Ask a car salesman anything...anything at all.

[4941cc]

PaulD86 said:

Just wondered if some of the sales guys can offer a reality check on a bid a dealer made for a car I have. The dealer appraised my car, told me what they would spend on it to put it on the forecourt (tyres, paint for stone chips, warranty etc). They told me they would spend £4500 on it, which sounded reasonable. The closest car to mine on sale is £43k. I was offered £29k. So at £29k with £4.5k costs to get to retail standard that's £9.5k below what similar cars are advertised at. But even if those cars are really selling at £40k I'd say that £6.5k profit on a used car of that value seems a tad excessive, especially as that wasn't a straight sale to them but rather based on the car being a PX on something else they would presumably also be making a profit on. To add, the dealer wanted the car to retail, it wasn't like it was something they wouldn't want to sell.

Any thoughts? Is that really the realistic profit target on a car at that value?

Could be if it's a vehicle with a very niche appeal that accordingly might sit in stock for ages and is currently dropping four figures a month in the guide.

That's a typical margin on a used motorhome in my industry for example. Giving a customer the not-so-good news at the moment that one they bought new for £46k (list £49.5k) in April is worth £33-34k for me to buy back now - to retail at £44,995, less than 2k miles later. It's competing against our own new and ex-demo/pre-reg stock so needs to have greater flexibility within it if it's not to sit here until next summer...

Also, take a sixth of any gross profit margin straight off for VAT. So with £14k across it, £2,333 will go straight to the tax man upon sale, irrespective of internal costs paid. Gross margins and net ones are very different things when all is said and done.

[shake n bake]

PaulD86 said:

Just wondered if some of the sales guys can offer a reality check on a bid a dealer made for a car I have. The dealer appraised my car, told me what they would spend on it to put it on the forecourt (tyres, paint for stone chips, warranty etc). They told me they would spend £4500 on it, which sounded reasonable. The closest car to mine on sale is £43k. I was offered £29k. So at £29k with £4.5k costs to get to retail standard that's £9.5k below what similar cars are advertised at. But even if those cars are really selling at £40k I'd say that £6.5k profit on a used car of that value seems a tad excessive, especially as that wasn't a straight sale to them but rather based on the car being a PX on something else they would presumably also be making a profit on. To add, the dealer wanted the car to retail, it wasn't like it was something they wouldn't want to sell.

Any thoughts? Is that really the realistic profit target on a car at that value?

If it’s something a little spicy then that’s about right.
Don’t forget out of that assumed profit there will be vat taken from the profit, the cost of a warranty which if it is something quick/manufacturer approved that warranty cost will be expensive, further more the risk in the first 30 days is generally taken on by the dealer so if anything breaks they bare the cost.
Finally they’re there to make money.

[tomble22]

Butter Face said:

tomble22 said:

Butter Face said:

I think as a whole, that place works quite well in a village like Tresillian with the estuary behind it. Looks quite smart.

Definitely, would look odd having a modern glass box there. Drove past last week and there was an R8 parked outside which made it look even better!!

Looking at your name, I think I sold you a Twingo about 6/7 years ago?

I did buy a Twingo in 2012 from Dales, a blue one!! Small world eh, hope you're well!! Unfortunately (for my wife anyway) I've had a few other cars since then!!

[Blakewater]

With regard to dealer standards, what about the example I gave earlier of Renaults being sold out of the corner of a Vauxhall dealership.

The local three showroom side up the road selling Fiat/Alfa Romeo, Volvo and Renault closed.

The local Vauxhall dealer started selling Renaults from the corner of its used car side.

It's not yet showing on Streetview, but the brick office has a Renault banner on the side of it now and the corner of the forecourt around it has a few new Renaults parked up. No showroom, little to make it stand apart from the Vauxhall showroom which is still the main theme of the site.

https://www.google.com/maps/@53.7500356,-2.4749619...

All vehicle maintenance is still in the service bay in the Vauxhall garage and people seem to collect their new Renaults from the car park of the Vauxhall dealership. I've seen new Renaults parked up there. I can't imagine Renault or Vauxhall being thrilled by it but maybe Renault are keen enough to keep a presence in the town to allow it for now.

