After following a couple of threads on new car orders and discounts being offered by some dealers for L405's before L460 arrives I just wondered what margin main dealers are given by JLR and if it's standard across all dealers or dependent on model and/or order quantities/sales volume.

Even big dealerships must have to shift a lot of stock just to pay for those fancy showrooms  2017 4.4 SDV8 Autobiography
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Rob, I cannot comment on the margin however, a large main dealer in Scotland pays the salespeople £50 commission per sale regardless of value, hence why they seem disinterested in our enquiries.......

Unless it has changed, the margins are small. The proper money is made on bonuses for the quarterly sales volume.

And on aftersales like warranties, tinting, side steps, ceramic coatings roof racks, bike holders, tow bars etc. parts sales is where the money is at, not car sales or servicing.

As pointed out above a margin on each car is very small to non existent, but if targets are met the bonuses go up greatly 👍

Rosco wrote:

Rob, I cannot comment on the margin however, a large main dealer in Scotland pays the salespeople £50 commission per sale regardless of value, hence why they seem disinterested in our enquiries.......

Wow, that's a tough deal  2017 4.4 SDV8 Autobiography
2012 4.4 TDV8 Westminster - Gone, but not forgotten

LT wrote:

Unless it has changed, the margins are small. The proper money is made on bonuses for the quarterly sales volume.

Sorry, but I can't see that making any sense... Bristol JLR has just opened up in Cribbs Causway and it must have cost several million to build! Maybe even tens of millions?

That doesn't come from just workshop profits! The time involved in prepping a new car, PDI, handover, after-sales... It all has to be profitable otherwise what's the point?

Looking at something like JLR at Cribbs, or the new super dealership in Sunbury, I would guess there might be incentives from the brand to the dealer/agent to make something like that as an advertising/marketing tool. I would also consider the service side of things to be a high margin business, and making oneself attractive as a one stop shop will help drive that income.

I don’t know anything about JLR margins, but looking at similar industries I have worked with in the past, a dealer margin could be anywhere from the 8-10% range up to 20+% on some extreme examples. One would expect a FFRR margin to be higher than say a Fiat 500, but then one must compare unit volume per month and the gross profit per unit. It’s entirely possible (although unlikely to my uninformed mind) that JLR margins are the same as lower cost brands in the automotive industry.

Look at the discounts offered to the military, finance contributions, etc, and consider that even after all stacked discounts have been applied, the dealer still makes money on a relatively low unit sales basis from high cost premises. There is an argument that the aftersales income drives the bottom line, but no sensible business sells a high cost low margin item unless it has a large captive audience (Apple)

At a pure and uninformed guess, I would say 15-18% (+/-3% for rounding) gross (ex VAT) That may not be reflected in the pay offered to sales staff, but it’s a realistic figure for a business with a high daily running cost.

Cam-Tech-Craig wrote:

Sorry, but I can't see that making any sense... Bristol JLR has just opened up in Cribbs Causway and it must have cost several million to build! Maybe even tens of millions?

That doesn't come from just workshop profits! The time involved in prepping a new car, PDI, handover, after-sales... It all has to be profitable otherwise what's the point?

Which is owned by Guy Salmon, who across the UK sell large numbers of JLR vehicles. Which is how they make their money on new vehicle sales, not by the profit on an individual new vehicle.

Workshops are very expensive to build and maintain, diagnostic and other brand and generic specialized equipment and technician training etc all add up. They make more on the parts than on the service Labour then quite often lose on warranty work, the diagnostic time is normally very low, like minutes, not hours then the manufacturer just pay the book time to replace the faulty part... a first time fault can take weeks to figure out then if it’s a quick part to replace that’s all you get... next time, yes it’s a quick diagnostic and replacement that not normally just covers cost... NOT profit!

I used to be a master tech so spent most of my time in diagnostic and problem jobs while the other techs did the profit making servicing. Then moved into service reception and management so I know the business model... it works but not high profit.

Even basic services are difficult to make money, the time provided is really tight so you need to be on top of your game to be ‘in the money’... that changes when you find something worn or broken... pads, exhaust, tyres etc then the profit and bonous opportunity jumps. Because a lot of the work is done, like getting the vehicle on the ramp, removing wheels etc etc.

Again parts and after sale options are where the money is, not car sales (new or used) or service, these are just support services for the main cash cows

Circa 2003 to 2005 I worked as a salesman at Honda (yes, I know, not LR)

Used cars yeilded far more profit than new cars did and if I recall, new cars made around £1k for the dealer in profit, hence discounts were not given really. The only discounts came when Honda UK, on a corporate level, incentivised sales with offers etc. 'Paint protection' carried a collosal margin.

Before Honda, I worked at Vauxhall and warrantly claims were a big money-maker for the dealer. Cars could also be sourced to sell via the 'Network Q' program from Vauxhall direct (management or ex-hire cars etc) These cars were delivered by transporter and if any of them had any undeclared cosmetic issues then the dealer would log as many claims as possible - so it was profitable to received damaged cars.

Brand-new unregistered cars frequently arrived damaged...again, a big money-maker for the dealer. Vauxhall, not Honda - Honda were a cut above in all respects. 2012 4.4 TDV8 Westminster - Baltic Blue, Jet interior
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That fits with my estimates. £1k profit on a 2004 Honda would be around 8-10% of the sales price ex VAT for many models.

As for other posts, Vauxhall were famous for making their money on finance, rather than car sales. An old Top Gear episode had Clarkson declaring that your get “5 doors, 5 wheels, and 5% finance”.

The Grand Tour episode on the age of Ford and the death of the Mondeo underlined how those companies made their money selling a reasonable vehicle, simply because the premium offers from German brands were unaffordable to the customers of yesteryear.

I forgot about financing... this is the biggest money spinner for dealers, they much prefer financing a vehicle to cash and will actively discourage cash... a lot of the public think cash is king and going to a dealer and dropping the cash word will bring them a saving... it doesn’t.

Used vehicles are hit and miss with profit, most dealers don’t check over a vehicle, they give it a clean then on the forecourt, if it sells then they check it over, this is done because if there is no sale after a period on a used vehicle they will just move it either in group, in the the trade or auction so don’t want to invest money fixing stuff first. Considering a good percentage of vehicles are changed due to issues this is where dealers get caught.

Don’t forget most buyer wants showroom price for their trade in and then discount on the new price on top... it doesn’t work like that 🤦‍♂️

my wife has just bought a car and the dealer tried to sell her gap insurance, wheel protection insurance, paint protection ,interior protection and a service plan...
me thinks theres a fair old kickback to the dealer on those.. ... - .- -.




Y. O. L. O.
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Gap insurance from dealer is usually about twice what it can be bought from elsewhere. Salesman usually get a kickback of about £40 to add that on, allegedly.

Autoglym paint protection is a £20 kit that they charge £400 to do, similar kickbacks.

When I worked in electronics sale the highest margin was on extended warranties, and our warranty were super cheap, but we till 80% margin ex tax.