no discount for cash

[bananaman1]

Rollcage said:

OP - try http://citroensupermarket.com/newcitroen, they offer pretty hefty discounts, even a bit off DS3s! Mega offers only until the end of March - or the next quarter!

Cheers Rollcage, a thousand cheaper on the ds3

[anonymous-user]

if a dealer buys a car in from the manufacturer at £10k all in and can sell it for £10,200 after VAT on a new car that just needs a webform filled in to get another one, I'd say in most cases it should be done

valeting and all that is a red herring, largely fixed costs at a big dealer. the marginal cost of prepping one additional new car is a couple of quid tops

in fact in many cases the car can be delivered direct from to the punter without it ever seeing the dealership - a transporter full of BMWs was in our village a couple of weeks back, delivering cars individually from the place at Thorne all over the place

[bananaman1]

I suspect theres alot more in it than just £200 for the dealer though.If it was say a £1000.How would that effect there margin ?

[anonymous-user]

swerni said:

So you think running a business on 2% gross margin is a viable business model?

The only time anyone is going to touch that kind of business is if it helps them hit their target and qualify for a rebate.

I don't think its sensible to run on 2% gross margin, but I think a profitable sale is better than no sale and, if I was a frachised Dealer, I wouldn't want someone walking away from me to buy the same (unbuilt / unallocated) car from the next nearest franchised Dealer purely on price. I would always want to outsell my nearest geographic competitors on that brand

But some don't, I bought a merc CLK that hadn't been built from a dealer 100 miles away from me for £2k less than the one nearest me would do. I gave them the chance - I said its a build slot, I can buy that build slot from you or from another merc dealer for £2k less. If you match the price, the money is yours. If not, it goes to them. The local dealer chose not to. I was buying a merc: which franchised dealer it came from was of very little consequence to me, to mercedes UK, to mercedes AG or to anyone other than the dealer / sales person involved

In that circumstance, it was a mistake for the local dealer not to take the sale. I'm sure of that

[daemon]

JPJPJP said:

if a dealer buys a car in from the manufacturer at £10k all in and can sell it for £10,200 after VAT on a new car that just needs a webform filled in to get another one, I'd say in most cases it should be done

valeting and all that is a red herring, largely fixed costs at a big dealer. the marginal cost of prepping one additional new car is a couple of quid tops

in fact in many cases the car can be delivered direct from to the punter without it ever seeing the dealership - a transporter full of BMWs was in our village a couple of weeks back, delivering cars individually from the place at Thorne all over the place

What about all those people who intereact with the car to get it out the door? The salesmans time, the service managers time, the proportion of the electricity, rates, lease costs that the car would incur?

What about the impact on your future sales? What if that one person tells another 20 and they expect the same deal? Do you do the same deal 20 times OR do you 'offend' 20 customers by telling them they cant have the deal and they go elsewhere?

Trust me, if you were running a dealership on £200 per car profit, you'd be out of business in a month.

[daemon]

bananaman1 said:

I suspect theres alot more in it than just £200 for the dealer though.If it was say a £1000.How would that effect there margin ?

The £200 being bandied about was because someone said that a dealer should 'do the deal' if they were getting any profit at all.

[daemon]

JPJPJP said:

swerni said:

So you think running a business on 2% gross margin is a viable business model?

The only time anyone is going to touch that kind of business is if it helps them hit their target and qualify for a rebate.

I don't think its sensible to run on 2% gross margin, but I think a profitable sale is better than no sale and, if I was a frachised Dealer, I wouldn't want someone walking away from me to buy the same (unbuilt / unallocated) car from the next nearest franchised Dealer purely on price. I would always want to outsell my nearest geographic competitors on that brand

But some don't, I bought a merc CLK that hadn't been built from a dealer 100 miles away from me for £2k less than the one nearest me would do. I gave them the chance - I said its a build slot, I can buy that build slot from you or from another merc dealer for £2k less. If you match the price, the money is yours. If not, it goes to them. The local dealer chose not to. I was buying a merc: which franchised dealer it came from was of very little consequence to me, to mercedes UK, to mercedes AG or to anyone other than the dealer / sales person involved

In that circumstance, it was a mistake for the local dealer not to take the sale. I'm sure of that

Maybe they were happy not to do the deal because they were comfortable selling their allocation of CLK's at a specific price.

