20% off a new car? Really?
Discussion
Sheepshanks said:
Fast Bug said:
And 50% just shows that there really are some clueless loons who try and sound like they know something when really, they know the square root of f
k all 
I know it suits you to dismiss it, but several people have explained how it works in this thread.k all Most people focus on the dealer margin, which is of course pathetic.
But the importer (ie MB UK) makes a margin, so does the in-house finance arm, and of course there's the manufacturing margin.
So there's a bunch of people taking a cut, all of whom could discount if they wanted / had to.
AB said:
Really irritates me, why not just price them a bit more realistically and NOT offer ridiculous discounts?
My BIK is still calculated on the list price!
Because a lot of people will walk in and pay full price because the salesman points out the lovely monthly figure and doesn't spend much time on the overall retail price. For every huge discount we get, somebody else pays top whack. That's the circle of life. My BIK is still calculated on the list price!
As for the bik bit, it sucks but there's no other way of measuring it other than official rrp
Sheepshanks said:
I know it suits you to dismiss it, but several people have explained how it works in this thread.
Most people focus on the dealer margin, which is of course pathetic.
But the importer (ie MB UK) makes a margin, so does the in-house finance arm, and of course there's the manufacturing margin.
So there's a bunch of people taking a cut, all of whom could discount if they wanted / had to.
You go get a discount from the importer, in house finance arm, and directly from the manufacture then... on top of your dealer margin as well.Most people focus on the dealer margin, which is of course pathetic.
But the importer (ie MB UK) makes a margin, so does the in-house finance arm, and of course there's the manufacturing margin.
So there's a bunch of people taking a cut, all of whom could discount if they wanted / had to.
Fast Bug said:
And 50% just shows that there really are some clueless loons who try and sound like they know something when really, they know the square root of fk all
The 50% is pretty much bang on, given that (as an example) BMW's materials/freight/shipping costs, as per their accounts are 55.2% of revenue, and their revenues are against their wholesale cost, not the higher price that the consumer pays, nor the higher again list price. The material cost of a BMW is going to be, on average (some more, some less), even slightly less than half of list. k all Obviously they still need to cover R+D + factory costs (though these might have been ammortised already), advertising and pay wages, but it's by no means a given that a car will pay its way. The X-Type lost £1.43 billion, or £4k/car, but they will still will have sold well above the marginal production cost for each car. Likewise the Veyron, VW spent $1.6 billion on R+D, and then it's said they lost £3 million per car or some such - it's not really true - the issue was they only built around 300, at a million quid each, so the price of materials in each car was basically irrelevant given the impossibility of recouping the investment required to build even one of them. I'm not sure the actual production cost of each car, but it could have been a fraction of the sales price.
Fast Bug said:
I'll bow down to your vast superior knowledge then, and take my 15 years working in sales in the motor trade, from retail, to fleet sales and directly for the manufacturer and being involved in working deals out to the last penny what the vehicle will OWE the manufacturer.
Your posting does give a view of someone unhelpful/confused/clutching at straws:Fast Bug said:
Sheepshanks said:
You know better than many that it's true.
For clarity for others, the issue is that the margin isn't all in the dealers hands, it's shared amongst several parties. But it can be made available if necessary. Hence discounts of 25% are possible yet the poor dealers allegedly make single figure margins.
Put the crack pipe away dude For clarity for others, the issue is that the margin isn't all in the dealers hands, it's shared amongst several parties. But it can be made available if necessary. Hence discounts of 25% are possible yet the poor dealers allegedly make single figure margins.
Fast Bug said:
So whilst yes, some vehicles it is possible to get 25% off,
My Grandad used to work for Fords, so as a relative I got 25% off their brand new cars. I presume the dealer still made their cut as they were keen on my repeat business. Also I got free insurance and low rate finance. This was back in my first few cars, circa 1995 onwards, for a few years util I tired of Fords.
Sheepshanks said:
Snollygoster said:
You go get a discount from the importer, in house finance arm, and directly from the manufacture then... on top of your dealer margin as well.
Sure - that's how we get to the 25% (or sometimes even greater) figures. But the various people in the chain are still making money on the deal. Not as much as they'd like, obviously, but however they're compensated, they aren't handling those deals for nothing.Snollygoster said:
The manufacturer support isn't a negotiation. It's given to everyone.
True, although some dealers have been known to "forget to mention it" to customers!There's a bit of confusion in the thread regarding profit margins, discounts etc, but as far as a buyer is concerned you can't speak to the supply chain, only the dealer.
