How in the world can auto makers still be in business?

JONOV

Twelve Pointer
No. I certainly didn’t miss it. As I said, we waited 7 months for our F150. The reason we waited was no chips.

My question was: how are the manufacturers making it, and why isn’t that situation a bigger story?

Dealer markups aren’t helping the manufacturers. I read up a bit on truck sales volume earlier today. Until very recently, it was way down. It is starting to make a comeback now, but still down quite a bit even compared to last year (when the whole chip thing started)
Think about 360 degrees of costs involved, big picture year over year. It wasn’t unusual for manufacturers (especially the big 3) to put lots of cash on the hood. A friend that bought a GMC pickup in 2019 or early 2020 got $3K in loyalty trade in money alone. Then Probably another $2500 from the manufacturer.

Then whatever the volume bonus is for their dealers, say another $500/car per month if they hit their monthly sales target. I’d assume that’s nonexistent or not nearly as lucrative. So that’s another $50K/month/dealer that the manufacturer isn’t paying.

All told I’d bet there’s about $5K per car the mfg isn’t kicking back to the dealer or customer right now.
 

JONOV

Twelve Pointer
If sales are half of what they used to be, do dealerships now have half the salesmen? If everything is presold, then what do the remaining salesmen do all day? No sense running a tire-kicker down, if you got nothing to sell him.
Salesmen aren’t much of a cost center. In fact the way that many of their comp plans now work it’s cheaper to have 3 sell 10 each than one that sells 30. It’s been a while but IIRC where I worked the first 10 were worth $125 each, it went up, over 22 was something over $300 a car retroactively. They’d pay like $4K commissions if they’re split between 3 salesmen, close to $10K if one salesman did it.
 

Zuk84es

Button Buck
Salesmen aren’t much of a cost center. In fact the way that many of their comp plans now work it’s cheaper to have 3 sell 10 each than one that sells 30. It’s been a while but IIRC where I worked the first 10 were worth $125 each, it went up, over 22 was something over $300 a car retroactively. They’d pay like $4K commissions if they’re split between 3 salesmen, close to $10K if one salesman did it.
Depends.
Isn’t normal pay for car salesman salary + commission?
 

JONOV

Twelve Pointer
Depends.
Isn’t normal pay for car salesman salary + commission?
Salary? Bless your heart. Unless things have changed in the last 10 years (and maybe they have.). Stores either pay a percentage of gross margin or for simple production. IE, they negotiate a deal that grosses $1800 in margin they get $450 with a minimum of $100-150 or so (they call those minis.). Alternatively, the store chooses to focus on volume and not reward for gross margin. Most manufacturers pay the dealership volume bonuses, so it makes sense not to have a salesman hassle over gross margin, the dealership will get a $50-100K bonus if they hit the manufacturers monthly target.

The last store I worked at had a draw of $1,200 a month. That’s a draw against future commissions. Basically they prepaid commission on the first 10 cars.
 

Bailey Boat

Twelve Pointer
What happened to cause a need for new engine at only 165,000 miles?
Nothing "happened" it was just getting to where I didn't trust it for another hunting season. Sept to Feb will see 5 to 8K miles going to where I want to be and shoot birds. I don't want to be dropped on the side of the road and the closest dealership was 200 miles away and I need new head gaskets or lifters and valves...... way too much to stress for me....
 

Zuk84es

Button Buck
Salary? Bless your heart. Unless things have changed in the last 10 years (and maybe they have.). Stores either pay a percentage of gross margin or for simple production. IE, they negotiate a deal that grosses $1800 in margin they get $450 with a minimum of $100-150 or so (they call those minis.). Alternatively, the store chooses to focus on volume and not reward for gross margin. Most manufacturers pay the dealership volume bonuses, so it makes sense not to have a salesman hassle over gross margin, the dealership will get a $50-100K bonus if they hit the manufacturers monthly target.

The last store I worked at had a draw of $1,200 a month. That’s a draw against future commissions. Basically they prepaid commission on the first 10 cars.
 

Zuk84es

Button Buck
Okay, understood. So would you be an employee of the dealership with benefits and such and unable to sell for another dealership at the same time?
 

Firedog

Old Mossy Horns
Contributor
Okay, understood. So would you be an employee of the dealership with benefits and such and unable to sell for another dealership at the same time?
Nobody factors in benefits (Health Ins, retirement plans, stock purchase plans etc.) into salary.... until they are faced with paying for all that themselves..
 

dobber

Old Mossy Horns
One more thing to consider about the assembly plants and the auto makers, each company needs to build a set amount of electric/enviro friendly vehicles to make sure they hit the "magic" number created by the governments, regardless if they sell or not, they must make them.
Then the parts and chips go towards the assembly plants that make the biggest profits per vehicle, example would be that a jeep makes more money than a pacifica, this is why the jeep plants are running and the pacifica plant isn't, and has only ran 1 week since the start of June.
 

Moose

Administrator
Staff member
Contributor
I ordered a new ford pu back in March my dealer told me they were running 10 weeks at the earliest most likely 14 weeks. I was sent my new Vin # less then 2 weeks after I ordered it. Truck was built middle of May and has been completed waiting shipment since then. The latest delivery estimate is week of July 17th. I'm not holding my breath on that date either.
New date ...... Aug 14th....... I'm starting to think it won't be here before my Maine bear hunt
 

dobber

Old Mossy Horns
New date ...... Aug 14th.....
Should ask for the print out of the VIN number and expected delivery date to show that it is in fact the plant and not the dealer messing around. They can provide it easy enough, shows the build status all the way through from BIW to Paint to GA and final, what shift it was built, what time it was put together, if it was repainted or touched up
 

Moose

Administrator
Staff member
Contributor
Hasn't left the factory waiting on chips. Not sure why they consider that "built" but that's what is going on.
 

