AD #1690 – VEBA is Thriving, Cadillac’s Super Cruise Feature, Strong Sales ≠ Big Profits

August 28th, 2015 at 11:31am

Runtime: 7:43

- VEBA is Thriving
- smart fortwo cabrio Revealed
- Cadillac Adds Semi-Autonomous Feature
- Hyundai Shows New i20 Rally Car
- Hopped-Up Peugeot 308 Headed to Frankfurt
- Strong Sales Not Equaling Big Profits

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18 Comments to “AD #1690 – VEBA is Thriving, Cadillac’s Super Cruise Feature, Strong Sales ≠ Big Profits”

  1. WineGeek Says:

    Dealer profitability is flat as far as % of profit I’ll agree, but if you look at dollar profit if your sales are increasing then your overall profit is increasing. I have always believed you pay the bills with $ not %!!

  2. Rob Says:

    The Smart for Two just doesnt seem that smart to me. Lots of vehicles on the market that can haul 4-5 people and have a trunk and get better than the combined 36mpg the smart car gets. Plus they are not a cheap car. I would guess once (if)Elio launches and has a 2 seater that gets 80mpg and is priced under 8k the Smart cars days will be numbered.

  3. Steve W Says:

    #2 Elio only collects money from investors. If they had intentions to manufacture it would have happened by now.

  4. MJB Says:


    I could be wrong, but I think the expectation is that with increased sales volume should also come increased plant efficiency, thus resulting in slightly higher profit margins.

    Of course, with the plant efficiency numbers John gave us a week or so ago, showing low numbers for the domestics, and higher ones for a few of the imports, I can see how margins would remain stagnant.

  5. MJB Says:

    1. & 4.

    My bad. I addressed mfr, profits instead of dealer profits.

  6. pedro fernandez Says:

    Elio Motors should be renamed Flim Flam Motors instead.

  7. Chuck Grenci Says:

    I don’t believe it either; that the Smart is too smart (of a buy). Even with the reported ailing transmission having been fixed, some of the damage has already been done (reputation) and with other ‘better’ choices out there, I don’t see sales taking-off.

    From the ‘clip’ on dealer profits remaining flat, the responder was right-on when he offered: that the reason for flat profits lies with the increased, and increasing, inventory and model introduction into the market. Even with increasing sales there is a finite number of vehicles being sold, and currently, there are so many choices that some of the niches, and also mainstream offerings, just can’t be sustained at healthy levels. This factor has sustained a buyers market (thus keeping higher profit margins elusive in a lot of the segments).

  8. HtG Says:

    Mike the Mole

    What we here need is a mole in the dealership who can lay out how money really moves around the dealer. When you say ‘net margin is 2%’ what is that? Does it include used cars on the lot? Does it take into account ‘dealer reserve,’ the mark up a dealer can take on financing? How do you factor in advertising allowance from the OE? Hold backs? Mark up on insurance products? What’s the return on capital at a dealer? (Buffet knows this, I’ll bet) How much does the average dealer principal have to pony up every year to the state lobbying group to grease up the state legislatures which maintain the franchise monopoly by law? How much of a discount does the dealer get from the OEM for their floor plan compared to the cost of capital in the open market? How many cars do the OEMs force dealers to buy even if they don’t want them? A simple figure like 2% makes me think someone needs to get Mike Jackson drunk.

    These are the questions keeping me awake at night.

  9. Brett Says:

    I recently postulated that Elio Motors in the Moller International of the 21st century. :)

  10. HtG Says:


    So a state by state monopoly is ripe for consolidation by private equity.

    Sounds dandy.

  11. NormV Says:

    Cadillacs almost drive themselves now.

  12. Kit Gerhart Says:

    In America, where smallness is not a huge advantage for parking, the smart is mainly for someone who wants a “city car” that is different from most. I kind of liked the first one, except for the horrid gearbox. That is now fixed, with a decent dual clutch, and even a manual.

    Still, the mpg is pretty bad for such a tiny, and not-too-quick car, The highway mpg is worse than that of several cars, including a base MINI or 1.0 turbo Fiesta, and the city mileage barely better than those cars.

  13. HtG Says:

    If I put on my cynic’s beenie, I’d say Merc would rather sell Smarts and lower its CAFE score, than buy credits from Tesla.

    btw, 2 i3s spotted in the last 24hrs. Starting to look normal

  14. Kit Gerhart Says:

    Yeah, CAFE may be the only reason they sell smart in the U.S. I don’t see i3′s, but then, I’m in Chrysler, and to a lesser extent, GM country.

  15. HtG Says:

    A dark grey i3 fits in very easily around here. The orange Lotus Exige with the supercharger and wing I just saw, not so much. Really though, it’s mostly a mix of everything, save for lifestyle trucks. The new Muranos are perfect, though, to my oddball eye.

  16. C-Tech Says:

    If you listen to the dealers they would have you believe selling and servicing cars is a public service they are performing.

  17. HtG Says:

    I like it when one side of the mouth says they create local jobs, and the other side says they’re looking to consolidate dealerships and back offices. They’ll say this with straight faces too.

    I love it when Autoline gets them to talk on camera.

  18. JT Lambert Says:

    Used car prices shooting UP.
    In order to get the general public into buying a newer car,the powers to be are raising the trade in value of what you have.Its well known that new car dealers make their biggest profits off of the used market.
    If you go into a dealers lot to buy a used car,he doesn’t have a sticker in the window telling you what he has in it.So you better do your home work,and know how to negotiate,When the salesman throws a sweet trade in price for yours ,he’ll suck you in.Come in a cab,and don’t talk trade in at all.Then sell your car on the open market.