Saw a Beetle at a dealer. List price £9500.
Our Fiesta's price on WBAC is £3000 and the Beetle was £7500.
Dealer offered me £2900. I explained to dealer that he was offering me around WBAC for trade in but retailing his at £2k more. He explained they are a dealer, warranty, car presentation etc. I understood that but thought £2k was far too much mark up. £300 for a warranty, £100 for a decent valet leaves a whole load of profit.
I would have thought retail at £8500 ish was more realistic.
He disagreed and we parted our ways.
Was I being too unrealistic?
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Well the dealer obviously thought so or he would have done a deal and at the end of the day that's the only view that counts.
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It depends how much you wanted it and how much he wanted to sell it. Its all supply/demand driven.
You obviously didn't want it enough to pay £9500 and he didn't want to sell it enough to let it go for £7500.
So if you'll easily get onbe close to your price, and he'll easily sell his closer to his, then so be it.
Being reasonable or unreasonable doesn't really come into it.
It would only be if one of you had turned down a deal without a likely alternative that you should worry about it.
In any case, you said you didn't warm to him. That's a pretty good reason for not buying from someone IMO.
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I suspect Bobby, only suspect mind you, that Beetles are not generally bought by people who "know about cars". I know it's not for you and it's for Mrs G, but the dealer almost certainly knows that someone will buy it because it's "cute" and not worry too much that it's overpriced. I'd guess he'll shift that car before long for more than it's worth to someone who has no idea of its real value.
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Thats a big part of it Humph - there are not too many about as there is not huge demand for them. So supply is probably roughly equal to demand. Not sure how long he has had it but I suppose like all things, you will start off with a high price for a while and then drop it if no sign of interest.
Am in no particular rush to buy so will monitor the situation....
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>> Was I being too unrealistic?
Ok, so say he got it at 7500 as that's the trade price, say 500 quid for warranty and prep. Its cost him 8000. £9500 is a profit margin of 20% that's not unreasonable by any means, you have run business, to my mind 20% is a bit marginal to survive. Not a "whole load" (in truth he probably got it for less than 7500)
Last edited by: VxFan on Thu 13 Apr 17 at 01:59
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What's the spec, mileage, number of owners of your Fiesta Bobby?
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2009 1.25 zetec 64k miles 2 owners
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If the dealer's got your 'phone number, then wait for the call. That'll show he's ready to haggle.
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New 2008 on shape? 3 or 5 door? Colour?
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A dealer will expect to make a good margin, £2k over the WBAC price is reasonable, they have to finance the stock, warranty it put faults right, pay the salesman and make a profit ...
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If dealers bought at 7.5k and sold at 8.5k I doubt many would make a sensible living. Several important cost factors have not been mentioned. If buying at auction there will be buyers fees and delivery costs to add on, perhaps £5-600. Then there is 20% VAT on the margin, so the notional £1000 margin has already reduced to a few hundred before financing and premises costs are taken into account. Then there is valeting costs at a minimum of £50 per car, although £75 is more likely. If there is any paint, bodywork or servicing required then of course that is a further on cost. A few scratches and scars and maybe a modest dent could easily be £250. You don't want to know what a split or damaged rear bumper on, say, a Volvo or Merc might run to. Engine work is often fairly predictable in terms of cost barring catastrophic and unpredictable failure, but dodgy electrics can be a disaster to attempt to sort out. Trade buyers will always be wary of any dashboard lights that happen to be illuminated on cars as they come through the auction. Auto trader is the largest sales site by a long way. A private advertise would pay £50+ to advertise their car, many dealers will have for figure bills every month for advertising alone.
Naturally buyers expect the best possible deal for their money, and also have the Consumer Rights Act and other legislation on their side. So with every car sold there is potential for additional cost. One of my clients is a small but dedicated dealer. He recently sold a very nice Lexus RX and the lady came back saying that the drivers door mirror did not auto-dim as per the original specification, and as did the interior and passenger door mirrors. It was not possible to source one secondhand, so a new one had to be fitted with parts alone exceeding £450.
My dealer client has now made two staff redundant thanks to minimum wage increases and the problems associated with employing people. He has also given up premises that he rented and rationalised to a single base in order to reduce premises costs, this is before any increase in business rates.
He is now working with an outsourced business model in order to turn as many fixed costs as possible into variable costs and reduce his overall cost base. In turn this means he can spend more time doing what he is really good at, sourcing were but better quality vehicles where there us a higher and more dependable source of margin and sales. Finally, he likes to make some money too, and unlike many of us does not have a reasonably secure, steady income. I am not making excuses for excessive profits and sharp practice, but the car business is no easy one to survive let alone thrive in these days.
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Yeah sorry, new shape, 5 door black.
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>> Yeah sorry, new shape, 5 door black.
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Could be interested for daughter. Does it have good tyres? And what brand are they? How long MOT? How would you describe the condition?
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There's a chance that as and when we do change, my daughter will take it. She currently has an Aygo doing a 60 mile round trip commute so the Fiesta would be a step up from that.
It has all season tyres, think its the Kleber Quadraxers if memory serves me right. MOT was Jan 2017 (should have been Sept 2016 but , ahem, the man in the house that takes to do with all these things totally forgot.....
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OK Bobby, just starting to look for a car in that price range and may he able to better the WBAC price if it's tidy etc ...
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I'll keep you posted!
Cheers
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Don't forget he hasto account for VAT out of his margin. So £1,500 includes VAT. £1,250 without. Plus whatever financing cost he has for funding his stock. Not sure I could be bothered with dealing with the general public and all their complaints about a used car for just over £1k?
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You might find if it's still sitting around on his forecourt in a couple of weeks and he has your number, you might get a call. I suspect though, as others have said, he is quite confident he can sell it for more than you were prepared to pay, hence why there was no deal.
