Having spent a decade selling new cars...I can tell you, no Dealership I worked for ever sold Demo's for less than what the base car cost the Dealer.
There were incentives to the sales people to sell Demo's of course, or the "90 day" beige model at the back of the lot. To pay incentives there has to be profit.
There are not huge margins in new cars...quite slim actually. Not much different to white goods really...the retailers have discounted as much as they can already.
At one stage I was selling Fords to fleet owners...the margin the Dealership kept was usually about $20.00 per car back then...would probably equate to about $100.00 now.
Though the factory would pay additional incentives on volume, by selling dozens of them. There is also what they call "Dealer Holdback"...additional money the Dealer could be paid later by the distributor. This was what kept many dealers alive...without that assistance the doors may as well close.
Usually "Demo's" are loaded with extras that have a profit margin from tow bars to window tints and so on. The "Demo" will usually be discounted by the profits in the extras...and some of the margin to compare the "discounted Demo" to same car at full list price...but still leaving a small margin on base car cost.
The Salesman has to be paid too...most buyers forget that little technicality...if you give away the whole margin where is the Salesman's commission going to come from?
Would you spend all day trying to sell a product against strong opposition, then when you do get a buyer after you have spent hours and hours on the phone as well as talking to the floor traffic...then you finally get a sale but there is no profit so you don't get paid...why bother...far easier to just call out "Next".
If you have a half decent trade you have a better chance of snaring a "deal" as the Dealer may take a "punt" on the trade in price...pay a bit more than he should to move the "Demo"...especially if a new model is coming or the k's are getting a bit high. Then they pull back a bit on the sale of the trade by reducing the margin slightly...
I don't buy new cars anymore...after years and years of watching my new cars depreciate at around $1,000.00 per month, I just can't see the point in it.
