California’s Car Culture

I am writing in response to your Oct. 3 article (“Car Salesmen Wheel and Deal With Image Problem”). The generalizations and selective omission of important, documented industry facts from the article helped to paint an inaccurate portrait of the average car salesman and the dealership which employs him.

As an example, The Times paraphrases a source from the Department of Consumer Affairs who “estimates that dealers make $1,500 to $4,000 on each car sold.” While it is true that some new car dealers selling very popular, limited-availability vehicles may realize this kind of profit, it is far from the industry norm.

According to published figures from the National Automobile Dealers Assn. (NADA), the national average net profit (after expenses) made by dealers on each car sold this year through July, 1989, was $342, before taxes were taken out.

The article also mentions a non-attributed estimate that dealers “earn in the neighborhood of 5% to 20% on each sale. . . .” Again, published figures from the NADA show the actual average net profit per car sold through July, 1989, to be less than 3%, before taxes.

There are a variety of other figures which play a part in the overall financial picture of car dealerships across the United States, as published by NADA. Only three of the franchises sold in this country (Honda, Ford, Chrysler) actually made money selling new cars through the first six months of this year. In the past year, the average selling price of a new car has risen $1,400. Of this, an average of $10 has gone to the franchised new car dealer.

JACK LIVINGSTON

President

Greater Los Angeles

Motor Car Dealers Assn.