21 Dealer Terms

1. Relate! Put Radio Terms Aside… Talk In Terms Dealers Know and Use 21 Dealer Terms Dealer Terms

2. 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 F & I Dealer Terms

3. Customers who walk-in Have not been in before Ups Dealer Terms

4. Manufacturer Suggested Retail Price Sticker MSRP Invoice • Price to the dealer • “We’re selling at invoice!” Dealer Terms

5. Generally about 3% of invoice Sometimes sliding rate as incentive based on models, quotas… Holdback Dealer Terms

6. Often around ½% of invoice Sometimes flat amount For moving a model, quotas, no HOCs… Listed weekly in Automotive News Dealer Incentives Dealer Terms

9. HOCs • Home Office Complaints Dealer Terms

10. 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? CSI Dealer Terms

11. Service Parts Body shop Back end (of the store) Back end (of the deal) • F&I • Pack Dealer Terms

12. 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 pack Pack or Packing Dealer Terms

13. Percentage of total expenses covered by backend profits 100% is the ultimate goal 70% is a realistic goal Variable based on front end sales Absorption Dealer Terms

14. Front-end expenses Unlike backend fixed rates, front end expenses likely vary Includes sales commission, delivery expense, floorplan interest, and advertising Variable Gross Dealer Terms

15. 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 Floorplan Dealer Terms

16. New vehicle goal is about 60 days Used goal is about 30-45 days Inventory Dealer Terms

17. Turn-over house TO house The Tower • Sometimes a raised area for the sales managers in the showroom • Sometimes figure of speech to refer to sales management Dealer Terms

18. 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 Dealer Terms

19. 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 Gross and Net Dealer Terms

20. Customer owes more on a trade-in than it is worth Upside Down Dealer Terms