[tzaman]

True story (mine): I knew a car dealer that made it very clear to me that if I buy the new car from him (and leave the old one there for a lower price) he'll give me significant discount. I said to myself "can't hurt to try" and went this route. The next day after owning the car (which I still own) the new owner of my old car called to ask what's the realistic condition. Turns out the dealer sold him the car for about $1500 more than I got from him, so I can only imagine he made the same thing with my new car, earning him $3000 for less than two hours of papirology.

I don't mind people making money, but for $10 - %15k cars it's an absolute steal.

[lysol]

This is normal. The dealer makes very little from a new car. They have to recoup that from trade-ins and selling used cars, which have a higher margin. New cars don't offer a lot of wiggle room because the invoice price for them is set, and they already sell them for little profit.

[btilly]

The dealer makes more than that from the new car. In addition to the invoice price (which is significantly higher than the dealer price) they also make money from add-ons, extended warranties, and the loan terms.

This doesn't stop them from making top dollar on everything else that they can though.

[ssimpson]

And some manufactures have "holdback" which means the dealer can get a percentage back if the car sells within 90 days. For VW it is 2% off MSRP.

http://www.edmunds.com/car-buying/dealer-holdback/

[pc86]

And the invoice price is always more than they pay for the vehicle anyway. It's not uncommon to see new vehicles advertised at several hundred below invoice (most I've seen is -$300 or so).

[bryanlarsen]

Not to mention the juicy profits they make from their service department.