MISSION
TAKE-OVER

A dealership runs four businesses under one roof: new sales, used sales, F&I, and fixed ops (service/parts). Sales gets measured on the first three — and it's judged in gross profit, not sticker price.

Front-End vs Back-End Gross

• Front-end gross — profit built into the vehicle price (cost vs. sale price).
• Back-end gross — profit from financing markup + F&I products layered on after.
• PVR — the real scoreboard management tracks. A thin front-end deal can still hit target if the back-end covers it.

Your commission is a percentage of gross, not sale price. A $50k car at $800 gross pays less than a $25k car at $2,500 gross. Chase gross, not sticker.

• MSRP — sticker price, set by the manufacturer.
• Invoice — what the dealer is billed. Not the true cost.
• Holdback — typically 1–3%, paid back to the dealer later. A car can sell "at invoice" and still profit.
• Dealer cash — unadvertised manufacturer-to-dealer money, heavier on aged or slow-moving units.
• Floor plan cost — why aged inventory gets pushed hard.

New car margins are thin because invoice pricing is public. The real engine is holdback + incentives + back-end — not the sticker fight.

No invoice on used cars — the cost basis is internal and invisible to the customer. That makes used gross far more elastic.

• Sources — trade-ins, auction (Manheim/ADESA), wholesale buys, off-lease returns.
• ACV — internal cost basis once a trade is acquired.
• Recon cost — detail, mechanical, tires — added to cost basis before it hits the lot.
• Used gross per unit typically runs 2–4x new gross per unit — no invoice transparency forcing the price down.
• CPO — manufacturer-backed, inspected, extended warranty. Sell it as peace of mind, not "basically new."

• Appraisal is against wholesale value, not retail — that's the gap customers feel cheated by if it isn't explained (recon, auction fees, no-warranty risk to the dealer).
• Trade equity — trade worth more than owed → reduces new deal price or funds a lease's cap cost reduction.
• Negative equity — more owed than it's worth → gets rolled into the new loan/lease, quietly raising the amount financed. Handle with full transparency — this is where trust breaks fastest.
• The Four-Square — know it exists so you can be transparent instead of manipulative. Customers research this now.

• Buy rate — the real rate the lender offers the dealer for that credit tier.
• Sell rate — what's presented to the customer, legally marked up (usually 1–2.5 pts).
• Reserve / dealer participation — 100% legal, and why rate is negotiable, not fixed.
• Longer terms (72–84mo) lower the payment but massively increase total interest and time spent upside-down.

Monthly Loan Payment

Run it live in the Tactical Calculator below.

• Cap cost — the negotiated "price" of the car in lease terms.
• Residual value — manufacturer-predicted end-of-lease value. Higher residual = lower payment (you only finance the depreciation gap).
• Money factor — markable-up the same way loan APR is.
• Mileage allowance — 10k–15k mi/yr standard; overage runs $0.15–$0.30/mile. Ask real driving habits early — get it wrong and it's a bad surprise later.
• Why leasing is often more profitable for the store — shorter cycles bring the customer back sooner, off-lease units feed the high-margin CPO pipeline, and manufacturers often subsidize money factor/residual to hit lease-share targets.

Lease Payment (pre-tax)

• Steepest drop is year one (historically ~20%), then ~10–15%/yr after.
• Resistance factors: reliability reputation, resale demand, low-production trims, maintenance cost reputation, tech relevance.
• This is exactly why CPO/used is such a strong pitch — someone else absorbed the steepest drop.

Reframe new-vs-used around total cost of ownership, not sticker price — consultative beats price-matching every time.

Pure back-end gross, sold after emotional commitment — which is exactly why it needs to be sold on value, never pressure.

• VSC (extended warranty) — protects against electronics/sensor/transmission repair costs once factory coverage lapses.
• GAP insurance — covers the gap between a totaled car's value and what's still owed. Easiest ethical upsell on high-LTV or rolled-in-equity deals.
• Maintenance plans — budget predictability, not "you'll need it anyway."
• LoJack — regional theft data + insurance discount angle, not fear alone.
• PPF / ClearShield — resale value + appearance. Strongest with anyone who mentioned keeping the car long-term.

The rule: every product ties back to something the customer told you they care about. Menu-dumping kills close rate and referrals. Tie-back selling wins both morally and numerically.