The Profit Making in the Car Industry

The sale of new vehicles only is not sufficient to sustain the automotive industry, as the margins can be slight sometimes (Marshall, 2011). Only 30% of the gross profit comes from the car sale (Reed, 2013).  Apparently, the majority of the automotive industry profit does not come directly from car sales. Commissions are a primary source of income for car sales people as they strive to hit their sales goals. Even if the profits from a unit car are small, a dealer can maximize his profit by selling as many cars as possible. In this case, the manufacturer does not earn much profit from the sale. Dealers also make a fortune from used cars, even more than what they make from new vehicles. The profit margin for used cars is high than that of new ones, as the dealers always claim to have incurred funds in the reconditioning process. Finance and insurance also comprise a significant part of the deal. It can be up to 20 percent of the gross profit (Henry, 2012).Automobile manufacturers get a………

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