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Comment by fancyketchup | Hacker News Reader

See, but this just shows that even those who think they are educated car shoppers actually aren't. Dealers never sell cars at zero or negative profit, unless you ignore things like holdback (a rebate on the wholesale price of the car when the car is sold at retail) or factory quota incentives (a "bonus" for dealers who sell a certain number of certain models of cars in a particular month). If you think you got the car for below cost, chances are you forgot to factor in holdback or you just pushed the dealer over the edge for a big fat manufacturer bonus check.

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A lot of irony in your statement. I've been involved in the retail automotive space for 8 years, so I'm not just talking out my ass.

It's a FACT that some dealers will sell new vehicles for below cost. One very simple example is when dealers are trying to hit stair-step incentive goals near the end of the month. This is where a manufacturer will pay out a bonus incentive on EVERY vehicle sold that month, if and only if the dealer hits a certain sales goal. If they are off by 1, they don't get any bonus. If they sell that one additional vehicle, they may get as much as $100,000 in bonuses. Dealers sell cars for below cost all the time.

Yea, neither am I: Grandpa had a Ford dealership until about 5 years ago, his son ran the service department. My uncle on the other side currently sells cars for Honda. I'm well-versed in the car business.

I'm not sure how your comment contradicts mine. If you get a $100,000 bonus for selling a vehicle, the marginal profit on that vehicle is damn near $100,000. Dealerships don't sell cars for a loss. Of course, that doesn't help the consumer unless the consumer wants that particular model, with the particular options that need to be sold to get the bonus.

OK, now you're just using semantics to change your argument.

Regardless, the stair-step incentives is just ONE of many examples I can provide.

The backlash against TrueCar's initial business model showed there were some dealers selling vehicles for below cost, in hopes of making up the difference with add-on sales. Whether these dealers made up the profit difference on the whole does not change the fact that at least some of those customers purchased vehicles at a profit loss to the dealer.

And I quote:

"[...] chances are you will get a zero-profit or even below-cost deal on your new car"

Let's say I'm a car dealer and I need to sell one more car to get my bonus. Let's say that car cost me $20,000. Let's say the bonus is $100,000. Now let's say I give away the car for free. I still have $80,000 more than I started with at the beginning of the comment.

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