What is a Car Dealership?

Car dealerships sell new and used vehicles, provide financing and insurance options, and offer service and parts. They also help customers with title and registration paperwork.


The sales manager will ask for your credit score and review specials and incentives to determine your best price. If you’re looking to negotiate, try calling three dealerships to get quotes before visiting one.

They sell new and used vehicles

Car dealerships are a huge part of the auto industry. They sell new and used vehicles, offer financing options, and provide service and car parts. They are also able to take care of the registration paperwork for their customers, saving them time and effort. They are a key source of state and local sales taxes, and have considerable political influence. As a result, they are protected by laws that prohibit manufacturers from side-stepping independent dealers and selling direct to consumers.

Dealership profits come mainly from sales of new and used cars, but they also make money from other services. These include service and insurance. In the case of new vehicles, dealerships may earn a percentage of the manufacturer’s profit as well as a flat fee per vehicle sold. They can also earn additional profits by offering extended warranties and accessories.

The dealer’s sales department is responsible for meeting with prospective customers and demonstrating vehicles. They can also make trade-in offers on customer’s current vehicles. Some dealers also offer leases and financing for their customers. These arrangements can be expensive for dealers, but they are a great way to move vehicles off their lots.

Dealerships make their money by selling cars at a premium over the MSRP. They may also receive incentives and “holdback” from the manufacturers. They can also profit from servicing their own inventory. While this practice is legal, some dealerships have been known to use shady tactics to maximize their profits.

They provide financing

Car dealerships provide financing to make the process of buying a vehicle less complex. They also help with the title and registration paperwork. Dealership profits come from the sale of vehicles and their servicing and repairs. They also make money from warranty and safety recalls. Some dealers are independent, while others are part of large automotive chains.

Dealers have access to lenders who offer products for consumers with bad credit, and they can negotiate rates and terms for you. However, this type of financing can be expensive and come with high fees, including loan origination fees. It is important to shop around and compare the rates and terms of different lenders before choosing a lender.

When shopping for a car, you should ask the dealer for an “out-the-door” price that includes all taxes and fees before talking to them about financing. This will allow you to compare offers on an apples-to-apples basis and catch any hidden charges. You should also ask the dealer to send you a copy of the final finance contract before you sign.

Some dealers require buyers to purchase credit insurance with their financing, which is not required by law. If you decide to purchase credit insurance, check your existing insurance policies to avoid duplicating benefits. Also, consider contacting a broker who can negotiate prices and loan terms on your behalf.

They offer service and parts

Car dealerships offer a range of services that can help you with the car-buying process. They can help you find a vehicle that meets your budget and driving needs, provide financing options, and assist with trade-ins or the sale of your current vehicle. They also typically have a service department where you can take your vehicle for routine maintenance and repairs.

Dealerships generally purchase new and used vehicles from auto manufacturers. They then sell them to consumers at a profit. Most dealers have franchise agreements with specific automobile manufacturers, which can allow them to sell only that brand’s cars and to perform warranty service on those cars. Alternatively, many dealers are brand-agnostic and buy and sell vehicles from various manufacturers.

Many dealerships have professional sales staff that can answer any questions you may have about the pricing and specifications of a particular vehicle. They can also explain the financing and leasing options available to you. They can also handle the transfer of ownership, and handle the registration process for you.

Dealerships can also supply OEM parts for your vehicle to keep it running smoothly. These are a great alternative to local mechanics that have to order the parts from the manufacturer, which can often delay your repair process. In addition, dealerships have the advantage of knowing the best prices for these parts and can help you avoid overpaying for them.

They hire employees

Car dealerships hire employees to work in their sales department and perform other jobs at the store. These workers are typically paid on a commission basis. They are also responsible for maintaining the dealership’s inventory. In addition, many dealerships provide training on the different types of cars they sell and help customers make the right choice. In some cases, the dealer will offer free maintenance for a period of time to encourage customer loyalty.

The most common employee at a car dealership is the salesperson, who is usually paid on commission and may receive bonuses for meeting quotas. Mechanics, receptionists, and lot attendants are also important employees at a dealership. In some cases, a GM is employed to oversee day-to-day operations at the dealership.

One of the biggest challenges facing car dealers is attracting and hiring top talent. Dealerships suffer from high turnover rates and it’s expensive to hire and train new employees. However, it’s possible to increase the number of quality applicants by improving your recruiting processes.

Increasing compensation for employees is an effective strategy that can help you attract and retain top candidates. However, you should be careful to ensure that your compensation packages are competitive with those of other companies. Otherwise, you might lose talented applicants to competing dealerships that are willing to pay them more money.