Dealer Profit on New Bikes

[bigjohnsd]

https://www.motorcyclistonline.com/how-to/about-dealer-profit-retail-confidential?con=TrueAnthem&dom=fb&src=SOC&utm_campaign=trueAnthem:+Trending+Content&utm_content=58355e19a167da0007a1370e&utm_medium=trueAnthem&utm_source=facebook

A good explanation

 

[El Toro]

I didn't see the infamous "doc fee."

Some of our dealers say it's not negotiable and they think it's worth $495.

I know the profit margin on new bikes isn't much. But doc fee, freight, and shipping can add a thousand bucks to the negotiated price here.

The best for the dealer seems to be kickbacks, also not mentioned. Dealer incentives may or may not be passed on to the customer.

Being a dealer is not a license to print money. Some make it. Some don't. It's a tough business.

 

[HotRodZilla]

AND, if you finance through the dealer, they make money "on the back end." When I sold cars, I used to get bonus checks all the time for getting people to use our banks. We got a portion of the interest that would be collected over the duration of the loan. I have very little sympathy for dealership owners, especially when they are driving $70k trucks and have MCs and other toys coming out of their ears.

 

[SLK50]

Profit is not a dirty word.

 

[wetwolf]

Back in the day when I worked at shops, profit margin averaged out to about 17% across the line. Somebody had to pay me ofor unloading the thing from a truck, moving it into a shop, uncrating, assembling, starting, test ride, PDI, etc, so there is definitely value there. Doc fee??? IMO, thats the amount of time it takes somebody to do the title paperwork. VERY negotiable.

They make the bigger money off of service, add on parts, extended warranty, and the back door of financing. Harley makes a buttload of $$ off of selling tshirts, but they also have the buying experience set up to get as much chrome and farkles onto a bike that is getting financed as the prospective buyer wants. More back end money.

Gotta love capitalism.

 

[El Toro]

Profit is good. There aren't any poor dealers. They're either well to do, bankrupt, or retired .

They can do better on used bikes than on new. Margins on used stuff can be quite good. Plus the used bike warranty, doc fees, financing fees, etc.

My model dealer is MAX BMW. I think he's got four stores now. Big internet presence. Fascinating live stream restorations.

A guy who can buy 10 or 20 of something gets a better margin than the guy who just bus the minimum.

And then there's the "floor plan." Commit to inventory for 90 days at no payments and hope you can move it before payments become necessary.

Triumph makes the full line dealers carry a huge amount of clothing and accessories.

It looks like Yamaha, Kawasaki, Suzuki, Moto Guzzi, Aprillia, and maybe some others are just happy if you stock any of their stuff. Honda, Triumph, BMW, Ducati, Indian, HD and maybe some others treat the dealer like a corporate subsidiary under total control.

Regarding the "doc fee," some dealers just make it a point that they will not budge. You don't have to use those dealers, but for someone who is bottom line oriented, who cares what buckets they put their receipts into? Personally, I like dealers who just deal in bottom line OTD numbers. I don't want to know about their fees for this or that. That's why I really liked Sport Cycles over in Rockingham, NC. No fees discussed. They obviously have to recover the same costs as other dealers. They just figure out how to put it into the OTD price. Works for me.

 

[scubatech]

When I used to sell Motorcycles here in Colorado the "DOC" fees were registered with DMV and they were the same for everyone. The freight & set up fees varied on European versus Japanese Bikes. Some of the crazy Dirt Bike price wars on Saturdays were so cutthroat that about the only profit a Dealer made was on set up & freight charges. We Americans are so used to not paying retail that it's hurt the value of most brands. Harley and BMW were smart in not doing much in the way of discounting prices and used accessories to give customers a feel good deal because of a better margin. My friend who's still in the business said the margin on Japanese Bikes is down to 9 - 10 %. Not much room to play.

 

[scubatech]

AND, if you finance through the dealer, they make money "on the back end." When I sold cars, I used to get bonus checks all the time for getting people to use our banks. We got a portion of the interest that would be collected over the duration of the loan. I have very little sympathy for dealership owners, especially when they are driving $70k trucks and have MCs and other toys coming out of their ears.

That's a great Avatar!!

 

[bigjohnsd]

El Toro - "A guy who can buy 10 or 20 of something gets a better margin than the guy who just buy the minimum."

In most states, the Franchise laws preclude this sort of discount.

Every dealer pays the same price for inventory.

Ford got sued in multiple states over having a volume purchase discount, They eventually dropped their plan.

I only have personal experience with Honda/Yamaha/Ural/Arctic Cat, they all adhered to the one price policy. Arctic Cat did kind of skirt around the edges on Parts Margin and some other "Incentives" to encourage dealers to buy more major units at order time. We always managed to resist the urge.

 

[El Toro]

It is hard to be in competitive retail. The guys who survive here are straight shooters. You might not think they will negotiate enough, but you know they'll be there with the doors open next spring.

 

[Old Guy]

I didn't pay any doc fees or other fees to the dealer on either of my bikes. Both dealers gave me a price, and I wrote a check -- simple as that. Sales tax, in Arkansas, is paid when we license the vehicle, so I did, of course, have to pay that.

Sometimes it is non-negotiable, but I always tell the sales person that I want that number on the front end. When we go to finance, if the number we're presented doesn't match, I have walked out.