[anonymous-user]

daemon said:

Maybe they were happy not to do the deal because they were comfortable selling their allocation of CLK's at a specific price.

maybe, but when a buyer of a new car has decided on the specific make/model she wants, she owes it to herself to get it at the lowest total cost from whichever franchised dealer will do the deal

if that means searching for a dealer that hasn't sold his allocation, or is keen for another unit to hit a target, or wants to sell the car cheaper than another dealer for any reason (or no reason at all)

or not, she could choose to pay list price from the nearest dealer to her house

[anonymous-user]

daemon said:

The £200 being bandied about was because someone said that a dealer should 'do the deal' if they were getting any profit at all.

you could go further and say the dealer should deal as long as a loss isn't made

why should a Dealer allow another dealer to profit at his expense? If the price is the deciding factor in taking market share, its the easiest way of winning isn't it?

[bananaman1]

I`m all for supporting the local dealer network,and don`t mind paying for the ease of having them near by .But is that not a 2 way street,they look after me...i look after them.Is that how u build a successfull dealership.
I guess its a sign of the times,and customer satifactions not important.More like grab the money and f*ck`em.But in this case it`s...dealer 0 customer 1, cos i will get my cars,but just not from them .A shame really.

[daemon]

JPJPJP said:

daemon said:

Maybe they were happy not to do the deal because they were comfortable selling their allocation of CLK's at a specific price.

maybe, but when a buyer of a new car has decided on the specific make/model she wants, she owes it to herself to get it at the lowest total cost from whichever franchised dealer will do the deal

if that means searching for a dealer that hasn't sold his allocation, or is keen for another unit to hit a target, or wants to sell the car cheaper than another dealer for any reason (or no reason at all)

or not, she could choose to pay list price from the nearest dealer to her house

All very possibly true.

However its the dealers perrogative whether or not to do the deal. They no doubt had their reasons. Why take £200 on a car when they could get £2000 off another customer?

Edited by daemon on Tuesday 22 March 21:09

[daemon]

JPJPJP said:

daemon said:

The £200 being bandied about was because someone said that a dealer should 'do the deal' if they were getting any profit at all.

you could go further and say the dealer should deal as long as a loss isn't made

why should a Dealer allow another dealer to profit at his expense? If the price is the deciding factor in taking market share, its the easiest way of winning isn't it?

Selling cars isnt necessarily about market share.

[anonymous-user]

swerni said:

but revenue is pure vanity.

You've got a nice care selection so clearly doing okay.
I'm just curious what you do for a living.

It's just that you have a novel though process.

Not a dig just genuinely curious.
I work in sales (not motor) for a multi billion dollar US firm, so that shapes my view on business that is worth or not worth transacting.

I have a few businesses in different industries now. Previously I have worked previously for multi billion dollar US and UK firms too and I did a classic MBA - so my views are similarly shaped to some extent!

Revenue is vanity, but profitable revenue (and non loss making revenue in some cases) is sanity.

In the case of a new, unbuilt car that a price conscious punter is shopping around (a few) competing dealers for, that particular car is going to be sold to that particular punter at a low price and I would rather that I made £1 from that sale than someone else (my competitor) made £2 on the deal. That's without thinking about servicing / warranty stuff / a car for the lady's husband / son / daughter.

The UK new car market is not a free market. Essentially there is competition at the retail level (buyer can't be compelled to buy from any particular dealer) and often the buyer is not buying physical, paid for stock - just a slot on the build programme. Pricing is complex and obfuscated with finance deals, service packages, GFV etc. and its hard to work out the total cost of ownership over a given period of time.

Dealer incentives are complex and not transparent at the retail level and the manufacturers do work hard to try to enforce the 'buy from your most local dealer' model. Furthermore, some dealerships are standalone and some are part of big (international) (multi franchise) (multi manufacturer) chains. Don't be surprised that some of the bigger dealers have incentives at the brand level and also the group level (VW, Audi, Skoda, Seat and overall VAG for instance) that could skew their pricing on a particular car from time to time as they aim for one of the various bonuses on offer to them somewhere that might seem very distant from the actual transaction on the table.

