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In the United States, a car dealership is a retailer that sells new and/or used cars. Used car dealerships carry cars from many different manufacturers, while new car dealerships are generally franchises associated with only one or two manufacturers. However, in some areas, dealerships have been consolidated and a single owner may control a chain of dealerships representing several different manufacturers. New car dealerships also sell used cars, as they take in trade-ins and/or purchase used vehicles at auction. Most dealerships also provide a series of additional services for car buyers and owners, which are sometimes more profitable than the core business of selling cars.
Most car dealerships display their inventory in a showroom and on a car lot. Under federal law, all new cars must carry a sticker showing the offering price and summarizing the vehicle's features. Typically, salespersons working on commission only, negotiate with buyers to determine a final sales price. In many cases, this includes negotiating the price of a trade-in — the dealer's purchase of the buyer's current automobile. Negotiations from the dealership's perspective is often referred to as "desking" a deal, although different terms are used throughout regions and should be considered regional.
Profit margins on automobile sales are surprisingly low. A new car dealer may mark up a car by less than two percent over the manufacturer's invoice cost, and typically the car dealer borrows from the manufacturer for inventory and pays interest (called flooring or floorplaning). On the other hand, some manufacturers pay "hold-back" to improve the fiscal stability of dealers. Typically this is around 1% to 2% of the vehicles' wholesale price to the dealer. Hold-back is usually not a negotiable part of the price a consumer would pay for the vehicle. Hold back is designed to offset the cost the new car dealer has for paying interest on the money s/he is borrowing to keep the car in inventory.
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