except on a larger scale).
This has now been replaced by "terminal style" which new dealers will be based on.

The manufacturers have very strict guidelines with regards to the design and construction of the dealership (down to the furniture and desk lamps). If you don't adhere to those you're liable to lose your supply contract.