Why Some Dealers Say “We’re Losing Money on This Deal” (But Usually Aren’t)

“If I had a dollar for every time a dealer told me they were ‘losing money,’ I could buy that same car in cash.” 💸😂

- Chase Jordan

Let’s be real — you’ve probably heard this line before. I know I have over a thousand times!

“We’re already losing money on this car!”

It’s the go-to guilt trip used by dealerships to shut down your negotiation.

And it sounds dramatic, right?

Like you’re taking food off their kids’ plates. 🍽️

But here’s the truth: it’s almost never true.
Let’s break it all the way down so you don’t fall for it.

🧾 First, What Do They Mean by “Losing Money”?

When a dealer says they’re “losing money,” they usually mean:

• They're selling the car near or below invoice

• They're not making as much on the front-end of the deal

• They want you to stop negotiating

What they don’t tell you is that they still make money elsewhere.

Let’s dig in.

💼 How Dealerships Still Profit — Even If They Sell “Below Cost”

Dealerships have multiple income streams baked into every sale. So even if the front-end profit (the price difference between invoice and your sale price) is small or negative, they’re still stacking cash from other places:

1. 🏦 Backend Products

These include:

• Extended warranties

• GAP insurance

• Paint protection

• Wheel & tire coverage

• Key replacement

• Pay ahead oil changes and tire rotation

These products often have massive markups — dealers can make thousands in pure profit here.

2. 💸 Financing Kickbacks

When you finance through the dealership, they often mark up your loan rate from what the bank actually offers.

That spread is their bonus.
It’s called the “buy rate markup,” and it’s legal — but sneaky and one of the reasons people do not trust car sales people and dealerships.

3. 🎁 Manufacturer Bonuses & Volume Incentives

Automakers reward dealerships for:

• Selling a certain number of units

• Moving specific models

• Participating in factory programs

This means even if they sell a car at a loss on paper, they might be earning $500–$2,000+ in back-end incentives on that same deal.

4. 🧾 Holdback

As we covered before, holdback is money the manufacturer gives the dealer after the car sells — usually 1–3% of MSRP. You don’t see it, but they do.

5. 🔁 Trade-In Profits

They may "lose money" on the car you're buying but make it up on the car you're trading in — especially if they lowball you or flip it at auction.

So yeah… they’re doing just fine. Google the average dealership owner's profit per year. Only a few are sucking wind, the rest are sucking cash into their bank accounts. 😎

🤨 Why Do Dealers Say They’re Losing Money?

It’s psychological.

It’s meant to:

• Shut down the negotiation

• Create guilt

• Make you feel like you’re already getting a gift

If you push back after hearing that line, they’ll either:

• Double down with more drama 😢

• “Go talk to the manager”

• Or… lower the price anyway (because they can)

💥 How to Handle It Like a Pro

• 🧠 Stay calm — don’t react emotionally

• 🧾 Ask for the full breakdown: MSRP, invoice, incentives, fees

• 🛑 Don’t let them guilt trip you — you’re not being unreasonable

• ⚔️ Bring in Deal Guard — we know the actual profit margins and never fall for smoke and mirrors

🛡 How Deal Guard Responds to This Line

We don’t blink.

When they say, “We’re losing money,” we say:

“Keep digging, there's more on the bone and you know it Chief!”

Ok, don't say that put you get the point. 😜

That’s when they usually realize:
✅ We know what’s up
✅ We’re not average buyers
✅ They better come correct — or we’ll find another dealer

😎 Final Word from Chase

When a dealer says they’re “losing money,” what they really mean is:
“We don’t want to lower the price any further — but we could.”

At GetDealGuard.com, we’ve heard it all before — and we never fall for the drama.

We’re your trusted car buying concierge and done for you buying service, and we’re built to cut through the confusion, negotiate like pros, and land you the strongest deal possible.

🎯 Tired of feeling like you’re being played at the dealership?
Let us do the heavy lifting. Visit GetDealGuard.com today and see what it feels like to buy a car with confidence.

Talk soon —
Chase ⚡️