Traders profit margin
Discussion
I know that car dealers will claim poverty, but I am genuinely interested in a dealers margin.
Looking to change one of our cars, that I paid £8,750 for last November. Today's offer - £4,500. Now I have not yet tested the water properly, but have glanced at the classifieds, and reckon it would still fetch £7,500 - £8,000 retail.
Do dealers really look for this sort of margin on a used car or have I been unlucky?
Looks like I'll be selling privately then...
For the sake of clarity - I'm talking about pitches with the portacabin office, not the full blown glass showroom.
Looking to change one of our cars, that I paid £8,750 for last November. Today's offer - £4,500. Now I have not yet tested the water properly, but have glanced at the classifieds, and reckon it would still fetch £7,500 - £8,000 retail.
Do dealers really look for this sort of margin on a used car or have I been unlucky?
Looks like I'll be selling privately then...
For the sake of clarity - I'm talking about pitches with the portacabin office, not the full blown glass showroom.
Yes Traders are that greedy.
It never fails to amaze me that people use them. But they do.
Margins of this sort mark up are common.
Gross margins that is there are costs to any Trader.
Any Part Exchanges and all the other costs and warranties etc.
Mot a job I would want. Dealing with the public? No thanks.
It never fails to amaze me that people use them. But they do.
Margins of this sort mark up are common.
Gross margins that is there are costs to any Trader.
Any Part Exchanges and all the other costs and warranties etc.
Mot a job I would want. Dealing with the public? No thanks.
www.motoring.co.uk - use free valuation to get guide price.
www.autoebid.co.uk - another free valuation site.
That'll let you see if the offer is on the level.
Not all cars make book - depends on how long the car is likely to sit for, but a diesel Merc should make its valuation, but extras fitted won't add anything, just make it easier to sell.
www.autoebid.co.uk - another free valuation site.
That'll let you see if the offer is on the level.
Not all cars make book - depends on how long the car is likely to sit for, but a diesel Merc should make its valuation, but extras fitted won't add anything, just make it easier to sell.
Ozzie Osmond said:
Hee, hee. All this motoring wisdom from the same people who happily go to a pub and spend £3.50 on a pint of beer they could have got for £1.25 at Tesco.
Maybe not the best anology but I know what you mean. The fact is that most people feel more secure buying from a dealer. I know there are some proper cowboys about but generally the cars will have been prepared for sale and there is at least some legal comeback if it all goes wrong.davidjpowell said:
I know that car dealers will claim poverty, but I am genuinely interested in a dealers margin.
Looking to change one of our cars, that I paid £8,750 for last November. Today's offer - £4,500. Now I have not yet tested the water properly, but have glanced at the classifieds, and reckon it would still fetch £7,500 - £8,000 retail.
Do dealers really look for this sort of margin on a used car or have I been unlucky?
Looks like I'll be selling privately then...
For the sake of clarity - I'm talking about pitches with the portacabin office, not the full blown glass showroom.
This old chestnut again Looking to change one of our cars, that I paid £8,750 for last November. Today's offer - £4,500. Now I have not yet tested the water properly, but have glanced at the classifieds, and reckon it would still fetch £7,500 - £8,000 retail.
Do dealers really look for this sort of margin on a used car or have I been unlucky?
Looks like I'll be selling privately then...
For the sake of clarity - I'm talking about pitches with the portacabin office, not the full blown glass showroom.
Every px price is different, and can depend on the car and the situation behind tha offer, but normally you can say the following:
Are you giving a warranty to the dealer?
Would you allow them to come back to you saying you forgot to say about an expensive issue with the car?
No? thought not.
Selling to a dealer, they buy it from you trade price. And will look at the current auction price and then make sure they arent paying more than that. Just like you will go round every dealer to get the best price for the car you want, they will offer the best price for them to buy yours.
If they buy yours in too high and end up keeping it for months on end and end up seeling at a loss,they go out of business, so of course they will offer you a price lower than you think your pride and joy is worth.
Why not put the details of your car up and see what dealers on here think? or just log in to webuy any car see what they say, then take off another 10 percent for faults they find upon inspection and their fee too.
You do know that you don't have to sell it to the trader? The trader in question might not even had wanted to buy your car, but he is making an offer (albeit a low one) anyway to try and facilitate the sale of his car.
Without knowing the details of the car, I'll have a guess.
If you paid £8,750 nearly a year ago, I'd say the realistic selling price today is more like £6,500 - £7,000. Just because you have seen a few priced for more than this it does not mean that those cars are the ones selling.
Based on the above it might mean your car could be worth up to £5,000 trade to the right dealer that wants it, so you could shop around for a better offer, or as mentioned sell it yourself.
Its a bit of a cliche now traders justifying their margins, but I will say this. If we are not making money we are losing money, and it can swing very quickly from the former to the latter.
I sold a car on Saturday for £8,500. When I first had it in stock 6 weeks ago I might have made £1,500 after costs(with a £2,500 margin). After a few price reductions, and fixing another problem it developed I made £30. If I had in stock much longer I would have lost money.