[Fast Bug]

Blakewater said:

With regard to dealer standards, what about the example I gave earlier of Renaults being sold out of the corner of a Vauxhall dealership.

The local three showroom side up the road selling Fiat/Alfa Romeo, Volvo and Renault closed.

The local Vauxhall dealer started selling Renaults from the corner of its used car side.

It's not yet showing on Streetview, but the brick office has a Renault banner on the side of it now and the corner of the forecourt around it has a few new Renaults parked up. No showroom, little to make it stand apart from the Vauxhall showroom which is still the main theme of the site.

https://www.google.com/maps/@53.7500356,-2.4749619...

All vehicle maintenance is still in the service bay in the Vauxhall garage and people seem to collect their new Renaults from the car park of the Vauxhall dealership. I've seen new Renaults parked up there. I can't imagine Renault or Vauxhall being thrilled by it but maybe Renault are keen enough to keep a presence in the town to allow it for now.

It looks like the site is going to be redeveloped to build a new Renault/Dacia showroom

www.lancashiretelegraph.co.uk/news/16134607.reveal...

[JimmyConwayNW]

PaulD86 said:

Just wondered if some of the sales guys can offer a reality check on a bid a dealer made for a car I have. The dealer appraised my car, told me what they would spend on it to put it on the forecourt (tyres, paint for stone chips, warranty etc). They told me they would spend £4500 on it, which sounded reasonable. The closest car to mine on sale is £43k. I was offered £29k. So at £29k with £4.5k costs to get to retail standard that's £9.5k below what similar cars are advertised at. But even if those cars are really selling at £40k I'd say that £6.5k profit on a used car of that value seems a tad excessive, especially as that wasn't a straight sale to them but rather based on the car being a PX on something else they would presumably also be making a profit on. To add, the dealer wanted the car to retail, it wasn't like it was something they wouldn't want to sell.

Any thoughts? Is that really the realistic profit target on a car at that value?

What car is it?

[PaulD86]

JimmyConwayNW said:

What car is it?

Cayman R. "Correct spec" i.e. the carbon bucket seats, correct R wheels etc. And the offer was against a GT4. I watch the market and good ones aren't hanging around so not like this is a car that's going to be a nightmare to shift.

[Fast Bug]

I sold new and used Porsche a few years back, and that margin sounds a little greedy, but not hugely over the top. Have you called a few indis and see what they'd bid you for it? They will have far lower recon costs and most would probably work to a slimmer margin

[pistonheadforum]

Fast Bug said:

How long is a piece of string? Both manufacturers will have different terms matrix in place, what discount off list price? Any finance or kesh no bits deal? Then do you look at back end money available? If so, have they hit target? What about over target? Demo model mix right? All staff up to date on training? Finance penetration target?

Can you help me understand that statement? Is there not a certain value that it simply cannot go below - for example on a 23k it's never going to go for less than X? I appreciate that there will be discounts/targets/etc but surely there must be a bottom that it can't go below? Or is it not like that?

[Butter Face]

tomble22 said:

Butter Face said:

tomble22 said:

Butter Face said:

I think as a whole, that place works quite well in a village like Tresillian with the estuary behind it. Looks quite smart.

Definitely, would look odd having a modern glass box there. Drove past last week and there was an R8 parked outside which made it look even better!!

Looking at your name, I think I sold you a Twingo about 6/7 years ago?

I did buy a Twingo in 2012 from Dales, a blue one!! Small world eh, hope you're well!! Unfortunately (for my wife anyway) I've had a few other cars since then!!

Blue with a sunroof if I recall properly!

That was me indeed!

[HTP99]

pistonheadforum said:

Fast Bug said:

How long is a piece of string? Both manufacturers will have different terms matrix in place, what discount off list price? Any finance or kesh no bits deal? Then do you look at back end money available? If so, have they hit target? What about over target? Demo model mix right? All staff up to date on training? Finance penetration target?

Can you help me understand that statement? Is there not a certain value that it simply cannot go below - for example on a 23k it's never going to go for less than X? I appreciate that there will be discounts/targets/etc but surely there must be a bottom that it can't go below? Or is it not like that?

