Reality- outside of HD and limited production American made motorcycles (Big Dog, American Iron Horse) there is little in the way of true profit margin in the motorcycle market. You can expect the average dealer profit to be between $300 and $800 on the bike. The "real" money is made in the finance office. I know because that's what I do. Actually, that's not even all that much. My average customer spends $300-400 on aftermarket stuff (gap or tire&wheel) and there's only about a 50% markup in that. So, I suggest that you work the bike shop for your break-in service or goodies (helmet and gear) instead of trying to work real magic on numbers from the sale. Any dealer will move bikes if they have to (floor plan interest on older bikes) but really there is not a huge number between the cost and msrp. That's why it's easier to work out deals on the "other" stuff you need to ride.
You can bargain, but not much more than $500, in my experience. You'll get nothing on a hot bike. The best deals-- thousands off-- are on bikes that were overlooked the past model year and that the dealer needs to clean out, or bikes the manufacturer made too many of. You can really save a ton that way. The other thing you can negotiate are freight, setup, documentation, and other fees. Oftentimes you can have all but the core DMV fees and sales taxes waived. You may also negotiate for a first service or discount on parts, or all of the above. But generally there isn't a lot of room on advertised price. Still, you should bargain, just to see what you get; and you should shop around.
Some shops straight up give you a good OTD price if you ask for it, with minimal hassles. In other words, they cave in quickly to bargaining demands. However, they won't cave in any further. This illustrates what little room they have to work with.
I think most good dealers, honestly, want to get you on the right bike for your skill level, and they'll make more money down the road on parts, acc, maintenance, etc. After that, they know they've got a customer for life, and hopefully a long life at that.
I too work in the industry, and acecycleins is correct. If you are looking at a Japanese bike, the dealers are not making much. With the fact dealers are now competing via the internet with much larger stores, the bikes they sell are usually near their cost. It is smart to check Cycletrader.com because that will give you a good idea of what cost is. I was talking the other day to a guy who purchased a new liter bike in the Spring. He said dealers were selling the bike at cost, and it had only been on the showroom floors less than a month. It has become a tough business to be in.
Not questioning the facts as presented by Morons who are apparently in the business. But, I am told by auto industry insiders that the actual final sales margin on cars is quite considerable, although much effort is made to convince the public that the "tissue" or invoice price is only a few % points below MSRP. The truth, regarding MC sales, I suspect, lies somewhere between the extremes. After all, while we've been told for years that dealerships make their profit in the service bay, I find it difficult to reconcile the service dept. generating the kind of revenues required to cover the staggering overhead required to keep a dealer afloat and still make a reasonable profit. But, if it's true that the profit margin on a $10,000 MC is only about 5%, while in most other industries it's 35%, why would anyone choose MC sales, and more interestingly, how did the industry evolve into selling a product without a reasonable return on the investment?
I believe, although I don't know for sure, that is why auto mfrs. have moved a lot of their assembly plants to the U.S. (obviously I am speaking of the Japanese mfrs.) Without the labor and retirement costs that some of the Amer. mfrs., they can produce cars relatively inexpensively here. Also, I would suspect the large volume of cars produced, especially in relations to bikes, helps keep the costs down. Obviously this argument does not hold water if you are talking about an Aston Martin Vanquish S, but it might if you are talking about a Toyota Corolla.
As for m/c dealers, my experience is that the service dept. is not always the cash cow everyone thinks it is. If the dept. is very well run, and is able to do a lot of work like performance or installing of accessories, often they cost money. Again, this is my experience.
Usually warranty work is a flat rate, dictated by the mfr. If it is something the dept. has to do a lot of, it obviously becomes less expensive the more they do. The mechanic becomes more familiar with the work and becomes more efficient. If not, then the dealership can lose money, because it is labor intensive, and the mfr. does not pay for how long it actually takes to actually do the work.
With regards to sales, it often depends on the unit. If it is a unit that is in high demand, then the dealer may be able to stick close to MSRP. If, however, the dealer has to compete with a large store (especially one with a large internet presence) , that is working off volume of sales, rather than higher margin on each unit, it starts to really drop the price.
It is a very tough business, and I see a lot of the smaller shops, especially the ones who have been around for a while, struggling. Add in the cost of keeping all of the inventory, and employees, and I suspect it becomes very hard. Again, I can only speak for my little world.
It didn't start out as a looser. The bike business is so competitive that dealers are willing to make a small $300 or so margin because they know that the parts and servive departments will (eventually) make up the profit margin. Ask any Euro bike dealer (like ours). The service department drives the profit center for the company. Even HD dealers know this. That's why you don't see $3000 mark-ups on their bikes now. You can go into a dealer and know that outside of the finance terms that the bike itself is going to be a good deal. You guys control the price of bikes and dealers know this. That's why the other services at the bike shop are "the" profit center of the business.
I have never seen anything with the invoice price listed. But I think that the price can be lowered a lot if the dealer wishes and the manufactuer is giving deals. My last two motorcycles were bought way below MSRP probably due to buying at the end of season and buying models that were not strong sellers. 01 Concours MSRP $8499, paid $6000 plus tax. 03 Z1000 MSRP $8499, paid $7200. I did use cycletrader to help out with what other companys were listing them for to help get the best deal. Good luck....
It is easy to see that the dealers make more than $300 on bikes. Go look at cycletrader and compare invoice to what some of those dealers are willing to sell at. Big difference there. I also have heard cyclebuy.com is a good place to get invoices on bikes.
I fully back what acecycleins says about profit and markup. I sold Cadillacs for years...the profit is in used cars and service. There was no 35% markup in new cars. We could make maybe $6000 on a $65000 Escalade if we knocked their head off...but with the competition and online pricing that rarely happened unless we sold wheels and extras. That is nowhere near 35%.
Iam sure it depends on which dealers your speaking of. I will admit that in any good dealer the service dept is the backbone of the whole store. Meaning if they arent quick to do the job once and correctly they will not turn a profit, obvisouly. But on the other hand I have never seen our shop sell a bike they didnt make at least some money on.
When this subject comes up its ignorant to even consider the Car dealers the margin is ALOT bigger than that of the motorcycle industry, by far. 10k versus even 32k who has more room to move.
My major problem is the people who want it for nothin and will post these threads up but excpect the dealer to be around once they need another new bike, parts or service.
I know our parts depts probably keeping the store going here. But hey at least Iam not working at micky d's yet,...LR!