Costs

Costs and cost “drivers” – what determines costs?

The average dealership in 2006 employed 53 persons and had an annual payroll of $2,493,000. The payroll for all dealerships was $52.9 billion and represented almost 14 percent of the nation’s total retail trade payroll.

Source: Employment Costs

Dealerships faced higher interest rates and large inventory which led to expensive floor-plan costs.

Directly Quoted
Some major expenses for the average dealership in 2006:
Payroll ………………………..$2,500,000
Advertising……………………$364,000
Rent and equivalent…………..$332,900

Source: Major Expenses

According to 2007 NADA Chairman Dale Willey, dealers have to pay for things such as:

  • Delivery of parts
  • Communications
  • Training
  • Special tools and diagnostic equipment
  • Land, showrooms, service bays, dealer lots, etc.
  • Advertising. Dealers contribute hundreds of millions of dollars each year toward advertising controlled by the manufacturer.

Source: Dealers' Costs


Scion

Research and development costs a lot, but can also mean life or death to a moving industry like automobiles. Scion's parent company Toyota has budget of $28 million each day for R&D.

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