It is very complicated:

Manufacturer I work for have a core margin of 7% across the range, however 2% of that is made up of:

1. 0.5% data capture: don't achieve 90% (I think) off email addresses for every new order then lose that 0.5%.
2. 0.5% CS: don't achieve at least a 90% CS score then lose that 0.5%.
3. 0.5% demo and display: don't adhere to the demo and display requirements which are audited quarterly then lose that 0.5%.
4. 0.5% showroom standards: don't adhere to the showroom standards then lose that 0.5%.

Then there are targets for example there is a new registration target of 100 for any given quarter, hit that target and a dealer may get an extra £500 per registration retrospectively, hit 110% and a dealer may receive £750 per registration retrospectively, hit 120% and a dealer may receive £1000 retrospectively per registration.

Don't hit 100% and tough, no bonus; but there may be if you can negotiate a deal; perhaps they may ask you to register a few undesirable cars that are stuck in central stock!

However sometimes these targets are linked to any given month a "fast start target" so at the beginning of a quarter; say July for Q4 a dealer may have to register a certain amount of cars for a "fast start" to that Q to help towards the total of the end of that quarter.

Then you have finance penetration targets and renewal targets, these can all be linked to your total quarterly targets.

Also you can negotiate if you are struggling towards the end of a quarter, sometimes they will let you combine targets with a sister branch, sometimes they wont; ie one branch hits 110% and the other 90% so they will award the group 100% or if they want a few more registrations; register a couple as pre reg's or demos and they will re evaluate each branch target and award a 110% joint target achievement; not always the case though.

Some models count and pay (receive bonus for hitting the overall target) towards target some models only count towards the target but don't pay any bonus.

You get the likes of CarWow and some dealers (one in particular) will offer a car at £600 less than all the margin and they also have to pay CarWow £360 (or thereabouts) if the deal goes through so already on a £1k loss, but the dealer are anticipating/hoping that it will achieve a certain percentage over target achievement so it is a loss leader in anticipation of hitting target and a retrospective £1k per unit back to the beginning of the quarter.

It is never as easy as saying x car discounted by x amount will earn this much, it can be very complicated especially if there is a second brand that is tied to the main brand and then this comes in to play.

Edited by HTP99 on Tuesday 16th July 20:20

[Fast Bug]

pistonheadforum said:

Can you help me understand that statement? Is there not a certain value that it simply cannot go below - for example on a 23k it's never going to go for less than X? I appreciate that there will be discounts/targets/etc but surely there must be a bottom that it can't go below? Or is it not like that?

HTP has explained it nicely. There's no limit to how much you can discount a car (some high end may differ), if a dealer wanted to they could offer 99% discount off list price. They wouldn't be in business very long, but in theory they could do it

[Roaringopenfire]

Hi, can you give any advice on getting a deal on a new Porsche Macan please? In your experience are there 'dealer contributions' available? Yep I know the easiest thing is to talk to the dealer, but to know what boundaries they have to work in would be really helpful.

[xjay1337]

Interesting post HTP.

I feel for dealers struggling to get units shifted and the CarWow situation.
Although I would probably use Carwow to get prices as I am not in a position to pay a few thousand more.

I wonder what is going on with the manufacturers, who are quoting record breaking profits, year on year, why can't they just sell each car for £1k less for example!

I often wonder what , for example , a VW dealer would "buy" a £30,000 RRP car at.
I've always imagined it's around 75-80% of the total RRP.

[pistonheadforum]

Thank you for the very complete answer. I am (potentially) looking to get a new car and since I tend to run them until the wheels fall off was happy to go for a completely new one. My current chariot has just passed it's MOT so it takes the presure off for anther while.

I was curious as to how low to pitch an offer and was also thinking of saying I would buy at some future point if they had not made an quotas - in essence put myself forward as a spare (with discount) if/when they needed a sale. I expect I know how that offer will go down with the dealer!

It does seem as though new car prices have more financial back-end deals and counter deals than regular products (TV, fridge) etc.

Many thanks.

[Fast Bug]

Roaringopenfire said:

Hi, can you give any advice on getting a deal on a new Porsche Macan please? In your experience are there 'dealer contributions' available? Yep I know the easiest thing is to talk to the dealer, but to know what boundaries they have to work in would be really helpful.

