I was a service manager at a Chevy / Pontiac dealership for about 15 years and there is such a thing as service absorption. In a car dealership the service absorption percentage should be very close to 100%. That is that the “back” room takes care of all the overhead of running the dealership. The back room includes, at least in a car dealership, the body shop, the parts department and the service department. If the back room isn’t making you money you better shut the door.
In the case of my HD dealership, and probably quite a few, their service and parts department are thriving in this economy and grossing lots of money.
I do know the auto industry that there are hold backs from the bottom line on the invoice and there are also advertising incentives per unit that sometimes gets in the dealer’s pocket.
Different models carried different percentage of markup as well. The cheaper cars, Chevy Cavalier (Sportster), carried a 10% to 12% markup and the, Chevy Malibu (Dyna), carried a bit more up to about 15%. The trucks and the full size cars, Touring bikes, carried the highest percentage of around 18%. This is only an educated guess on my part. The parts department on the other hand had about a 30% markup. That’s why car dealers try to pack a bunch of accessories on cars when they prep them. You’ll also see some HD dealers packing the accessories on bikes as well as they can make the install labor and more profit from the accessories themselves.
Speaking of prep, car dealers were all given under the warranty policy 1 to 2 hours of prep time, but nothing for the top off of fluids, windshield washer fluid, trans fluid and motor oil. Back in the mid ‘80s almost every car was shipped about a quart low on motor oil. Hey it’s just 1 quart but when a car company like GM does this across the board on all their vehicles, its millions of quarts of oil saved. The individual dealership would only see it as a quart here and there during the prep, but it will hit them eventually too. I know that in the invoice shown above the dealership was not given any prep allowance so it has to be added on by the dealership.
Another place the dealerships make money is on the used vehicles they sell. Usually it’s harder to price shop used vehicles as very seldom do two vehicles have the same options, mileage, condition, accessories etc. We all know of the low dollars allowed for the trades on our bikes and when we go back to look at our bikes put on the used lots, we see a tremendous markup over our trade allowance. I’ve heard people here complain about certain HD dealerships on how much they marked up the trades, but that is as they sale, “life”…
In our dealership we would quite regularly sell at just a couple hundred over invoice to get a sale away from a neighboring city competitor. This was tough on the dealership if the back room was in a slump, but it happened more than we liked.
So used vehicles, service and parts have to be right up there making money or a dealership can’t pay the bills.
One reason HD dealerships charge what they do, MSRP or more, is because they can…The above car dealership items may have changed since I left the business, but up to that point the process had been the same for 40 years so I doubt much has changed. You’ll even see some Chevy dealerships parts departments looking more like a showroom for Jeg’s or Summit Racing. They have custom wheels on display along with all other sorts of add on’s to increase profitability.
Go into my HD dealership and you see tons of Kuryakyn displays. I’m sure the profit margins are a bit better on them and they have their Custom Chrome catalogs right next to their HD accessory books. These people are not dumb and they know how to market their stuff very well.
As many have said in this thread, trying to get an invoice copy or dealer costing on HD bikes is going to be very tough. I’m sure some insiders in the industry could tell us but I think it’s kind of like a magician not revealing secrets, it’s sacred to them.
I also agree that even if you knew the cost, why would that put you in a better place to deal? At least right now they don’t have to do much to get you to buy. If you’re looking at HD bikes, it’s doubtful you’ll end up with a Honda or Yamaha, you’ll buy the HD bike you want at the best price you can find and no HD dealership will undercut their standard pricing. You may get some of the prep or freight charges lowered, but that again is money right out of their pocket.
I can only speculate on the CVO bikes and think that they have about the same or higher markup than the Touring bikes do. Once a bike has been on the floor for more than probably 60 days, it’s costing the dealership money. So pick a model that’s been on the floor for a period of time and you’ll probably get a better deal.
As was also said, get what you want up front and load the bike with accessories and you can probably work a better discount on the parts than normal 20% off sales. If you're going to get the stuff anyway, this might save a few bucks later.
Sorry for the rambling on and on and this is only my 2¢ worth of useless information.
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Topic: Dealer Invoice (Read 3698 times)