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Dealer profit margins
- ronk
- Lifer
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- Location: Durham
Dealer profit margins
I was browsing Auto Trader and saw a car very similar to mine.
ie a 2016 35is - It has 29714 miles on the clock and they want £29000 for it
Auto Trader also say "Great Price"
On previous browsing I had added my car details
ie 2016 35is - It has 16285 miles on the clock - Their offer price as a trade in £22660
Now I realise they are in business to turn a profit - but is 28% - is that the usual mark up/sale?
ie a 2016 35is - It has 29714 miles on the clock and they want £29000 for it
Auto Trader also say "Great Price"
On previous browsing I had added my car details
ie 2016 35is - It has 16285 miles on the clock - Their offer price as a trade in £22660
Now I realise they are in business to turn a profit - but is 28% - is that the usual mark up/sale?
You don't stop playing when you get old - You get old when you stop playing!
So I bought a 35is with all the toys to play with.
So I bought a 35is with all the toys to play with.
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OnlineNictrix
- Lifer
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- Location: Paisley
Dealer profit margins
A friend just sold his Merc C43 for 28k to a dealer, a week later its up for sale at 36k
E89 2014 35i M Sport Black with Black leather
- TitanTim
- Lifer
- Posts: 8065
- Joined: Sun Feb 12, 2012 11:21 pm
Dealer profit margins
Hi Ron,
From my experience with BMW when trading in early half way through a PCP they were making round 4k on the forecourt price, however the last time would have been in 2016 when I bought the M140i. Factor in the demand for good low mileage second hand cars due to long new car lead production times, shortage of silicone chips, parts, pandemic etc then that sounds not too far off the mark.
I thought second hand value had dropped recently though. 12 months ago I had my M140 valued the likes of Motorway were offering around 18k which by early this year peaked at 23k and with values dropping again by March this year. Could be that second hand values might be creeping up again.
Tim.
From my experience with BMW when trading in early half way through a PCP they were making round 4k on the forecourt price, however the last time would have been in 2016 when I bought the M140i. Factor in the demand for good low mileage second hand cars due to long new car lead production times, shortage of silicone chips, parts, pandemic etc then that sounds not too far off the mark.
I thought second hand value had dropped recently though. 12 months ago I had my M140 valued the likes of Motorway were offering around 18k which by early this year peaked at 23k and with values dropping again by March this year. Could be that second hand values might be creeping up again.
Tim.
- Ole gits rule
- Lifer
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Dealer profit margins
Most business make 20% margin but then take our O/H etc and the actual profit will drop to 10%.
My guess is they will drop 2k off the asking price and then they take off O/H etc plus all the stuff they have done to the car plus a warranty etc they wont be making a massive profit.
My guess is they will drop 2k off the asking price and then they take off O/H etc plus all the stuff they have done to the car plus a warranty etc they wont be making a massive profit.
M4 Vert in Yas Marina Blue
2011 23i M Sport Highline in Alpine White with Smart Top installed - Gone but not forgotten.
2011 23i M Sport Highline in Alpine White with Smart Top installed - Gone but not forgotten.
- ronk
- Lifer
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- Joined: Tue Feb 24, 2009 11:50 am
- Location: Durham
Dealer profit margins
28% again
You don't stop playing when you get old - You get old when you stop playing!
So I bought a 35is with all the toys to play with.
So I bought a 35is with all the toys to play with.
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- Member
- Posts: 326
- Joined: Thu Aug 30, 2007 5:28 pm
- Location: Tamworth
Dealer profit margins
And don't forget Vat will be included in the selling priceOle gits rule wrote: ↑Sun Aug 21, 2022 8:32 pm
My guess is they will drop 2k off the asking price and then they take off O/H etc plus all the stuff they have done to the car plus a warranty etc they wont be making a massive profit.
- PerryGunn
- Lifer
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Dealer profit margins
The rules are slightly different for used cars though as VAT is paid on the dealers profit not the total sale priceIan J wrote: ↑Mon Aug 22, 2022 6:21 amAnd don't forget Vat will be included in the selling priceOle gits rule wrote: ↑Sun Aug 21, 2022 8:32 pm
My guess is they will drop 2k off the asking price and then they take off O/H etc plus all the stuff they have done to the car plus a warranty etc they wont be making a massive profit.
