How long can dealers feasibly keep part-ex vehicles?

[PumpkinSteve]

This is just something that I've often wondered after buying a new car and seeing my old car up for sale 3-6 months later:

Let's say I trade in my car to a dealership, it's fairly new so the keep it rather than auctioning it off (or whatever else they do with bangers) and put it up for £1k more than they gave me for it. They will have to put 6 months tax on it when it sells so there's £100 gone off their potential £1k profit.

How long could a dealership feasibly afford to keep the car up for sale? Would they keep it up indefinitely and accept the loss, knowing that they had sold a new car to the owner who part-exchanged it?

[pacman06]

A poor car dealer will be along shortly to reveal all his overheads and convince you he is actually selling at a loss and making no money at all!

[sebhaque]

Most part exes tend to have a bit of a delay between collection and resale. If the garage doesn't want to or can't sell the cars, they either auction them off or pass them to another dealer who may be able to sell them. I have heard of cars being kept at dealerships for even years due to lack of interest.

Apologies for the grammar and spelling, I'm not exactly sober at 3.20am on a Friday night.

[ClintonB]

pacman06 said:

A poor car dealer will be along shortly to reveal all his overheads and convince you he is actually selling at a loss and making no money at all!

Really does depend on what they're given. If they didn't ask & I didn't tell, I could feel somewhat happy if given decent P-X for what I currently have to offer.

[philmots]

Used cars from a dealer are 9/10 times priced plus tax.

[ralphrj]

PumpkinSteve said:

This is just something that I've often wondered after buying a new car and seeing my old car up for sale 3-6 months later:

Let's say I trade in my car to a dealership, it's fairly new so the keep it rather than auctioning it off (or whatever else they do with bangers) and put it up for £1k more than they gave me for it. They will have to put 6 months tax on it when it sells so there's £100 gone off their potential £1k profit.

How long could a dealership feasibly afford to keep the car up for sale? Would they keep it up indefinitely and accept the loss, knowing that they had sold a new car to the owner who part-exchanged it?

1. Almost certainly a buyer would have to pay road tax on top of the price of the car so it doesn't really come out of the dealer margin.

2. How long it remains in stock will depend on the dealer policy. Most large dealer groups set a maximum age for used cars after which they must be sold through auction. The group I worked for had a maximum age of 60 days in stock.

[greygoose]

A garage near us has had a smart car for sale for 3 years now, I've no idea how he stays in business.

[LouD86]

We keep ours 90 days, then auction. Tend to prob make a profit on 9/10 of them, which isnt too bad. All depends on recon costs etc,and what margin we have to play with.

[markmullen]

Most main dealers have a 60 or 90 day policy. At the end of this time the car will either go to auction, or be swapped with another branch in group with the dealer who bought it in getting CAP value for it from the receiving dealer.

This can cost the 1st dealer a fortune, they might have put a lot into the car in the first place, they've had 3 book drops on the car and any prep they've had to do is all lost.

My old GM used to produce a spiv list of cars which were going to go 90 days that month and put extra commission on those cars, up to £500 per car. I used that list as my shopping list, once taking £5500 extra commission in a month out of it!

[anonymous-user]

Ok, concrete example. You're a franchised dealer with a 2-3 year old big petrol engine luxo barge up at 35-40k. No interest for 90 days. What will it get at auction, and is the auction trade only?

[andy665]

markmullen said:

My old GM used to produce a spiv list of cars which were going to go 90 days that month and put extra commission on those cars, up to £500 per car. I used that list as my shopping list, once taking £5500 extra commission in a month out of it!

And therein lies a major customer relationship / standard of service issue. You can't blame any sales person wanting to maximise their income but I have lost count of the number of times I have witnessed potential customers being sold what the sales execs wants to sell rather than what the customer wants / needs

Edited by andy665 on Saturday 30th July 10:39

[TomJS]

andy665 said:

markmullen said:

My old GM used to produce a spiv list of cars which were going to go 90 days that month and put extra commission on those cars, up to £500 per car. I used that list as my shopping list, once taking £5500 extra commission in a month out of it!

nd therein lies a major customer relationship / standard of service issue. You can't blame any sales person wanting to maximise their income but I have lost count of the number of times I have witnessed potential customers being sold what the sales execs wants to sell rather than what the customer wants / needs

Potentially the customer could also bag a decent discount on those cars as well, since they were about to be shipped on for a low value. So if the customer isn't picky, then everyone could be a winner. (or at least the dealership lost out less than it could have done)

[aw51 121565]

andy665 said:

And therein lies a major customer relationship / standard of service issue. You can't blame any sales person wanting to maximise their income but I have lost count of the number of times I have witnessed potential customers being sold what the sales execs wants to sell rather than what the customer wants / needs

Edited by andy665 on Saturday 30th July 10:39

Strong seller meets weak buyer .

It can go the other way too (can get some right bargains that way!) - and there are two 'inbetween' scenarios as well (where both the seller and buyer are either strong seller and buyer or weak seller and buyer), which can be, errm, enlightening for the wrong reasons sometimes .