How much do indy dealers make on cars?

[jason61c]

I had a look at a private is220d but didn't go for it for a number of reasons(none of them price).

This one....

http://www.ebay.co.uk/itm/2008-Lexus-Is-220D-Se-17...

The day after it was picked up it went for sale here for £2k more than the sale price...

http://www.ebay.co.uk/itm/LEXUS-IS-220d-2-2TD-MULT...

So is this the normal margin they make/aim for?

[mattman]

Some you do, others you don't - there's a lot of factors and costs you need to cover by the profit margins, I know that buying at the right price is one of the hardest and time consuming aspects of the job

[LaurasOtherHalf]

30%
(ish)

[Benjy911]

I did some work experience at my local vauxhall dealer and you soon see that even know that it may look like an easy £2k slapped on top, it's generally quite a bit less. Obviously some cars are better than others, but potentially it needs a service, maybe some bodywork, valet, advertising and finally some sort of warranty. Then there is the fact most people will want some sort of discount off screen price.

[Engineer1]

As above but if the dealer adds £1500 but gives you £500 below book it's the same as the dealer who added £2000 but gave you book on trade in.

[POORCARDEALER]

Average margin on a sensibly priced car in the 5-10k bracket would be around 1k, less prep warranty etc

[jason61c]

Engineer1 said:

As above but if the dealer adds £1500 but gives you £500 below book it's the same as the dealer who added £2000 but gave you book on trade in.

I'm aware of all that, just wondered what the normal margins are!

[crostonian]

Don't forget also that out of a £2000 gross profit £333 will go to the VAT man.

[Megaflow]

Looks about right to me. As crostonian already said £333 will go straight to the tax man.

So out of his £2000 gross margin, I'm not going to call it gross profit, because it isn't, it will look something like this:

Tax Man - £333
MOT & Service - £200 (I haven't read the eBay ad in full so sort of assuming it needs something doing)
Valet - £100 (Any decent trader is going to clean a car properly before sale)
Warrenty - £200 (Any registered trader by law has to give 3 months warrenty, so he should set something aside for this)
Total - £833

So his gross margain has been reduced from ~£2k to just over £1k just through costs associated directly to the car. Now he has to cover overheads of the business, pay himself a wage and make a profit.

And all of that assumes he won't take an offer on it.

[HTP99]

Hi, new here, this is my first post.

Many think a £2000 margin is extortionate on a car, people look at the margin and mistakenly think that the garage will be walking away with the whole £2000, wrong.

Firstly "a deal" will probably be asked for, after a bit of negotiation, say £300 off or a £300 over allowance on their part ex, so we are at £1700, a service will most likely be needed, so let's say, £250, we are now £1450, while its being serviced the technician notices a tyre and front brake pads are needed, on a car like the Lexus, I guess pads probably £150 and a decent tyre another £150, so we are now £1150, 6m warranty, another £200, valet £25 so we are now, after all prep, £925 take the VAT off we have a grand total of £770 profit and out of that the salesman needs paying, even if it didn't need a tyre and pads the profit after VAT will be £1020.

Also who knows what other prep has taken place before being placed on the forecourt, a coUple of smart repairs and a alloy wheel refurb? That's another £150.

Is a £2000 margin now so bad?

I'm pretty sure the vat comes off after all other associated costs, however I cold be wrong.

(I think my maths works out ok?!)

[paul0843]

When i see overheads that dealers carry,i am amzed how they make a profit..

[Roo]

paul0843 said:

When i see overheads that dealers carry,i am amzed how they make a profit..

So are we a lot of the time.

[r1ch]

This might sound a bit thick, but i'll ask anyway.

Why would anybody buy from an indy dealer when you can pick up the same car privately for so much less?

[S3_Graham]

r1ch said:

This might sound a bit thick, but i'll ask anyway.

Why would anybody buy from an indy dealer when you can pick up the same car privately for so much less?

Warranty? Peace of mind? Trade in?

[HTP99]

S3_Graham said:

r1ch said:

This might sound a bit thick, but i'll ask anyway.

Why would anybody buy from an indy dealer when you can pick up the same car privately for so much less?

Warranty? Peace of mind? Trade in?

And backup, £8000 is a lot of money to put into a car with absolutely no fall back.

[CraigMST]

Independant dealers play £250 for a service? Really?
I'd have thought a service wouldn't be needed on alot of cars if they went by the manufacturers guidelines.
Then the actual cost of £250. Would this be done by the car manufacturer or a garage that the indy knows? Because then it would be alot less than £250.
Valet, £100?! Really. Don't believe that one bit unless it's a high end car.

Are all the people above in the trade or are they just spouting what they've read on the internet?

[HTP99]

I'm in the trade, for a main dealer, we actually pay £15 for a full valet, I said £25 as I just assumed it may be a bit more for a slightly higher end dealer, as for servicing, I was being kind, I have seen shocking servicing bills for mundane stuff that run into the many hundreds.

[Dodsy]

I wouldnt imagine a dealer is paying the kind of prices mentioned in this thread for servicing etc. i know a local garage who service cars for a dealer. A service means an oil change probably £50 tops , may not even get a new oil filter. Tyres will be the cheapest ditchfinders , if it must gave brake pads they will be the cheapest crap out there.

I have been looking for a jag xj8 for a few months now , every dealer car i have seen has nasty tyres knackered brakes and a full jag service history apart grom the last which was done by some local garage. It really puts me off tbh. One dealer pretty much threw me off his forecourt for telling him i would buy the car but would need to knock off a few hundred to replace the crap tyres he'd put on.

[Roo]

HTP99 said:

I'm pretty sure the vat comes off after all other associated costs, however I cold be wrong.

Correct, you are indeed wrong.

The VAT is payable on the margin between the buying and selling price irrespective of any costs or expenditure.

[HTP99]

Roo said:

HTP99 said:

I'm pretty sure the vat comes off after all other associated costs, however I cold be wrong.

Correct, you are indeed wrong.

The VAT is payable on the margin between the buying and selling price irrespective of any costs or expenditure.

Thanks, more than happy to be corrected, I couldn't remember, I don't do the costings, so then even less is made out of each deal.