On two occasions I've had dealers call me after we've parted company unable to reach an agreement, to offer me a better deal if I'm prepared to go ahead immediately. It does happen.
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>>Not sure I could be bothered with dealing with the general public and all their complaints about a used car for just over £1k?
I f you sell one car a day, and you're a one or two man band, thats a healthy figure!
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>> >>Not sure I could be bothered with dealing with the general public and all their
>> complaints about a used car for just over £1k?
>>
>> I f you sell one car a day, and you're a one or two man
>> band, thats a healthy figure!
>>
Is it though? Even if you manage 250 cars a year that's £250,000 margin.
I imagine rent/rates/insurance could soon eat £50k to £75k of that. A part time admin plus some book keeping / tax / accounting support another £25k. So you're down £100k. Sell 5 cars a week probably means you need 15/20 cars in stock or in the pipeline probably means £150k ish tied up in stock. Say financing costs of another £10k or so? Then you've got to source all these cars, so you need to employ someone to actually sell the cars you've got. That's another £50k gone.
Now you're left with £90k which is not bad, but for a two man band hardly a kings ransom. And there's a lot of risk and hassle... I reckon you either do it as a true one man band and sell far fewer cars, or go for higher volume but with the associated overhead...
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Ah, but your 250k margin is actually only 200k as VAT comes off the top. Then of course what is left over after everything else has been paid is taxed.
Of course there is the occasional bad egg, some cars are sent to the auction for a very good reason, that incurs a loss. My client bought what he thought was a good car only to suffer a painful £3k loss when the engine blew up several months after it had been sold. This is an increasingly tough business for the smaller trader in particular.
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Yes, sorry, I wasn't clear... my earlier post set out why the margin after VAT was around £1k per car. But yes, tax, either income or corporation plus income depending on structure has to be paid. It's a low net margin game even if the headline difference between trade in and retail is several thousand pounds or more unless you're either very big, or cut corners...
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250 cars in a year is a lot of legwork. How many hours does it take to process a single car: inspect, buy, get it in, cleaned, paperwork, negotiate with average of say three buyers all of whom have a test drive etc. etc.?
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Many years ago I bought a couple of cars from a trader I knew who did probably half a dozen cars a week. All were trade-ins bought from dealers, underwritten beforehand and a "drink" for the dealer sales manager. Most went in the auctions after at most a clean.
Occasionally he would sell to people like me on the understanding that it was sold as seen - not really legal of course and it would have been impossible to shift large numbers that way.
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>>and a "drink" for the dealer sales manager.
So the various sales managers were stealing from their employers. Nice.
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Welcome to the real world. It was at one time much more widespread than it is now and one of the reasons why many dealers especially the bigger ones have a blanket policy of sending trade-in stock they cant sell on the forecourt to auction.
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>>Welcome to the real world.
Absolutely. Just thought it was worth pointing it out...
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>> Many years ago I bought a couple of cars from a trader I knew who
>> did probably half a dozen cars a week. All were trade-ins bought from dealers, underwritten
>> beforehand and a "drink" for the dealer sales manager.
It was the practice at the main dealer for whom I worked from 1964 to 1966. New salesmen, such as I was, were not let into the scheme until they had been employed for a good few months.
I think the bung was about a fiver, or perhaps a tenner (memory grows dim) from one trade buyer only, who would underwrite probable trade P/Xs, rather than probable retail P/Xs.
They would not up their valuation, even on a tight deal, if the salesman offered to forego the bung for an increased underwritten price.
(Remember in those far off days a new mini was about £525, so a modest bung, (added to the underwritten price) by today's values, was not so modest as not to make a difference in closing a deal)
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>>from 1964 to 1966...
>>I think the bung was about a fiver, or perhaps a tenner
By 1977/8 I was informed it was about £50.
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.............and he has to pay VAT on the margin from buying to selling price.
Oops! Missed PeterS' post. Points deducted for inattention in class.
Last edited by: Roger. on Thu 13 Apr 17 at 12:09
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If you left the dealership your phone number Bobby, there's every chance they will call you back in a week or so with a token 500 quid price reduction.
I showed interest in a 2011 Mitsi Lancer a couple of weeks back, at a dealership who know me. Couldn't budge on the asking price they said, there's no profit in it for them. 2 weeks later I see that it's still for sale on the web and that they've shaved NZD1000 off the price... What a waste of everyone's time.
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Happened to me with a property in Tenerife. Seller WOULD NOT budge on price.
Two weeks later estate agent came running round to say seller would accept my offer. Too late by then, I'd bought another.
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Yeah the dealer has my details although that particular model of Beetle is now scored off the list.
Interestingly I have looked at various others and compared the WBAC prices and the "mark up" in some other dealers is much higher!
Sometimes too much knowledge can be bad for you!
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Indeed. If you seem something you like, can afford it, and the price is not outrageous then go for it. Life is too short to be worrying over whether you have got the best possible deal or whether you could have saved a few pounds buying elsewhere.
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>> Indeed. If you seem something you like, can afford it, and the price is not
>> outrageous then go for it. Life is too short to be worrying over whether you
>> have got the best possible deal or whether you could have saved a few pounds
>> buying elsewhere.
Very true - in my recent hunt for a car for a friend I was becoming a little concerned about finding the right car at the right price quickly enough - in the end I paid what was probably a slightly high price but it was exactly what I was after and very clean FSH 10 year old cars are hard to come by
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Curiosity got the better of me and had a wee check on auto trader.
Car is still for sale, nearly 3 months later, and price now knocked down to 8995
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Was I being unfair / unrealistic with dealer? - CGNorwich