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- Dave1971
- Member
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Dealer profit margins
That's not quite correct. The dealer pays 20% vat on the difference between the buying price and the selling price.PerryGunn wrote: ↑Mon Aug 22, 2022 6:38 amThe rules are slightly different for used cars though as VAT is paid on the dealers profit not the total sale priceIan J wrote: ↑Mon Aug 22, 2022 6:21 amAnd don't forget Vat will be included in the selling priceOle gits rule wrote: ↑Sun Aug 21, 2022 8:32 pm
My guess is they will drop 2k off the asking price and then they take off O/H etc plus all the stuff they have done to the car plus a warranty etc they wont be making a massive profit.
For example a dealer buys a car from auction for £16k and sells it for £20k so a nice 20% mark up. The vat is £800.
But out of the £3200 left the dealer now needs to pay all the other business overheads like gas, electric, phones, building maintenance, business rates.
Then you need to fix anything that is wrong with the car. The different departments in a main dealer act like separate businesses so when the sales person puts the car into the workshop they don't get any special benefits, they pay through the nose just like we do.
Then there is the sales persons commission, probably only a couple of hundred quid but it all comes out of the pot. There's also the none productive staff like the dolly bird on reception, the guy who washes all the cars, the sales manager, dealer principal and maybe even a share holder or two.
Suddenly that £3200 is spread very thin indeed, the "profit"
is probably very small. In fact if the car turns out to need a bit too much work in the workshop then it's quite easy to make a loss because no matter what the tax man still wants his £800.
Zed No 1 2004 e85 Z4 2.2 se
Zed No 2 2007 e85 Imola Red Z4MR
Zed No 3 2006 e85 Ruby Black 3.0si Roadster
Zed No 4 2009 e89 Deep see blue 35i sDrive
Zed No 5 2006 e85 Titan silver 3.0si Roadster
Zed No 6 2004 e85 Black Sapphire Alpina Roadster S Lux #073
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- Ole gits rule
- Lifer
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Dealer profit margins
Vat is only applicable to the profit but will be a chunk for certainIan J wrote: ↑Mon Aug 22, 2022 6:21 amAnd don't forget Vat will be included in the selling priceOle gits rule wrote: ↑Sun Aug 21, 2022 8:32 pm
My guess is they will drop 2k off the asking price and then they take off O/H etc plus all the stuff they have done to the car plus a warranty etc they wont be making a massive profit.
M4 Vert in Yas Marina Blue
2011 23i M Sport Highline in Alpine White with Smart Top installed - Gone but not forgotten.
2011 23i M Sport Highline in Alpine White with Smart Top installed - Gone but not forgotten.
- Dave1971
- Member
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- Joined: Sun Jan 22, 2012 7:20 pm
Dealer profit margins
This is not true. Vat is paid on the difference between the buying price and the selling price not the profit.Ole gits rule wrote: ↑Mon Aug 22, 2022 12:49 pmVat is only applicable to the profit but will be a chunk for certainIan J wrote: ↑Mon Aug 22, 2022 6:21 amAnd don't forget Vat will be included in the selling priceOle gits rule wrote: ↑Sun Aug 21, 2022 8:32 pm
My guess is they will drop 2k off the asking price and then they take off O/H etc plus all the stuff they have done to the car plus a warranty etc they wont be making a massive profit.
The difference between the buying price and the selling price maybe several thousand but the profit (after costs) may only be in the hundreds. It makes a huge difference to how much is paid in VAT.
Zed No 1 2004 e85 Z4 2.2 se
Zed No 2 2007 e85 Imola Red Z4MR
Zed No 3 2006 e85 Ruby Black 3.0si Roadster
Zed No 4 2009 e89 Deep see blue 35i sDrive
Zed No 5 2006 e85 Titan silver 3.0si Roadster
Zed No 6 2004 e85 Black Sapphire Alpina Roadster S Lux #073
Zed No 2 2007 e85 Imola Red Z4MR
Zed No 3 2006 e85 Ruby Black 3.0si Roadster
Zed No 4 2009 e89 Deep see blue 35i sDrive
Zed No 5 2006 e85 Titan silver 3.0si Roadster
Zed No 6 2004 e85 Black Sapphire Alpina Roadster S Lux #073
- PerryGunn
- Lifer
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- Joined: Mon Jun 25, 2012 6:16 pm
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Dealer profit margins
All I missed out was the word gross i.e. 'VAT is paid on the dealers gross profit not the total sale price', what you have done is explain how gross profit becomes net profit.Dave1971 wrote: ↑Mon Aug 22, 2022 10:09 amThat's not quite correct. The dealer pays 20% vat on the difference between the buying price and the selling price.
