I know that in the car business, the cars themselves are often the loss-leader. My dealership was divided among three major lines: sales, service, and parts.
A no-profit sale of a new car generates enough income down the line to take care of all sorts of people. First of all “dealer invoice” is often a crock. Other expenses are tacked on to inflate the base price of the vehicle, so even that low, low price accounts for a lot of dealership expenses.
Then there is the trade-in. A good trade-in will oftentimes make more money off the top than a new car will. That is partially offset by the never-ending parade of shitboxes which get dumped off to other dealers or sold at auction, often at a loss. It’s still one of the highest-profit sections of the biz.
And then there is the warranty and service agreements. Your basic warranty will still draw a profit because it’s never just a problem that will be covered by the manufacturer’s warranty–a manufacturer won’t guarantee a part if they expect it to break. Oftentimes the dealer will try to tack a second “extended” warranty onto the car. They’re often redundant enough that the dealer can pitch most of those expenses straight back at the manufacturer.
Scheduled maintenance contracts are great, because the more often a car is in the shop, the better the odds of a mechanic finding something wrong with it. This isn’t always a scam, either. Preventive maintenance can often save a customer a lot of money, but they’re still paying some right now, which is good enough.
Somewhere along the way there are machinists, diagnosticians, detailers, dent doctors, painters, aftermarket guys and rodders. Anything the dealer contracts out still gets shaved slightly by the dealership.
And then there’s the Big Daddy: parts. Some of those damned things are marked up so high they’re worth more than their weight in gold. With the miracle of overnight shipping, the parts guys rarely need to stock anything but the most common items, so they can keep their inventories small these days, too.
The trick of course is to make sure your shiny new car comes back to the dealer, regularly and often.