how certain distrubutors can sell cheaper than the factory or manufacture price

Question

I recently found a car that a distributor sells cheaper than the official company. How can the distributors in genral afford this decision financially?

In: 69

Answer 1

In general when a “factory” sells to the public, they do so at the “manufacturers suggested price”. Resellers get a discount on that price and some are willing to take less profit in exchange for more market share.

The manufacturer doesn’t sell it at their cost because then the resellers would be unable to compete and would stop selling the product. The manufacturer doesn’t want this because the resellers provide marketing and distribution services that the manufacturer doesn’t have.