Of course I've also sold cars this month that have made money. It is always a gamble and a dealer never really knows for sure how much they will make when buying a car. The margins tend to be proportional to the amount of money and risk involved in selling a particular car. A nice clean little KA that would sell easily for £1,500 with little prep might only have £500 margin, whilst a £100,000 Italian super car with an unknown amount of prep, might have £20,000 margin.
Somewhere between margin and net profit there is something called costs.
Without knowing the details of the car, I'll have a guess.
If you paid £8,750 nearly a year ago, I'd say the realistic selling price today is more like £6,500 - £7,000. Just because you have seen a few priced for more than this it does not mean that those cars are the ones selling.
Based on the above it might mean your car could be worth up to £5,000 trade to the right dealer that wants it, so you could shop around for a better offer, or as mentioned sell it yourself.
Its a bit of a cliche now traders justifying their margins, but I will say this. If we are not making money we are losing money, and it can swing very quickly from the former to the latter.
I sold a car on Saturday for £8,500. When I first had it in stock 6 weeks ago I might have made £1,500 after costs(with a £2,500 margin). After a few price reductions, and fixing another problem it developed I made £30. If I had in stock much longer I would have lost money.
Of course I've also sold cars this month that have made money. It is always a gamble and a dealer never really knows for sure how much they will make when buying a car. The margins tend to be proportional to the amount of money and risk involved in selling a particular car. A nice clean little KA that would sell easily for £1,500 with little prep might only have £500 margin, whilst a £100,000 Italian super car with an unknown amount of prep, might have £20,000 margin.
Somewhere between margin and net profit there is something called costs.
redgriff500 said:
minghis said:
For your average used car selling for around £3,000 - £6,000, whatever the car costs stick £1500 on that - then assume you'll lose around £400 - £500 on MOT, service, valet, warranty and general prep. Leaves a gross margin of around £1000.
Roughly this. ^^^Obviously my expectations maybe unrealistic, but I really do not think so this time. Heyho maybe he did just not fancy the trade...he certainly was not prepared to work for it (is would not return calls),
Ignoring the issues around margins, prices have dropped more than you may realise over the past 12 months, hence its not worth close to what you would have paid for it last year.
The market is currently very slow, so dealers will bid low unless the car is exceptionally saleable - as it could just sit on his forecourt for a couple of months (whilst dropping £500 / month in book value).
Then they have to prep the car for a retail customer ie make paintwork good, refurb alloys, tyres, service due, new mot, valet, fix any little faults - could be very little for your car but on average more like £500-£1000 per car.
The market is currently very slow, so dealers will bid low unless the car is exceptionally saleable - as it could just sit on his forecourt for a couple of months (whilst dropping £500 / month in book value).
Then they have to prep the car for a retail customer ie make paintwork good, refurb alloys, tyres, service due, new mot, valet, fix any little faults - could be very little for your car but on average more like £500-£1000 per car.
Question is are you are prepared to sell privately to get more than the low trade offers, then go in with cash? If the answer is no then they have you over a barrel.
I suppose sometimes a dealer makes loads on a car that comes in and goes out quick with minimal prep required, but will sometimes make zilch due to a car that doesn't sell and loses money every month.
You do get spun some nonsense sometimes though, i'm looking to swap and had offers on my car in line with CAP at 6-7k (although mine is loaded with extras, which they happen to forget). The car would fetch 9k+ all day long in a private sale. Then they say they have very little room for money off their top retail plus a bit more car. Maybe £500 off max, we'll be losing money, honestly guv, our dealers (Lexus)don't operate like that, we have very little margin. This is on a car up for 24k which (using the same CAP book) has a trade value of 17k. Having said that if they can get full money for them then thats what they're worth!
Athough there is one i enquired about around 6 or 7 weeks ago which was up for 24k, with no room for haggling of course, which i notice has been dropped to 21k now..... mmmmmm.
I may well have paid 22k for that 6 weeks ago, so the dealer has lost out there...
I suppose sometimes a dealer makes loads on a car that comes in and goes out quick with minimal prep required, but will sometimes make zilch due to a car that doesn't sell and loses money every month.
You do get spun some nonsense sometimes though, i'm looking to swap and had offers on my car in line with CAP at 6-7k (although mine is loaded with extras, which they happen to forget). The car would fetch 9k+ all day long in a private sale. Then they say they have very little room for money off their top retail plus a bit more car. Maybe £500 off max, we'll be losing money, honestly guv, our dealers (Lexus)don't operate like that, we have very little margin. This is on a car up for 24k which (using the same CAP book) has a trade value of 17k. Having said that if they can get full money for them then thats what they're worth!
Athough there is one i enquired about around 6 or 7 weeks ago which was up for 24k, with no room for haggling of course, which i notice has been dropped to 21k now..... mmmmmm.
I may well have paid 22k for that 6 weeks ago, so the dealer has lost out there...
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