 

[Old Guy]

It is hard to be in competitive retail. The guys who survive here are straight shooters. You might not think they will negotiate enough, but you know they'll be there with the doors open next spring.

Bingo! I've dealt with my Kawasaki dealer for over 20 years and my Yamaha dealer over 30. I won't buy anywhere else. I could sometimes save a few bucks, but considering how long I keep a bike, a few hundred spread over those years isn't that important.

 

[Fred W]

I have a problem with vehicle dealers when they try to add in all sorts of fees to pad their profit margin, for what amounts to their cost of doing business. When an object is advertised for sale, and subsequently negotiated from the asking price, that should all be in good faith from both parties with the understanding that the negotiated price will include profit for the dealer and that they can manage the costs of doing business from whatever total profits they make, like every other business does. People's acceptance of these shady dealings over the years is what enables them to get away with these shenanigans.

 

[Geezer]

I have a problem with vehicle dealers when they try to add in all sorts of fees to pad their profit margin, for what amounts to their cost of doing business. When an object is advertised for sale, and subsequently negotiated from the asking price, that should all be in good faith from both parties with the understanding that the negotiated price will include profit for the dealer and that they can manage the costs of doing business from whatever total profits they make, like every other business does. People's acceptance of these shady dealings over the years is what enables them to get away with these shenanigans.

The problem is that if one dealer quotes a price that includes everything, the next dealer will leave some things out of the quote and appear to be offering a better deal. Once the buyer is sitting at the desk discussing the details of the deal, most end up buying at that dealership rather than going back to the dealer who was more straightforward with the initial offer.

 

[bigjohnsd]

Most vehicle purchases, motorcycles included, are " Impulse Buys" often by folks with less than stellar credit.

The most common refrain heard by the salesman is "Yeah, I'll buy it if you can get me financed" literally a license to steal.

No matter what the purchase is the Salesman always will talk payment instead of price.

Once the salesman knows you are a payment buyer your Goose is Cooked.

 

[Old Guy]

Most vehicle purchases, motorcycles included, are " Impulse Buys" often by folks with less than stellar credit.
The most common refrain heard by the salesman is "Yeah, I'll buy it if you can get me financed" literally a license to steal.

No matter what the purchase is the Salesman always will talk payment instead of price.

Once the salesman knows you are a payment buyer your Goose is Cooked.

I was in the Kawasaki shop not long ago, and a guy was in there trying to get his wife to let him buy a new bike with the argument "But, they're giving me more than I owe on my old one!" What a deal, huh?

 

[Uncle Hud]

bigjohnsd posted: No matter what the purchase is the Salesman always will talk payment instead of price. Once the salesman knows you are a payment buyer your Goose is Cooked.

Funny! (But not really.)

My ex used to say, "You don't have to afford the whole thing, you just have to afford the monthly payments." She conned me into a new car every 18 months.

 

[Old Guy]

bigjohnsd posted: No matter what the purchase is the Salesman always will talk payment instead of price. Once the salesman knows you are a payment buyer your Goose is Cooked.

Funny! (But not really.)

My ex used to say, "You don't have to afford it, you just have to afford the monthly payments." She conned me into a new car every 18 months.

I worked with a lady who bought a new car every year. She'd show me her car and say something like "It was a great deal. My payment only went up (insert amount)." What's bad is that she was a branch manager of our bank; she KNEW how much the financing was costing her

She told me one day that it was actually cheaper since she always had a new car under warranty. I told her I'd bet she paid more in interest in the last five years than I'd paid for repairs in the last 10. She wouldn't take that bet.

 

[BkerChuck]

16 years as a part timer in a Harley Davidson dealership parts department here.

Harley had this thing that when a customer bought a bike the salesman would run the financing and see just how much the customer qualified to borrow and then would tell the rest of the staff what kind of upsell to shoot for in riding gear, accessories, etc. Dealership owners pushed us to try to add no less than $800.00 in add ons for every bike going out the door, new and used.They referred to it a their "Chrome Consultant" plan. I hated it. Even though I was only part time I received commission as an incentive. At first everyone's commission was based on their own performance. Once the owner's kids started working for them they switched to a pooled commission where you got your cut based on hours worked.I was pretty good at my job and knowledgeable so I didn't have much trouble but their kids knew very little about HD or bikes in general so it was only a matter of time until they cried the blues about not getting enough money. Because it was only a part time job and I have some integrity I never pushed hard anyway but it still sucked that suddenly my skills and knowledge were now benefiting those born with a silver spoon instead of my family.

I often talked folks out of spending more money if I knew it wasn't in their best interest. I tried to always learn a little bit about the new customer and feel out their intended use before we'd add anything on. Far too often I would end up pissed off because I could easily see the salesman sold them the wrong bike. Instead of advising them to wait for an incoming bike or trying to locate and trade another dealer they'd push what we had on the floor even if it was nowhere close to what they really were looking for then prod us to cost them more money changing things around to make it work. Early 2000's FXDX model was a prime example. Bike had all black engine cases, fully adjustable front forks with twin 4-piston disc brakes. Piggy back gas filled rear shocks, tachometer, black bars, etc. We'd end up selling them on chromed forward controls, chrome engine pieces, windshield, lower rear shocks and more. For less money they could buy a Low RIder that came that way standard!

Needless to say I walked away from that part of my life a couple years ago. I just hated how it became all about profits and little to nothing about motorcycles and the people riding them.