You'll get a feel for discount if you ask in the Porsche section

[Theguy5]

HTP99 said:

It is very complicated:

Manufacturer I work for have a core margin of 7% across the range, however 2% of that is made up of:

1. 0.5% data capture: don't achieve 90% (I think) off email addresses for every new order then lose that 0.5%.
2. 0.5% CS: don't achieve at least a 90% CS score then lose that 0.5%.
3. 0.5% demo and display: don't adhere to the demo and display requirements which are audited quarterly then lose that 0.5%.
4. 0.5% showroom standards: don't adhere to the showroom standards then lose that 0.5%.

Then there are targets for example there is a new registration target of 100 for any given quarter, hit that target and a dealer may get an extra £500 per registration retrospectively, hit 110% and a dealer may receive £750 per registration retrospectively, hit 120% and a dealer may receive £1000 retrospectively per registration.

Don't hit 100% and tough, no bonus; but there may be if you can negotiate a deal; perhaps they may ask you to register a few undesirable cars that are stuck in central stock!

However sometimes these targets are linked to any given month a "fast start target" so at the beginning of a quarter; say July for Q4 a dealer may have to register a certain amount of cars for a "fast start" to that Q to help towards the total of the end of that quarter.

Then you have finance penetration targets and renewal targets, these can all be linked to your total quarterly targets.

Also you can negotiate if you are struggling towards the end of a quarter, sometimes they will let you combine targets with a sister branch, sometimes they wont; ie one branch hits 110% and the other 90% so they will award the group 100% or if they want a few more registrations; register a couple as pre reg's or demos and they will re evaluate each branch target and award a 110% joint target achievement; not always the case though.

Some models count and pay (receive bonus for hitting the overall target) towards target some models only count towards the target but don't pay any bonus.

You get the likes of CarWow and some dealers (one in particular) will offer a car at £600 less than all the margin and they also have to pay CarWow £360 (or thereabouts) if the deal goes through so already on a £1k loss, but the dealer are anticipating/hoping that it will achieve a certain percentage over target achievement so it is a loss leader in anticipation of hitting target and a retrospective £1k per unit back to the beginning of the quarter.

It is never as easy as saying x car discounted by x amount will earn this much, it can be very complicated especially if there is a second brand that is tied to the main brand and then this comes in to play.

Edited by HTP99 on Tuesday 16th July 20:20

So do you as a dealership buy the cars when they are ordered, or just act as a middle man between manufacturer and customer and the dealership gets ‘commision’ from the manufacturer when they sell a car?

[Sa Calobra]

So I was going for a PCP due to tye low monthlies and handback/no hassle.

At the final moment the dealer entered into blackhorse finance but..the final valuation changed by £600. Which would mean I pay £600 more over the next two years...

All APR all the same except of course monthly cost went up

I said no, I wouldn't do that. Sorry.

He then tried to convince me it'd cost me less to buy out at the end.


Then.....he created a HP with my original monthlies and the final monthly payment as the balance. He explained it's the principle as PCP. That I can just hand back.

The question is how 'bad' an issue is this? My concern is if he can do this so blatantly who else has he convinced previously?

[HTP99]

Sa Calobra said:

Then.....he created a HP with my original monthlies and the final monthly payment as the balance. He explained it's the principle as PCP. That I can just hand back.

The question is how 'bad' an issue is this? My concern is if he can do this so blatantly who else has he convinced previously?

I would be wary that you can hand the car back at the end and that the final balloon isn't just that, a balloon payment with no guaranteed value that is underwritten by the finance company.

[Wooda80]

Sa Calobra said:

Then.....he created a HP with my original monthlies and the final monthly payment as the balance. He explained it's the principle as PCP. That I can just hand back.

The question is how 'bad' an issue is this? My concern is if he can do this so blatantly who else has he convinced previously?

Do you mean that it was an HP agreement with a balloon, or that it was an HP agreement without a balloon but for example you would be settling a 60 month agreement at 36 months?

As HTP said, check that it's a regulated agreement and that you will have paid more than half the Total Amount Payable by the time you wish to hand it back.

If this is the case then I don't see how it's 'bad' at all. The guy has listened to your requirements regarding deposit, monthly payment and disposal and offered a solution that appears to meet them.