Bike shop profit margins?

[sidecar bob]

When I bought my K3 GSX-R1000 brand new, the selling dealer showed me the invoice from Suzuki NZ. I was surprised how little was actually in it for the dealer.
All I expect is a fair deal, too. For everyone involved

There are plenty of other benifits for the dealer in selling a bike over & above the profit margin. Some offer a monthly rebate with the amount depending on thruput of that brand for the month.

[doc]

I'm not too worried about what their profit margin is. After all it's their business not mine. If you feel you have been ripped off you don't go back. Easy to say bling does that aye. I'm more worried about confidence in the service department. Prefer to ride away noticing or thinking yep this has been worked on and feels like it. Just have felt in the past after forking out close to a grand on a service took 8 hrs Yeah right, looking at the inspect , check , replace sheet that all I basically got was an oil change.
0k in the last 50k and 2 years the shims have not needed adjusting once . Thats how many hours of wrenching required inspecting at 80 hr ? A new car has them checked how often with modern materials and machining, surely a bike engine shouldn't need that much attention other that oil changes and they know it but charge according to the factory service check sheet . Without doing the work, That must improve their profit margins for the bling part of the shop.

[MadDuck]

Hey folks Im interested to hear
What do you concider a fair profit from a bike ??
$100,$500,$1000 , $1500 $2000??

Ok so what mark up on cost do you think a shop has to make to acheive this?

Too many variables to come up with a simple $ value or even % mark up.

For example rent and rates in say Henderson will vary considerably than those in say Khyber Pass or the central city. Wages in Auckland will vary to those in smaller towns....blah blah blah

[Goblin]

Another plus for Boyds (when they were Honda). I found them to be most helpful and always tried to get me the best deal on whatever I needed.

When I needed a brake seal kit for my ratty I tried my local shop who told me "I'll do you a good deal! $80 and a 3 week wait." Phoned another shop in The Mt and got the seal kit for $40 the very next day. So I dont even ask my local anymore. Why would I?

[Ocean1]

Don't bike shops have a right to charge what they like?

I've had more than one shop owner tell me that both buy and sell prices are dictated by the principle. That's why they're often more flexible on extras than price. If that's substantially correct then a) it's potentially price fixing, wot's marginally illegal, and b) profit is manageable only in terms of overheads...

Hey folks Im interested to hear
What do you concider a fair profit from a bike ??
$100,$500,$1000 , $1500 $2000??

Ok so what mark up on cost do you think a shop has to make to acheive this?

... Which makes our opinion on margins irrelevent, but may explain a trend I've noticed for punters to find better deals in the provicial, even rural centres, where rent etc is far friendlier.

I suspect difficult times are already causing stress for most of 'em also, big and small. Smaller dealers may well have more options for survival though, more flexible.

[Forest]

Before you answer take this into concideration.
Aunty helen takes 12.5% of the profit
All operating expenses of the business have to be paid from the profit.
Including rent,rates,power phone,advertising,staff,insurance,and cost of stock
All warranty claims have to be covered from that profit.
So what then would you say is Fair?

GST has zero net cost to the bike dealer - don't forget that they claim back the GST that they pay to acquire the stock.

However they do of course have to pay 33% of their final profit as company tax.

To answer your original question - I personally don't give a shit how much profit they're making on the bike. Thought I reserve the right the right to laugh when I see things like this.

In case the link doesn't work, it is a dealer listing for a 1994 NSR250 SP in Rothmans colours with 27,235 km. Asking price is $10,995

[Ixion]

GST does affect cash flow though. More businesses go under through cash flow failure than through actually losing money.

[MadDuck]

GST does affect cash flow though. More businesses go under through cash flow failure than through actually losing money.

Disagree. Most businesses go under because of bad management decisions.

[AllanB]

Ah one thing I don't get here reading this - why has (or would) anyone buy a new bike if they were not getting a good deal/service? Surely you are doing your homework - checking magazines and the net for the bikes price in NZ, checking on prices of your trade and getting a few prices from different shops for your trade so you have a realistic value of it (thats about 25% less than you really think it is worth !).

If you have done your research you should be able to organise a realistic purchase/trade combo that is good for both parties.

