Automotive Dealership Terms Flashcards
OEM (Original Equipment Manufacturer)
Refers to the company that produces the vehicles (Ford, Toyota, GM, etc…)
MSRP (Manufacturers Suggested Retail Price)
The suggested selling price of a vehicle as set by the manufacturer
Invoice Price
The amount the dealer pays to the manufacturer for each vehicle. Often the starting point for negotiations.
Dealer Holdback
A percentage of the vehicles invoice price that is returned to the dealer after the car is sold, providing additional profit.
Floor Plan Financing
A loan that allows dealership to finance their inventory of vehicles.
F&I (Finance and Insurance)
The department responsible for arranging financing and selling insurance products.
Lease
An agreement in which the customer pays to use a vehicle for a specific period without ownership often with mileage restrictions.
Trade - In
The vehicle a customer brings to the dealership as part of the transaction when purchasing a new one
Upside Down (Negative Equity)
When a customer owes more on their trade in than its current market value.
APR (Annual Percentage Rate)
The annualized interest rate charged for borrowing, including any fees or additional costs
Extended Warranty
Additional coverage beyond the manufacturers warranty, offering protection against certain repairs.
Inventory Turnover
The number of times a dealership sells and replaces its inventory in a given time period.
CSI (Customer Satisfaction Index)
A measurement of customer satisfaction based on their experiences with the dealership.
BDC (business development center)
A department focused on generating and managing customer leads.
RO (Repair Order)
A document detailing services or repairs performed on a vehicle in the service department
Back End PRofit
The profit generated from financing, insurance and aftermarket products
Hold Back
Additional profit given to the dealer by the manufacture after a vehicle is sold
Closing Ratio
The percentage of customers who make a purchase compared to the total number of customers
LTV (Loan to Value)
The ratio of a loan to the value of the asset being purchased
Blue Book Value
The estimated value of a vehicle according to industry guide KBB
Dealer Incentives
Special discounts or promotions offered by the manufacturer to dealerships to encourage sales
F & I (Finance and Insurance)
Department responsible for arranging financing and selling insurance products to customers
Closing Ratio
the percentage of customers who make a purchase after a test drive or dealership interaction
Lead Generation
Methods used to attract potential customers to the dealership, such as online marketing, events or promos
Up Selling
the practice of offering customers additional products or service to increase the overall sale
Test Drive
Allowing a potential customer to drive a vechile to experience its features and performance
Trade In
A vehicle that a customer offers to the dealership as part of the payment for a new vehicle
Loyalty Programs
Programs designed to retain customers by rewards or discounts for repeat business
CSI (customer Satisfaction Index)
Measurement of customer satisfaction with the dealership service and sales processes
Inventory Turnover
The rate at which a dealership sells and replaces its inventory
Back end profit
Profit generated by the F&I department, through the sale of financing, insurance ,and aftermarket products
CRM (Customer Relationship Management)
Software used to manage customer interactions and data
Demo unit
A vehicle used for test drives and demonstrations
