How much of each cars price is advertising?

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our Honda dealers (and Kia) run ads all day long over the radio " Hi Im fred Smith general manager of xyz honda , and have a great deal for you.

what does this add to the car cost? it certainly adds no VALUE
 
There are actually layers of advertising. You heard a local dealer. But "Kia USA" the distributor buys time, too, and sometimes there's a regional group and or middleman.

Sometimes you'll see the advertising as a several-hundred-dollar line item when you buy a car.
 
There's no way to tell and it varies widely. manufacturers do sometimes give dealers an advert allotment, sometimes dealerships have to pay it..
 
Oh, somewhere around 0%.
There is a popular misconception that advertising and promotional expense somehow increase the selling price of a good.
They don't.
Advertising comes out of the manufacturer's or sellers margins and is intended to increase sales enough to offset that expense.
 
I don't know. But I hear and see more car ads on the local TV and radio stations that just about anything else.

Instead of Uncle Sam bailing out the car manufacturers, I think it should have been the radio and TV stations
smile.gif
 
Originally Posted By: eljefino
Originally Posted By: javacontour


Instead of Uncle Sam bailing out the car manufacturers, I think it should have been the radio and TV stations
smile.gif



Oh, that's actually going on. See how many millions of dollars are on the table for your favorite station to cease to exist!

https://www.fcc.gov/about-fcc/fcc-initiatives/incentive-auctions


Interesting. I skimmed some of the information over the last 30 minutes. . Seems the FCC want to reclaim some UHF for wireless broadband. They want to entice license holders to leave, move or share channels in the spectrum to free up this space. Is that the 50k foot overview?
 
I honestly don't understand advertising in general. I've never once saw an ad on TV, radio etc , and thought "oh yeah, I need that".

If I need something I go search it out, read reviews etc. I don't let a manufacturer try and sell me on their product, of course its always "the best".
 
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Yeah, but someone has to buy it, and review it. So be glad that people are swayed by advertising, the rest of us benefit.
 
Originally Posted By: edwardh1
our Honda dealers (and Kia) run ads all day long over the radio " Hi Im fred Smith general manager of xyz honda , and have a great deal for you.

what does this add to the car cost? it certainly adds no VALUE


I work for a dealer, and the annual advertising/showroom/preparation costs exceeds what we make on the sale of new cars.
 
Originally Posted By: Huie83
I honestly don't understand advertising in general. I've never once saw an ad on TV, radio etc , and thought "oh yeah, I need that".

If I need something I go search it out, read reviews etc. I don't let a manufacturer try and sell me on their product, of course its always "the best".


... and you think that the buying public in general is like that? Nope. The 'average Joe' is very easy impressionable and he is who the ads are aimed at.
 
Originally Posted By: Jetronic
Originally Posted By: edwardh1
our Honda dealers (and Kia) run ads all day long over the radio " Hi Im fred Smith general manager of xyz honda , and have a great deal for you.

what does this add to the car cost? it certainly adds no VALUE


I work for a dealer, and the annual advertising/showroom/preparation costs exceeds what we make on the sale of new cars.


I can vouch for this. There are some new cars, mostly Fiesta and Focus where the net profit is in the $100-250 range for the dealer.
 
Originally Posted By: Jetronic
Originally Posted By: edwardh1
our Honda dealers (and Kia) run ads all day long over the radio " Hi Im fred Smith general manager of xyz honda , and have a great deal for you.

what does this add to the car cost? it certainly adds no VALUE


I work for a dealer, and the annual advertising/showroom/preparation costs exceeds what we make on the sale of new cars.



Hard to believe, make $150 on a $25000 ticket item?
 
no, most cars cost less than that.

But yes, 2% gross is the norm these days for econoboxes. Any extras the client secures in the deal, comes out of that 2%. Things like car mats etc... we also need to was it, check it over prior to delivery and make sure all the fluids are properly filled for that amount.

Luxury cars, or the top of the line offer a bigger profit, but you sell only ahandful of those, and the net result over a year is still a loss for sales only:
Showroom had to be built and paid, lights have to be on, showroom has to be maintained/cleaned. At least 1 sales person there at all times the dealership is open, and then there's the requirements by the importer (sales training, promo materials, advertising, signs outside...).

Just because you sold a new car for $1000 over cost, doesn't mean you made that amount. And $1000 on one car is exceedingly rare, that'll be a $50,000 car

The parts desk and if applicable the gas station are the most profitable. If warrantry work paid fair here, the workshop would be profitable too, but it's about break even now.
 
I've never paid for advertising as an extra line item on any of the new cars I have bought but I'm sure there was some built into the cost of the car. I had one dealer try to charge me separately for advertising and I told them that they should pay me advertising fees if I bought their truck since they had their dealer name and city on a name plate on the tailgate of the truck. Needless to say, I didn't pay the extra amount.

I did keep the name plate on the tailgate and 18 years later, it is still on there so I have done a bunch of advertising for them over the years.

Wayne
 
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