How Car Dealers Make their Money might surprise you - the profit mostly comes from everything else

Once upon a time there was a mega-dealer in Columbus that sold more cars and made more money than anyone in the county. Then it was the region. Then it was Ohio. Where are they now and who’s #1? Well, apparently it isn’t the guy with the guitar anymore.

The new Ward’s Dealer 500 List is out, listing the top 500 dealers in the nation, and Jeff Mauk is smiling. He’s the guy who owns/runs Jack Maxton Chevrolet in Worthington, Ohio. His dealership hauled in over $122 million last year, putting him at #73 in the nation and the rough numbers from Ward's tell you a lot.

48% of the money came from new vehicle sales and 38% from used vehicle sales. But when you count the iron (that’s dealer talk for the vehicles themselves) 38% of vehicles sold were new and 62% of them were used. It takes a lot more used cars to make a buck apparently.

But over $3 million of gravy was cooked in the F&I office where the sales staff (they call it the business office - it’s where your financing is arranged and set up) sold soft add-on’s like service contracts, GAP insurance, credit life and disability, etc. You can take quite a few extra vacations on three million, folks. They’re called soft add-on’s because they don’t really add any “hard” value to the vehicle itself and a lot of folks doubt that they are worth the high prices most dealers charge. You can read about car dealer slang terms on this web site dictionary here.

But Maxton Chevrolet isn’t really trying apparently because they were #73 on the list and the dealership that was #72, just once notch higher, was The Andira-Winton Chevrolet dealership in San Antonio and their F&I staff processed a lot less sales, nearly a thousand fewer vehicles, but made over TWICE as much money selling those soft add-on’s.

It’s like we said before - selling cars is like selling movie tickets - the real money is at the refreshment stand. And in the car business, the extra profit (made with little real cost of what’s being sold) is in the F&I office. Not coincidentally, that happens to be where a lot car dealer sales fraud occurs too.

Smoking paperwork, packing deals, menu selling and other buzz words that basically mean ripping off the customer. Be careful you don’t become an auto sales fraud victim. You can learn how to buy a used car and not get ripped off by reading this Legal Guide here:

Remember: most car dealerships only has one goal and that’s to get as much of your money as possible. You should also have just one goal: to get the best deal you can without paying anymore than you have to.

Oh, and that guitar playing brother whose dealership used to be #1? They aren’t even on the Ward’s Dealer 500 list now.

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Known nationwide as a leading Lemon Law attorney, Ronald L. Burdge has represented literally thousands of consumers in "lemon" lawsuits and actively co-counsels and coaches other Consumer Law attorneys. From 2005 through 2018, attorney Ronald L. Burdge has been named as the only Lemon Law Ohio Super Lawyer by Law and Politics magazine and Thomson Reuters Corp., Professional Division. Burdge restricts his practice to Lemon Law and Consumer Law cases. The Ohio Super Lawyer results are published annually in the January issue of Cincinnati Magazine. Ronald L. Burdge was named Consumer Law Trial Lawyer of the Year 2004 by the National Association of Consumer Advocates, the nation's largest organization of consumer law private and government attorneys. "Your impact on the auto industry has been magnified many times over because of the trail you blazed for others," stated NACA's Executive Director, Will Ogburn. Burdge has represented thousands of consumers in Ohio, Kentucky and elsewhere since 1978 and is a frequent lecturer to national, state and local Bar Associations and Judicial organizations. Burdge is admitted to Ohio's state and federal courts, Kentucky's state courts, and Indiana's federal courts. Other court admissions are on a "pro hac" temporary, case by cases basis.