I've done exactly this on my last two bikes and both have come from Dunedin (I live in Christchurch) as that's where I got the best deal.

No gripes with my local dealers I just got a better cash then trade deal (plus delivered for free).
So if you think you have been screwed on your new purchase, did you do your homework first.

Remember NZ is a small country and its only about $400 to get a bike delivered between islands (or less if the shop will go halves with you).

[Jantar]

Hey folks Im interested to hear
What do you concider a fair profit from a bike ??
$100,$500,$1000 , $1500 $2000??

Ok so what mark up on cost do you think a shop has to make to acheive this?




Before you answer take this into concideration.
Aunty helen takes 12.5% of the profit
All operating expenses of the business have to be paid from the profit.
Including rent,rates,power phone,advertising,staff,insurance,and cost of stock
All warranty claims have to be covered from that profit.
So what then would you say is Fair?

A fair question, and no-one so far seems prepared to answer. IMO it should be around $500 to cover the fixed costs of ownership transfer, advertising, floor space etc, and a variable component of 10 - 20%. Thus a bike that will retail for $9999 would get $8000 offered as a trade in.

This should allow for some haggling on items like new tyres or similar as part of a sales deal. But the shop that relies on bike sales for income will quickly go bust. The real profit is in keeping that customer coming back for services, accessories, or just for a chat while they browse. The shop that has its workshop busy will succeed ahead of one that makes a one time profit off a bike sale, and never sees that customer again.

Why do you think the mark-up on new bikes is so small? Its because the dealer knows that in most cases that customer is locked into using his workshop for the next two years.

[FROSTY:Me]

A fair question, and no-one so far seems prepared to answer. IMO it should be around $500 to cover the fixed costs of ownership transfer, advertising, floor space etc, and a variable component of 10 - 20%. Thus a bike that will retail for $9999 would get $8000 offered as a trade in.

And what would you concider a fair discount for cash purchase then?

[FROSTY:Me]

GST has zero net cost to the bike dealer - don't forget that they claim back the GST that they pay to acquire the stock.

However they do of course have to pay 33% of their final profit as company tax.

sorry to corect ya there dude. We claim GST on the purchace price but we PAY Gst on the sale price. so there is 12.5% GST on any NETT profit.


Can I put the boot on the other foot.
If you had taken say $300000 to buy a bike shop. Worked 12 hours a day 6 and (Mt eden MC as an example) 7 days a week what would you want back out of it?

Im not having a go just wondering how you folk think about this stuff

[Jantar]

That would depend on how badly the dealer wants to move that particular bike, what work had to be done to the bike to get it to showroom condition, any trade in etc. I certainly wouldn't like to put a generic number on it.

[ital916]

what I would like to know is everyones opinion on the mentality of how people are always asking for discounts. Even on a sale day when prices are well and truly astronomically good there is always the "so can you cut me a better deal".

It doesn't happen with computer games/music/movies so why bikes and bike gear. Fair enough with bikes because it is a lot of moeny maybe a little haggling is good to ease the mind but your kidding yourself if you want to get more than 200 off the bike i reckon..if the dealer gets rid of on raod and a little more thats already a 500 off the bike which in my books is good enough. It is the customer service I prfer.

[DMNTD:Me]

what I would like to know is everyones opinion on the mentality of how people are always asking for discounts. Even on a sale day when prices are well and truly astronomically good there is always the "so can you cut me a better deal".

It doesn't happen with computer games/music/movies so why bikes and bike gear. Fair enough with bikes because it is a lot of moeny maybe a little haggling is good to ease the mind but your kidding yourself if you want to get more than 200 off the bike i reckon..if the dealer gets rid of on raod and a little more thats already a 500 off the bike which in my books is good enough. It is the customer service I prfer.

Yep I get it all day every day. Generally I sell new bikes at window price but discount the gear they may want. Profit margins in new bikes are a heck of a lot lower than what most would realise.
Second hand bikes...depends....if they are trading...window price. Cash/finance...then we can talk creative finance.

Some people forget that lights must be turned on,wages paid ...same with a power load of bills!

Good service and "an experience" if free though