With a bit of generalisation it's probably fair to say dealers from most brands have 12-14% margin in their cars front and back end combined. Then there's sometimes some Manufacturer Support, a pre-agreed figure from the quarterly marketing campaign available to all, and only really offered/necessary on slightly older & slower selling cars, then there's sometimes a finance deposit contribution, again pre-agreed for that quarter, again available to all.
If you're seeing discounts much above the 10-14% mark then the additional money is coming from the manufacturer as support above the dealers own margin.
unrepentant said:
thelawnet said:
Car list prices have a lot of margin in. For some brands its normal to inflate the price by 25%.
Really? Can you name those brands because I'm looking for a new car and I'd really like to know which ones are inflated by 25% so that I can do the best deal for myself. You sound like you're a well informed individual so help a brother out and give me the inside scoop on these brands. Breath well and truly baited in anticipation.
Orangewheels said:
If you're seeing discounts much above the 10-14% mark then the additional money is coming from the manufacturer as support above the dealers own margin.
You keep saying manufacturer when you mean importer. In the case of Mercedes that's Mercedes-Benz UK Limited, who of course don't build car themselves. 
Sheepshanks said:
Sorry I deleted my post as I didn't want to detract from Fast Bug being handed his arse.
Completely disagree. Fast Bug will know their prices better than either you or I. Anyone can get the account details for a car manufacture/dealer group and find out how much they make, but to just but 1 and 1 together doesn't make 3. Fundamentally, as others have stated, there are several parties at play. You will only be able to negotiate with the dealer as to what the price is sold to you at, or in the case of the OP, you can use a broker to aid with this process.
All of the other money made on the car plays no part in how much you can get off a car. Those prices are set, and on occasions, the sales and marketing company of a manufacture in that country will offer additional support. The dealer has no involvement of this.
To sum it up as simply as possibly.
Manufacture make car for x.
Manufacture sell the car for y to importer.
Importer sell the car for z to the dealer.
The dealer sells the k to the customer.
As someone else has rightly said, their are deals done throughout that chain which can effect offers and discounts. For instance, a dealer may agree to purchase a bulk deal of 500 specific vehicles from the importer company in agreement to register them before a certain date. They may get an additional bonus, which in turn the dealer can choose if they want to pass that saving onto the customer, or retain profit.
Another example, similar to the case of the original OP's and Merc additional £2,500, is that the Import Company MBUK will give that money to the dealer, which they in turn will pass onto you, and this is what the MBUK will advertise. The former example they won't.
Ultimately, the general public will only be able to buy the car directly from the dealer. The dealer will buy the car for a certain amount, and will in turn obviously charge you more. Any other discounts and monies are out of your control, and is seen as a bonus.
If a manufacture is making 50% on the sale of vehicle, the dealer will not see anything close to that, nor will Fred Smith be able to negotiate on that as that is what they are selling it the dealer at.
I fear this thread is getting far to out of hand as it's a very complex procedure with ever changing deals being done. To get back to the OP's original point, yes it's possible to get 20%. It's possible to get 40% of some cars. The chances of the latter being a rare occurrence. There is no linear patten, as there are so many factors in play.
Sheepshanks said:
You keep saying manufacturer when you mean importer. In the case of Mercedes that's Mercedes-Benz UK Limited, who of course don't build car themselves.
Mercedes Benz UK Limited is simply a part of Daimler Benz AG, so it's exactly the same thing, as far as a customer is concerned they do not differentiate. The legal definition of a limited company means it's a separate entity for tax purposes but that's really just arguing over semantics, again may be useful for a discussion on the overall breakdown on what % of money goes where initially, but as it all just ends up in Daimler Benz's pockets anyway it's a moot point, as opposed to the dealer profit margin which is an entirely separate thing. All monies of this type are expressed to the dealer and customer as "Manufacturer Support" and it's a common industry term, hence my use of it.Most manufacturers UK importers are owned by their parent companies, it's rare to see a private importer for any major brand, just occasional small scale car sales, in which case often it's a specific dealer group that owns the importing rights.
Mercedes are rare in that they do also own a part of their own dealership network in the UK, nearly all other UK dealers are franchises.
Sheepshanks said:
Sorry I deleted my post as I didn't want to detract from Fast Bug being handed his arse.
Not at all. Posters are making out that 25% is available as a standard margin which ever manufacturer you go to. This is not the case.Can you show me a new, unregistered car with 50% off please?
Fast Bug said:
Can you show me a new, unregistered car with 50% off please?
It hasn't happened for years - the only time I can remember is back in 2008 when the credit crunch turned up, one or two American brands getting rid of their fairly dreadful stuff like the Dodge Avenger:http://www.dailymail.co.uk/news/article-1082181/Bu...
There really has to be something horribly wrong for a discount like that to happen.
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