A reliable source -friend of mine who is in the car business told me that the dealership he works at recently sold a mid range SUV for $38,000 and the profit that the dealership made is only $160. He has said that car manufacturers are getting really tight about even warranty repairs too. He believes that the manufacturers really want to push franchises out of business and take over sales themselves. Does this fall in line with the Tesla model of sales? is this the future of car sales?

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dtf
1994 E320 Wagon (Died @ 308,669 miles)
1995 E300 Diesel (228,000)
1999 E300 Turbodiesel ( died @ 255,000)
2006 Toyota Tundra SR5 AC 4X4 (115,000 miles) rusted frame - sold to chop shop
2011 Audi A4 Avant (165,000 miles) Seized engine - donated to Salvation Army
BMW 330 xi 6 speed manual (175,034 miles)
2014 E350 4Matic Wagon 128,000 miles
2018 Dodge Ram 21,000 miles

i said awhile back that i think what is going to happen is there will come a day when you can not buy a new car.my thinking came about after i read an article about the car manu's.years ago they fought like h$ll to not give out the trouble codes.they lost.
So now they are saying that "they" own the software in their vehicles.much like microsoft sells you "the right" to use office.but "they" still own the software.
SO what will happen is they will lease you a new car.they still own the car.you can not alter it in any way.when the lease is up they junk the car and lease you a new car.they keep full control of the car.what you do or did say exceed the speed limit,performance chip etc etc.they dock you just like exceeding the milage.
eventually all the older cars will be junked and they will have everyone by the balls.you want to drive!pay the piper!!!
just look at tesla.they download software updates at will pretty much without your knowledge.you don't make a lease payment they just shut the car down and it ain't goin nowhere til you pay up.

Define profit. Many big block buster movies never make a profit on the books, but they do make many people filthy rich.

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1979 Black on Black, 300CD (sold), 1990 Black 300SE, Silver 1989 Volvo 780, 1988 300CE (vanished by the hands of a girlfriend), 1992 300CE (Rescue).

Is this person you know a salesman or entry level manager? Because he's being lied to by the dealership. Dealers pay salesman a commission, on new cars its 33% of the profit and 25% on used. The the profit falls below that number the minimum commission is usually $200.

Dealers decided the salesmen were making too much money and invented something called a pack. This is usually $1000 to $2000 on every car. On the books the car's invoice is that inflated number. This $1000-$2000 goes towards overhead or whatever else. So its very feasible for a $38000 car to only make $160.

This happened to me when I was working at a local Chevrolet/Cadillac/BMW dealer back in 2007. There was $10,000 in profit in the new Escalades that came out that year and pretty close to that on the loaded Tahoes, Suburbans, and Silverados. People were excited about them and paying near full price. They decided a few months in to put on a $2000 pack with these vehicles; we noticed suddenly the "cost" of the vehicle jump that amount.

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1985 500SL Euro w/ AMG bits 130k
1984 300SD Turbodiesel 192k
1980 240D Stick China 188k
2001 CLK55 AMG 101k
2007 S600 Biturbo 149k Overheated Project, IT'S ALIVE!!!

Thanks Tyler - I get it now. The dealership must have to report what they paid for the car to the manufacturer to Feds though right?

So the actual profit from the sale of the car is now included in the invoice - clever.

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dtf
1994 E320 Wagon (Died @ 308,669 miles)
1995 E300 Diesel (228,000)
1999 E300 Turbodiesel ( died @ 255,000)
2006 Toyota Tundra SR5 AC 4X4 (115,000 miles) rusted frame - sold to chop shop
2011 Audi A4 Avant (165,000 miles) Seized engine - donated to Salvation Army
BMW 330 xi 6 speed manual (175,034 miles)
2014 E350 4Matic Wagon 128,000 miles
2018 Dodge Ram 21,000 miles

Explain why you'd title your thread; "The Tesla effect?"
What in the World does this have to do with Tesla?

Tesla owns their sales outlets. They do not want to participate in the dealer franchise system of marketing and selling their cars.

See bolded. He thinks that the other automakers might be following Tesla's lead and going for the direct sales model.

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"Senior Luna, your sense of humor is still loco... but we love it, anyway." -rickymay ____ "Your sense of humor is still loco... " -MBeige ____ "Señor Luna, your sense of humor is quite järjetön" -Delibes

1982 300SD -- 211k, Texas car, tranny issues ____ 1979 240D 4-speed 234k -- turbo and tuned IP, third world taxi hot rod

2 Samuel 12:13: "David said to Nathan, “I have sinned against the Lord.” And Nathan said to David, “The Lord also has put away your sin; you shall not die."

BINGO!

I refuse to buy new or used cars from a dealer in order to avoid that wonderful "dealership experience". I would much rather purchase some used beater from a guy who has maintained it himself for the last 20 years than deal with the halfwits at a dealership.

That all changed the day we placed an order for a Tesla Model 3. I would rather wait 2 years for a Tesla than walk into any new car dealer.

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CENSORED due to not family friendly words

Thing is, Tesla will still need authorized repair centers in may smaller communities. They're not going to own repair shops worldwide.

Example with a different product: a friend of mine is from St. Lucia (the island). Closest Apple (owed) store is an hour's flight away in Port of Spain, Trinidad. Local "authorized" Apple stores are somewhat incompetent, so her mom brought her MBA laptop to NYC for repair when she visited.

If Apple doesn't do it with a computer store, Tesla won't do it worldwide with car dealerships, which have a higher startup cost than a storefront.