For example a dealer buys a car from auction for £16k and sells it for £20k so a nice 20% mark up. The vat is £800.
But out of the £3200 left the dealer now needs to pay all the other business overheads like gas, electric, phones, building maintenance, business rates.
Then you need to fix anything that is wrong with the car. The different departments in a main dealer act like separate businesses so when the sales person puts the car into the workshop they don't get any special benefits, they pay through the nose just like we do.
Then there is the sales persons commission, probably only a couple of hundred quid but it all comes out of the pot. There's also the none productive staff like the dolly bird on reception, the guy who washes all the cars, the sales manager, dealer principal and maybe even a share holder or two.
Suddenly that £3200 is spread very thin indeed, the "profit"
is probably very small. In fact if the car turns out to need a bit too much work in the workshop then it's quite easy to make a loss because no matter what the tax man still wants his £800.
Alpina Roadster S #320
* Quaife ATB LSD * StrongStrut Braces * Turner RTAB Limiters * Gap-Tech RCH+ *
* Intravee & KCA-420i * Mini 0806 * Cheetah C550 * Stubby *
* Quaife ATB LSD * StrongStrut Braces * Turner RTAB Limiters * Gap-Tech RCH+ *
* Intravee & KCA-420i * Mini 0806 * Cheetah C550 * Stubby *
- Rockhopper
- Senior Member
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Dealer profit margins
Plus he might have car sitting there for a few months before it gets sold.
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OnlineMikeyH
- Lifer
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- Location: Devon
Dealer profit margins
I thought only second hand vans had VAT put on them and only then if they were previously owned by a business that paid VAT.
Now, Sterling grey Z4 2.2 with cup holders, stubby aerial and sport seats. Roadsters ‘cause they’re great with the roof down.
Ford Anglia, Red Sprite, a few MG midgets, MGB Roadster and yellow Ford Capri, all gone many years now.
Ford Anglia, Red Sprite, a few MG midgets, MGB Roadster and yellow Ford Capri, all gone many years now.
- Ole gits rule
- Lifer
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Dealer profit margins
No I think there is VAT due on the profit - VAT is added to second hand vans as companies will not have paid VAT originally.
M4 Vert in Yas Marina Blue
2011 23i M Sport Highline in Alpine White with Smart Top installed - Gone but not forgotten.
2011 23i M Sport Highline in Alpine White with Smart Top installed - Gone but not forgotten.
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Online
- Lifer
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Dealer profit margins
Used car dealers don't really work on percentages in my experience. It's more about the amount of money they can make or 'need' to make.
Also good luck getting a dealer to accept an 'offer' on their price. It's been a seller's market for the last 18 months. I have made offers on a few cars in the last year, all have been refused. It has been full asking price or nothing IME. Then after 3 months they have dropped the price if they haven't sold.
The ONLY car I got even a few hundred quid off was my Alpina and that was only because I knew what the dealer bought it for (it was discussed on another forum) and he knew it. He wanted to make £5,500 profit on a car he bought for £12,000.
The VAT thing can be quite complicated when it comes to vehicles, so not getting involved.
Also good luck getting a dealer to accept an 'offer' on their price. It's been a seller's market for the last 18 months. I have made offers on a few cars in the last year, all have been refused. It has been full asking price or nothing IME. Then after 3 months they have dropped the price if they haven't sold.
The ONLY car I got even a few hundred quid off was my Alpina and that was only because I knew what the dealer bought it for (it was discussed on another forum) and he knew it. He wanted to make £5,500 profit on a car he bought for £12,000.
The VAT thing can be quite complicated when it comes to vehicles, so not getting involved.
All good things come to those who wait. I'm really impatient which explains a lot.
F31 320i. Good car.
E89 20i Now fully dried
Z3 'free litre'. Project and a half. Complicated!
Mazda3 sold
Tatty old R56 Mini Cooper. Money pit!
F31 320i. Good car.
E89 20i Now fully dried
Z3 'free litre'. Project and a half. Complicated!
Mazda3 sold
Tatty old R56 Mini Cooper. Money pit!