Scooters Dealer Earnings: If you go to a scooter showroom with a one-lakh budget, you may wonder how much profit the showroom generates. You could be surprised at the answer, since besides selling the scooter, dealers make money through many means which remain unseen to customers. Let’s dissect how much showroom owners actually make on these best-selling scooters.
How Dealership Profit Works
The dealer purchases the vehicle from the company at the manufacturer-declared dealer price. This cost price does not account for taxes, insurance, or registration fees. After selling it to a consumer at the ex-showroom price, which pays all taxes and fees, the profit for the dealer is the difference between the purchase price and the sale price. That difference is their profit margin.
Actual Earnings on a One-Lakh Scooter
Typically, a scooter dealership makes a margin of 3% to 6% per sale. So, if you purchase a scooter with a price of ₹1,00,000, the immediate profit of the dealer will be between ₹3,000 to ₹6,000. This varies depending on which brand the scooter happens to belong to and what model it is. Some companies have higher margins, while others remain closer to the lower end of the spectrum.
Incentives and Bonuses for Dealers
Beyond their fixed margin, companies also pay incentives to dealers. Certain brands set aggressive higher sales targets and award showrooms with additional bonuses when they achieve or surpass the goals. These incentives enhance the total revenue of the dealer and inspire them to sell more units each month.
Additional Sales Equate to More Profits
Scooter dealerships do not merely profit by selling vehicles. They also increase revenues through accessories, finance packages, insurance products, and warranties. These add-on items have their own commissions, which contribute a significant amount to a dealer’s revenue. For instance, if you purchase an insurance package or finance your scooter at the showroom, the dealer typically receives a commission on such transactions as well.
How Servicing Supports Their Business
As soon as you buy a scooter, you are likely to go back to the same showroom for maintenance. Dealers make money through scheduled maintenance, replacement components, and labor fees. Extended warranties also generate revenue, providing dealers with a consistent stream of income. This balances their lesser profit margins on the sale of the scooter itself.
Why the Customer Should Know
Customers should understand that even though they pay a high amount upfront, a dealer’s immediate profit remains relatively small. Their profits increase primarily from additional services and achieving bonus thresholds. This implies customers may negotiate improved deals on accessories or insurance, aware that the dealership’s actual profit is not as great as it seems.