Worst loss on a car

[Adam B]

Zwolf said:

Not really, £25,000 of a new £150k car is VAT

I have never understood this logic, that you throw away the vat value on a new car, happy to be persuaded otherwise but until then I will stick with bks argument.

The price of that car is £150k, it's irrelevant whether that money goes to the garage or the taxman. When you buy that same car it's value is largely determined by the cost of the alternative new price which is still 150 not 125.

The exception is demo cars i imagine.

There the garage buys the car and so can reclaim the vat. When it sells the car it is as a 2nd hand car where it pays vat on the margin not the full price, but still bases the price on a new car. Nice margin in demo cars or bargain hard?

[LordHaveMurci]

Classic Impreza Turbo, lost over £12k in 4 years.

BMW 330D Touring, lost £13k in 4 years.

Mk5 Golf GTi, £1.5k in 9 months.

Current 2001 3.4 996 Coupe, paid £21k, now worth somewhat less from what I've read on here

I did have a Fiat Coupe 20VT for 2 years until somebody wrote it off, only lost about £1k on that
Lost about £2.5k in 5 months on its replacement though

Also lost about £5k on my Motorhome.

And I've never bought a brand new car!

[HBFS]

Some of these posts are making me feel better.
I bought a Fabia vRS 3 months ago, apparently now its worth £3k less than what I paid for it and I know this because I want a change.

[Paul_B]

Not much compared to some on here, but my missus 328Ci (E46). Gave £3600 for it just over a year ago, just sold it for £2000. Considering I've never lost on a car before, infact usually made money, it upset me.

[Adam B]

POORCARDEALER said:

1996 Aston Martin Vantage

I sold a brand new one for list, man did under 1000 miles in it in 4 months and hated it.........he lost £60K!

Wtf! What was list price?

[TameRacingDriver]

HBFS said:

Some of these posts are making me feel better.
I bought a Fabia vRS 3 months ago, apparently now its worth £3k less than what I paid for it and I know this because I want a change.

Unlucky, these used to hold their value at one time. I bought one new (stupid me) and then had to sell it a year later as I moved out and couldn't really justify the repayments. I put 20,000 miles on it and still only lost £1,500 in a year.

I've been looking at these again, even though I can't afford, I still like the look, but it'd have to be a modded one as for me the standard ones aren't much cop, bit boring, which IMO is probably why you want a change I'm guessing?

Assuming its not the diesel lump putting you off, I'd suggest a remap, FMIC, Ibiza Cupra TDI intake, some coilovers and Octy vRS brakes. That would really transform it into an insane little smog monster!

As for losses on cars, I'm the master at it. I've lost about £20K on cars in the last 8 years.

[Deva Link]

Adam B said:

Zwolf said:

Not really, £25,000 of a new £150k car is VAT

I have never understood this logic, that you throw away the vat value on a new car, happy to be persuaded otherwise but until then I will stick with bks argument.

The price of that car is £150k, it's irrelevant whether that money goes to the garage or the taxman. When you buy that same car it's value is largely determined by the cost of the alternative new price which is still 150 not 125.

Correct.

It's possible the car could sell for a higher price if it's in demand and on a long delivery time.

Adam B said:

The exception is demo cars i imagine.

There the garage buys the car and so can reclaim the vat. When it sells the car it is as a 2nd hand car where it pays vat on the margin not the full price, but still bases the price on a new car. Nice margin in demo cars or bargain hard?

Not correct.

The garage pays VAT on the full sale price of the car.

Do you seriously think the Government would just let the VAT go?

[Zwolf]

Deva Link said:

Adam B said:

The exception is demo cars i imagine.

There the garage buys the car and so can reclaim the vat. When it sells the car it is as a 2nd hand car where it pays vat on the margin not the full price, but still bases the price on a new car. Nice margin in demo cars or bargain hard?

Not correct.

The garage pays VAT on the full sale price of the car.

Therein lies the difference between VAT Qualifying and Margin Scheme used cars.

It's not VAT on top of the sale price of the car, it's the VAT element of the used sale price.

Say it is £30k new. £5k VAT is therefore reclaimed. That car gets sold for £24,000 six months later, the VAT element due is £4k (20/120 of £24k), rather than 20% of £24k additionally (£4,800).

If that second purchaser is also a business that can reclaim half or all of the VAT on a VAT qualifying car, the process repeats until somebody who isn't able to reclaim VAT buys it (i.e. a typical retail consumer).

So the net cost to the business is (£30k ex-VAT) - (£24k ex-VAT) = £25k - £20k = a £5,000 loss, rather than the £6,000 it would otherwise be if nothing was done with the original VAT.

For a margin scheme car, that is where VAT is not reclaimable at purchase nor due at disposal. In that case (more often the case with used cars) a business pays VAT on the gross margin between purchase price and sale price.