As a franchised dealer, I am generally going to be treated better by my franchisor if I am one of the bigger members of the network (in volume / ££ terms) and it is in my overall interest, therefore, to sell more units within the rules of the franchise than another dealer. If that means taking share from neighbouring dealers by undercutting them - whilst not making a loss - on those few sales that are purely down to price at a level that is below normal margins (i.e. sacrificing margin for volume where necessary to take market share from a competitor), why wouldn't I?

So, the price conscious buyer really has her work cut out if she wants to buy a new car at the cheapest cost of ownership.

[anonymous-user]

daemon said:

Selling cars isnt necessarily about market share.

For franchised dealers (of most franchises) in the UK new car market, it pretty much is

[Jakg]

bananaman1 said:

I guess i was thinking along the lines that some profit is better than no profit.

Making £1 per car but selling 5 cars is not as good as making £1k on a car but only selling one...

The dealer will want to sell the car, but for the best price they can get away with.

Never really got "discount for cash", especially with the kickbacks for finance.

[Kiltox]

JPJPJP said:

I don't think its sensible to run on 2% gross margin, but I think a profitable sale is better than no sale and, if I was a frachised Dealer, I wouldn't want someone walking away from me to buy the same (unbuilt / unallocated) car from the next nearest franchised Dealer purely on price. I would always want to outsell my nearest geographic competitors on that brand

But some don't, I bought a merc CLK that hadn't been built from a dealer 100 miles away from me for £2k less than the one nearest me would do. I gave them the chance - I said its a build slot, I can buy that build slot from you or from another merc dealer for £2k less. If you match the price, the money is yours. If not, it goes to them. The local dealer chose not to. I was buying a merc: which franchised dealer it came from was of very little consequence to me, to mercedes UK, to mercedes AG or to anyone other than the dealer / sales person involved

In that circumstance, it was a mistake for the local dealer not to take the sale. I'm sure of that

I wasn't buying a build slot because most dealers have stock of the car I want however my experience was much the same as yours.

Two dealers would not budge on price at all, one of them was even trying to force me to buy a car with metallic paint because he claimed to be unable to source a white one.

Third dealer (Arnold Clark, so much larger then the other two) had six white cars in stock and sold me the car for a considerable amount off list with no difference in my part exchange value (a fair trade price for the condition etc).

Only two out of the three dealers mentioned the Kia backed finance deposit contribution even though they all gave me a PCP quote.

I guess it has a lot to do with the size of the dealer, how many cars they are buying from the manufacturer etc as to what discounts they can afford to offer. Or it's sheer greed

[bananaman1]

Jakg said:

Making £1 per car but selling 5 cars is not as good as making £1k on a car but only selling one...

The dealer will want to sell the car, but for the best price they can get away with.

Never really got "discount for cash", especially with the kickbacks for finance.

wasn`t looking for them to make only £1,they wanted to make a £1000.I wanted them to make £750

[anonymous-user]

Jakg said:

Making £1 per car but selling 5 cars is not as good as making £1k on a car but only selling one...

The dealer will want to sell the car, but for the best price they can get away with.

Never really got "discount for cash", especially with the kickbacks for finance.

which is fine, as long as he also accepts that if his bottom price is higher than the next dealer on the dealer finder for that punter, he will always be open to losing a sale for a few quid

and, in the way that manufacturer incentives and finance incentives work for dealers, it can often be better overall to sell 5 cars for an invoice price based profit of £1 each rather than just sell 1 car for an invoice price based profit of £1k. Most incentives are still, broadly, based on volume being good.

[anonymous-user]

swerni said:

Thanks for that.
It could be an interesting debate, but that would side track the whole thread even further

indeed

[daemon]

JPJPJP said:

daemon said:

Selling cars isnt necessarily about market share.

For franchised dealers (of most franchises) in the UK new car market, it pretty much is

Sorry, but i dont agree. Its not 'sell a car at any cost'. If it were then price would simply be the driving factor. Thats not a sustainable business model.