Buxndiverdux

Old Mossy Horns
I asked my local Chevy dealer how he was holding up. He said everything that comes in is either pre-sold, or sold with 1 or 2 phone calls. He said he needed less of a sales force, and normally paid monthly interest on a 25 to 55 million dollar floor plan. He said he barely pays anything on his floor plan inventory (1.5 million at current inventory) since nothing stays on the lot longer than a month. Not having the inventory has reduced his overhead considerably in a lot of ways. Said the repair, parts and warranty services haven't missed a beat volume wise. Said some parts were taking a while to get, but they trickle in. All in all, he said it was a different way of doing business and more streamlined sales approach since people didn't have much to choose from. Not much haggle room or ability to be picky over options. People just bought what he had on the lot or didn't and someone else did the next day.

Said the Covid shut downs stopped microchip production. It was going to take 3-6+years for the manufacturing industry to even think about catching up on inventory. He said Chevy kept an inventory of all vehicle parts for manufacturing, and reordered when supply got low, like most every business. Said now days, there is no such thing as "in stock" inventory for critical path manufacturing products. It's a worldwide issue for darn near every industry.

It all started with "2 weeks to stop the spread"....
 

timekiller13

Old Mossy Horns
I had my truck at the dealership this morning for a recall. Being inquisitive, I ventured over to a salesman and asked him what I could get, trade in value for my truck. It’s 2015 F350 powerstroke fx4 XL model. No bells and whistles just a plain Jane truck. It’s got 62k miles on it. He said “We will give you 55k trade in right now.” Intrigued I glanced around to see what they had. Thinking maybe an upgrade was in my future.

2022 F350 powerstroke XL 4x4 was $73,500.

2022 Temor package F250 With 7.3 gasser was $94,500.

I’m keeping my truck!!! It’s paid for an only 60k miles.
 

Rescue44

Old Mossy Horns
I had my truck at the dealership this morning for a recall. Being inquisitive, I ventured over to a salesman and asked him what I could get, trade in value for my truck. It’s 2015 F350 powerstroke fx4 XL model. No bells and whistles just a plain Jane truck. It’s got 62k miles on it. He said “We will give you 55k trade in right now.” Intrigued I glanced around to see what they had. Thinking maybe an upgrade was in my future.

2022 F350 powerstroke XL 4x4 was $73,500.

2022 Temor package F250 With 7.3 gasser was $94,500.

I’m keeping my truck!!! It’s paid for an only 60k miles.

If you don't mind, what was the ballpark sticker on your truck when you bought it? Assuming you got it new.
 

SharpShooter

Ten Pointer
Guess who called me? Dealer has my truck. Just getting bedlinner sprayed and final clean up. I guess the 14th was a pretty good date ...... this time. Crazy experience hopefully it's straightforward the next couple of days.
Does it come with all of the paid for options working with "Chips" installed?
 

Hazmt

Four Pointer
Had not the market on trucks increased so much, I would have purchased one by now. Having a side business where a truck could really be helpful,
the price jump just makes no economic sense right now to acquire one. Basically, the side business would only be making enough money to pay for the truck I need to have the side business. That hardly makes sense to me - not putting any money in the bank by paying for the truck, and then on top of that the depreciation on the truck .

In short, it's like I would be working for nothing to show for it. Especially since gas prices and everything has gone up.
Sounds like your side business is farming!
 

Moose

Administrator
Staff member
Contributor
Does it come with all of the paid for options working with "Chips" installed?
I assume so but not sure. I'll pick it up in a couple of days and know for sure. I would hope the dealer would know..... Ford has never said anything about the chips in any of their communications with me. The dealer told me it was the chips that was holding it up.
 

dobber

Old Mossy Horns
All the chips will be installed, the vehicle isn't allowed off the plant property till its completed and built. I have seen the F150 plant with a few thousand trucks waiting chips, as well as a few other facilities
Plant i was at yesterday has just over 2000 vehicles parked literally everywhere waiting on one component or another
 

QBD2

Old Mossy Horns
I just finished a car that I started on before I left for Texas, and I hunted the second week of the south zone for turkey(March)😂 Poor Kia was long since repaired, just waiting on a resonator. Used one and 2 new ones showed up the same week…

Oh, and your insurance policy’s are cutting off rentals at 30 days in most all cases. If someone hits you, no problem. If your policy is paying, you’re SOL if you’re backordered🤷‍♂️
 

SharpShooter

Ten Pointer
I’m currently half expecting my “chips” won be installed ever at the rate GM is going. I’m currently Lin line for the heated seats, ventilated sear, park assist, heated steering wheel chips. I ordered my buyback replacement in October,had to reorder in November(they claimed GM didn’t have enough 5.3 engines to build so I went diese) and it was finished in March And received last of April. My dealership has received the bulletin about ho to do the chip or module installs but hasn’t had the opportunity to do one yet.
 

sky hawk

Old Mossy Horns
Contributor
I’m currently half expecting my “chips” won be installed ever at the rate GM is going. I’m currently Lin line for the heated seats, ventilated sear, park assist, heated steering wheel chips. I ordered my buyback replacement in October,had to reorder in November(they claimed GM didn’t have enough 5.3 engines to build so I went diese) and it was finished in March And received last of April. My dealership has received the bulletin about ho to do the chip or module installs but hasn’t had the opportunity to do one yet.
My wife's car is waiting on the park assist and steering wheel. Thankfully, it came with the seat chips. They originally said we'd have it around June. Who knows.
 
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