So in the example above of a dealer selling a nearly new car upon which they did not reclaim the VAT (say it was bought by a retail customer and traded in six months later), the sale price is still determined by market value at £24,000 (the market doesn't know or care how a particular car was accounted for), the dealer will have brought into stock at around £21,000.

They then pay 20/120 (simplified to 1/6) of that difference - irrespective of the costs of sale involved between the two figures. (£24k - 21k) x 1/6 = £500 VAT due to HMRC.

[Pig Skill]

Zwolf said:

Robsti said:

Eddh said:

How do you people do it, bizzare!

They do it through PCP/HP type agreements and then roll the pain into the next agreement by making the term and the balloon greater keeping the payments the same so convincing themselves that they got a great deal!

This all aided and abetted by salesmen who then laugh their tits off when the punter is out the door!

God you're a stuck record. Sorry to disappoint, but not every new car or every car over £5k is sold via PCP. Some people just earn and/or have more money than others.

That's as may be, but he is dead right. People just box it all up into a monthly figure that they can afford to pay and happily dick around in their new car losing fk loads of money each month. They are paying a beefy amount of interest for a finance company to lend them a car for a few years. Its madness. No wonder the West is in such a bleedin mess.

[Adam B]

Deva Link said:

Adam B said:

The exception is demo cars i imagine.

There the garage buys the car and so can reclaim the vat. When it sells the car it is as a 2nd hand car where it pays vat on the margin not the full price, but still bases the price on a new car. Nice margin in demo cars or bargain hard?

Not correct.

The garage pays VAT on the full sale price of the car.

Do you seriously think the Government would just let the VAT go?

Not actually what I said, so wind your rofl in

Of course the garage pays full vat when it takes the car as stock, as a business you can usually then reclaim vat paid against vat due. Zwolf - are you saying this is not possible?

I realise I was getting confused between vat and corporation tax on the profit between buying and selling although selling a demo at a loss presumably decreases profits liable to company tax.

[fluoxetine]

2004 Caterham Academy car - Cost £22k in Feb '04 with options (weather gear / black pack etc), probably another £5-600 in build consumables - Raced for the Academy season, and a couple of Super Grad's races. £1-1.5k spent on tyres / Super Grad upgrades = £24k?

Sold April 2005 for £12k...Needed a new nose cone / respray (decals had peeled the paint off), but on the button otherwise.

(I know, I know...)

[Zwolf]

Adam B said:

Of course the garage pays full vat when it takes the car as stock, as a business you can usually then reclaim vat paid against vat due. Zwolf - are you saying this is not possible?

Not at all, I'm saying VAT is paid and reclaimed at point of purchase, then paid again when sold - whichever way around those figures are. Which in practice is reclaiming VAT paid against VAT due, so there'll be a net VAT per deal figure that won't end up much, if at all different to the same car sold via the margin scheme - they get the same pound of flesh one way or another, it's just how it impacts cashflow differently and is accounted for in each case.

Consider a VAT Qual vs. Margin used car. In each case the car is bought for £21k and sold for £24k.

VAT Q:
Bought for £21k, so £3,500 VAT paid and reclaimed, so your actual net price is £17,500.
Sold for £24k (£20k net), £4k VAT due, so all said and done you've a profit of £2,500 (£24k ex-VAT - £21k ex-VAT).
HMRC end up with a net £500 from the transaction.

Margin Scheme:
Bought for £21k, nothing reclaimed.
Sold for £24k, nothing paid.
£3k gross margin, taxed at 20/120 = £500 paid to HMRC and a £2,500 profit for the dealer.

(prep, marketing and warranty costs ignored as they're the same either way).

Same purchase and sale prices, same price to the customer, same profit and VAT paid - just accounted for differently and with different cashflow, bearing in mind that VAT isn't reclaimed or paid instantly.

Adam B said:

I realise I was getting confused between vat and corporation tax on the profit between buying and selling although selling a demo at a loss presumably decreases profits liable to company tax.

Yes, that does reduce profits liable to Corporation Tax as do other losses and expenses. It isn't accounted for on a per deal basis, because then you'd have to account for all the business's various overheads and outgoings on a per deal basis too and that's just unnecessary. Which is why most businesses make provision for a nominal "house charge" at usually a flat rate per deal that goes towards departmental costs not directly attributable to deals, or into the "write down pot" to offset things like demo losses etc.

VAT is calculated and accounted for on a per deal basis though. It's all a bloody massive headache TBH.

Edited by Zwolf on Saturday 26th November 16:54

[Deva Link]

Adam B said:

Deva Link said:

Adam B said:

The exception is demo cars i imagine.

There the garage buys the car and so can reclaim the vat. When it sells the car it is as a 2nd hand car where it pays vat on the margin not the full price, but still bases the price on a new car. Nice margin in demo cars or bargain hard?

