Yes, they expect to make some profit on the trade-in as their expense to
liquidate your car. It is more like 50/50 chance they can make a profit as
some car is just too troublesome or expensive to fix that they ended up in
auto auction and will fetch for the trade-in value... more or less.

The dealership will want to make something off your trade, if they keep it. The salesman only gets a
commission on what he/she sells.
Some trade-ins look real good on paper, but the car is a dog that will only get wholesaled.
In order to allow a high $$ trade-in value, you are getting less $ off the new car price.
If you believe you are getting more $$ for your trade-in as it sits, then you are paying more for
the new car.
If the dealer intends to keep the trade-in, they have to figure in what they believe it will cost to
make the car front line material: it may need all new tires, a bumper-to-bumper inspection CPO
inspection [if it is MB],
complete detail, cosmetic touch ups, etc. A used car has a retail value [high book] and a wholesale
value [low book]. They want to give you less than low book. The difference between what they give
you and high book minus the reconditioning expense is the profit the dealer makes.
The salesperson makes a % of the profit as a commission.

First, when talking to the salesman, do not mention that you have a
trade-in--he will simply crunch numbers in his favor, not yours.  Make your
best deal sans trade-in.  After getting the best price for the car you want,
then bring up the trade-in.  He won't be able to screw you as hard that way.