What is the profit of a car dealership?

New car dealerships work on very small profit margins. The dealership purchases car from the manufacturers at what is called 'invoice price'. On a $25,000 the dealership may only be making a profit of $2,000-3,000 if the car is not being discounted at all. Any discounting cuts into that small profit.

Car dealers may receive some additional incentives from the car manufactures if they are promoting or have a surplus of a particular model.