Not correct.

The garage pays VAT on the full sale price of the car.

Do you seriously think the Government would just let the VAT go?

Not actually what I said, so wind your rofl in

Maybe it wasn't what you meant, but it is what you said - your words are quoted up there!

They don't pay VAT on the margin on ex-demo cars, they pay VAT on the sale price. Ex-demo cars are often not much cheaper than discounted new cars, so, as Zwolf indicates, there's probably not a lot in it in terms of VAT saving.

[russy01]

daemon said:

I had four on the trot...

New 535d M Sport in May 2007 - bought for £42K sold six months later for £33K.

Then bought a new X5 in Nov 2007 - bought for £47K, sold six months later for £42K.

Then bought an 05 320d SE for £15K, sold the following month for £13K

Then bought a three year old 535d M Sport for £23K. Drove it for a year, sold it for £17K.

Not proud of any of that....

What were you playing at? Can you no make your mind up?

[Rufus]

My father very sensibly bought cars at 6-8 months old, never really lost big on anything, and he had some very nice stuff. I do try to emulate this and usually manage, some stuff I just refuse to wait for, hate to think what I've lost on a few but I'm a keeper so I never normally find out until well down the line after I've really had my monies worth.

[pidsy]

£4.5k in 6 weeks on a hilux a few years ago.

[Adam B]

Deva Link said:

Adam B said:

Deva Link said:

Adam B said:

The exception is demo cars i imagine.

There the garage buys the car and so can reclaim the vat. When it sells the car it is as a 2nd hand car where it pays vat on the margin not the full price, but still bases the price on a new car. Nice margin in demo cars or bargain hard?

Not correct.

The garage pays VAT on the full sale price of the car.

Do you seriously think the Government would just let the VAT go?

Not actually what I said, so wind your rofl in

Maybe it wasn't what you meant, but it is what you said - your words are quoted up there!

They don't pay VAT on the margin on ex-demo cars, they pay VAT on the sale price. Ex-demo cars are often not much cheaper than discounted new cars, so, as Zwolf indicates, there's probably not a lot in it in terms of VAT saving.

In retrospect I am completely wrong, too much Sauvignon, my apologies sir

[-Z-]

Decky_Q said:

Worst loss was my Alfa 147 2.0TS new in 2003-£22,500 in 2005 was looking at boxster and it was valued at £6k, in 2009 valued at £1400, its now my track slag.

Your Profile said:

Bought for £6,500 in January 2006 at 50,000 miles. Now worth about £2,500 at 85,000 miles.

really nice car, with alot of nice luxuries but ultimately too heavy to be sporty, too low on power compared to simliar 'warm' hatches and way too thirsty (about 20-25mpg).

oh an it costs a leg to have any work at all done to it!

buy the diesel variant and remap it in my opinion.

Cheating

Edited by -Z- on Sunday 27th November 13:33

[HBFS]

TameRacingDriver said:

Unlucky, these used to hold their value at one time. I bought one new (stupid me) and then had to sell it a year later as I moved out and couldn't really justify the repayments. I put 20,000 miles on it and still only lost £1,500 in a year.

I've been looking at these again, even though I can't afford, I still like the look, but it'd have to be a modded one as for me the standard ones aren't much cop, bit boring, which IMO is probably why you want a change I'm guessing?

Assuming its not the diesel lump putting you off, I'd suggest a remap, FMIC, Ibiza Cupra TDI intake, some coilovers and Octy vRS brakes. That would really transform it into an insane little smog monster!

As for losses on cars, I'm the master at it. I've lost about £20K on cars in the last 8 years.

You did well to only use that, I think the VAT and 0% finance deals have probably dragged the resale value down.
I did look into the remaps, apparently it'll do 60 in under 6 and 100 in about 13 seconds. But at 22, with 5 points I dread to think the premium that would command...

More troubling for me, and the reason for sale is that it just isn't refined enough. I've done 10,000 miles in the 3 months and:
The stereo isn't good enough
Suspension too hard, though I could probably put up with this if it wasn't so loud on the motorway...

I do love the little thing, but its not quite right for me.
I'm after a 'Rocco now with the 2l TSI, DSG, Upgraded stero, and adaptive chassis. Which apparently makes fr a very smooth drive.

[Robsti]

russy01 said:

daemon said:

I had four on the trot...

New 535d M Sport in May 2007 - bought for £42K sold six months later for £33K.

Then bought a new X5 in Nov 2007 - bought for £47K, sold six months later for £42K.

Then bought an 05 320d SE for £15K, sold the following month for £13K

Then bought a three year old 535d M Sport for £23K. Drove it for a year, sold it for £17K.

Not proud of any of that....

What were you playing at? Can you no make your mind up?

As daemon has said many times PCP can be a good way to "own" cars!

But what he meant was it can be a very expensive way to rent cars!