Neophyte buying a tractor needs help.

[Bird]

</font><font color="blue" class="small">( There is also the case of taking advantage of credit card benefits )</font>

Yep, but since I have no use for frequent flyer miles, I use Discover Card mostly for the little bit of cash back.

And Pete, I, too, use Quicken, but have never downloaded the transactions. Instead I bring all the receipts home and manually enter them, then once a month (or more frequently) compare mine to theirs to be sure it's correct.

 

[KiotiJohn]

</font><font color="blue" class="small">( Re: that much profit I would think because the volume (number of units) is much less than say an auto dealer, the average unit profit would have to be higher. )</font>
After all is said and done, clearing $1000 on each tractor is not horrible, but not wonderful either.
I really doubt that many dealers who offer reasonable prices, note I said reasonable, make $2K to 2.5K after expenses. It's probably the reason so many small dealers go out of business so quickly. If they can't turn several tractors a month, they can't make the nut on the business.
Most tractor dealers who succeed don't rely simply on tractor sales. Usually you will find they have other equipment such as lawn mowers, lawn tractors, ZTR mowers and their respective parts. There are often higher profits in lawn and garden as opposed to CUT sales, and generally, the sale is done and over with little need for dealer intervention again.
Seems many people really thing tractor dealers are making a huge buck off each tractor. Only the ones who won't come of the MSRP are making GOOD money, but they wouldn't get ANY of mine! John

 

[twabscs]

DesertDog,

Just so you understand a bit more about the business aspects of retailing. The dealer's don't pay cash up front on their tractors so they don't need the big return you mention. They use leverage / credit for all that inventory. The manufacturers give them some free time (~90 days) and after that they can "finance" the expensive inventory on the lot. It gets a bit complicated, but a 1K return on a 0K investment changes the dynamics significantly....

I know a used car dealer that has 3 mil of inventory (100 vehicles) and he "owns" none of them. He buys them at auction, takes the title to the bank, and the bank finances it all at < 5%. I'm sure you get the gist of what I'm saying... Yeah, if he had 3 mil to buy inventory he would close the doors and retire on the return on those AAA bonds. /forums/images/graemlins/smile.gif

 

[jd2210]

Just to give you an idea on margins, at my dealership (cars) I try to gross between $800 and $1500 per transaction. There was a time when the bigger tickets like diesel Cummins trucks I could gross much higher, but I have a dealer down the road who sell strictly on price so the idiot sell too cheap. Most markets Dodge dealers can still pick up $2500 to $3000 on a Diesel.
When I sold John Deere's we made an average margin of 15%. We aimed for 21% on used. John Deere gave us 1 year interest free (because we floor planned through them and met the minimum requirements for contracts), but Chrysler gives me squat. The day a vehicle is BUILT, BUILT they charge me interest on it.
So why do I have cars instead of tractors? Yeah the volume is higher, but more importantly the shop is busier.
At John Deere we had a 1 sales person to every mechanic ratio, here I have 5 mechanics and I do all the selling. Cars need more frequent maintenance (time wise) and we can appeal to all brands. Tires alone we sell 600 a year.
Plus I have 2 flat deck haulers, a CAA contract, and a bodyshop. All things you don't get with tractors. You for sure gross much higher selling tractors, but I gross higher yet and have smaller outputs in the shop.

 

[Libertine]

KiotiJohn:

<font color="blue">. . . make $2K to 2.5K after expenses. </font>

Sorry, I meant gross margin (over cost of goods), not net. This seems fair to me. From JD2210's post above, that seems in the ball park.

Still don't know where (or if???) there is a source for dealer cost on tractors (like there is for autos, small trucks, etc.) ?????? Of course, I can understand why no one in the business would want that info getting out.

JEH