21 dealer terms
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Relate! Put Radio Terms Aside… Talk In Terms Dealers Know and Use. 21 Dealer Terms. Dealer Terms. Finance and Insurance Profit in finance Profit in loan payment-interruption insurance Extended warranties Accessories Floor mats Undercoating Rust proofing - PowerPoint PPT PresentationTRANSCRIPT
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21 Dealer Terms
Relate! Put Radio Terms Aside… Talk In Terms Dealers Know and Use
Dealer Terms
![Page 2: 21 Dealer Terms](https://reader034.vdocuments.us/reader034/viewer/2022042822/56815e1f550346895dcc7bdf/html5/thumbnails/2.jpg)
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F & I• Finance and Insurance• Profit in finance• Profit in loan payment-
interruption insurance• Extended warranties• Accessories
– Floor mats– Undercoating– Rust proofing
• As much or more profit for dealers as vehicle sales
Dealer Terms
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Ups• Customers who walk-in• Have not been in before
Dealer Terms
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MSRP• Manufacturer Suggested
Retail Price• Sticker
Invoice
• Price to the dealer• “We’re selling at invoice!”
Dealer Terms
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Holdback• Generally about 3% of
invoice• Sometimes sliding rate as
incentive based on models, quotas…
Dealer Terms
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Dealer Incentives• Often around ½% of
invoice• Sometimes flat amount• For moving a model,
quotas, no HOCs…• Listed weekly in
Automotive News
Dealer Terms
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HOCs
• Home Office Complaints
Dealer Terms
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CSI• Customer Satisfaction Index• Developed by J.D. Power &
Associates• Factories push it• High CSI looks good for Brands
in their advertising• Pressures dealers to hire more
people• Factories use it
– Tie incentives to it– Tie allocation to it– Tie special ads to it (“Your 5
Star…”)• Turned into a meaningless
joke?
Dealer Terms
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Back end (of the store)
• Service• Parts• Body shop
Back end (of the deal)
• F&I• Pack
Dealer Terms
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Pack or Packing• Or “packing the deal”• Additional costs added
onto an invoice• $400 - $600 • Covers cost of detailing,
gasoline, fluid top-offs…• Includes additional profit
for the dealer• Sales commissions
exclude packDealer Terms
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Absorption• Percentage of total
expenses covered by backend profits
• 100% is the ultimate goal• 70% is a realistic goal• Variable based on front
end sales
Dealer Terms
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Variable Gross• Front-end expenses• Unlike backend fixed
rates, front end expenses likely vary
• Includes sales commission, delivery expense, floorplan interest, and advertising
Dealer Terms
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Floorplan• The loan to the dealer to
pay for the inventory• Factories get paid when
the dealer takes possession of the vehicle
• Banks usually lend at a favorable rate
• Floorplan interest is interest paid the loan-holder upon the sale of the vehicle
Dealer Terms
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Inventory• New vehicle goal is about
60 days• Used goal is about 30-45
days
Dealer Terms
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TO house• Turn-over house
Dealer Terms
The Tower
• Sometimes a raised area for the sales managers in the showroom
• Sometimes figure of speech to refer to sales management
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Dealer Terms
RDR
• Retail Delivery Registration• Management Information
System (MIS) at Mercedes• Daily Operating Control (DOC) at
Dodge
Turn and Earn
• The more cars a dealer sells, the more he earns in allocation
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Gross and Net• Dealers use “Gross” for
Gross Profit – profit on a vehicle before sales commission and delivery expenses are paid
• “Net” is for Net Profit – profit on a vehicle after sales commission
• “Net Profit” usually refers to total dealership profit after all expenses are paid
Dealer Terms
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Upside Down• Customer owes more on a
trade-in than it is worth
Dealer Terms