On another forum I contributed to a thread where some people were saying car dealers are scammers essentially because they sell cars for a lot more than they buy them for. I was pointing out some of the costs and overheads and discussed that even car dealers have to make a living. Anyway, someone linked to this video which I found quite interesting - seems to give a fairly honest idea of how it really works and I thought some of you may be interested.
www.youtube.com/watch?v=2GUJ1Fj_Ud8&t=2s
Last edited by: smokie on Thu 20 Feb 25 at 18:57
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73 views and no comment! I didn't even realise we had that many regulars!! :-)
Last edited by: smokie on Fri 21 Feb 25 at 15:31
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>> 73 views and no comment! I didn't even realise we had that many regulars!! :-)
Bots?
The Fabia I got £6,600 for 4 weeks ago is now on the market at an asking price of £8,990.
www.qtcars.co.uk/details/used-car-in-st-ives/skoda/fabia/1.2-tsi-monte-carlo-euro-6-ss-5dr/1365593/
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>>Fabia...
Nice looking car Brompt. I remember when you got it and if I recall, recently you said you paid £9,500 for it?
Markups...
I think there are different markup percentages, older smaller cars may see a higher percentage mark up than newer cars because you might be able to add say 20% to a £5,000 car to make it say £6,000 but on a £20,000 car that's £4,000 and is going to be noticeable to customer.
Of course people seem to forget the "establishment costs" that go on top of the costs that go in to getting the car ready for sale, such as electricity, gas, water, business rates, staff salaries, pensions, NI, tax, VAT, mortgage or rent etc.
A restaurant did an experiment and asked people to pay what they though the dinner was worth. Most paid the price of the ingredients only, forgetting that a chef had to cook it, a server had to serve it, a washer up had to clean the plates etc. a cleaner had to clean the restaurant, the plant had to be paid for, the premises had to be paid for etc.
Shame the video that smokie showed has Teslas in it. I wouldn't buy one now, because of the brand's owner.
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>> Of course people seem to forget the "establishment costs" that go on top of the
>> costs that go in to getting the car ready for sale, such as electricity, gas,
>> water, business rates, staff salaries, pensions, NI, tax, VAT, mortgage or rent etc.
When part of the MoJ was going through a 'reform' that might have involved redundancies on of my colleagues investigated going to work for a solicitors' practice who would be taking over some of our role.
He was told he'd need 'billable hours' of around 3* his salary becuase of need to cover overheads.
I don't think the numbers worked for him in the end!!
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The guy in the video was an honest man.
Unfortunately there are several dodgy ones out there.
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Forgot to add...he also has to warranty the cars he sells. Even with a manufacturers warranty, if they don't cover the cost, he may have to.
Also noted on Brompts. ex chariot, there's a bit of a markup but they've done the cam-belt which must have cost a bit.
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>> Also noted on Brompts. ex chariot, there's a bit of a markup but they've done
>> the cam-belt which must have cost a bit.
I'd missed that.
Marshalls in Northampton quoted £600+ a couple of years ago.
I decided to ignore it as the 5(?) year interval was nonsensical and not required in other markets.
VAG have effectively conceded that now.
Need to check situation for the Superb.
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>> The Fabia I got £6,600 for 4 weeks ago is now on the market at
>> an asking price of £8,990.
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A red centre console?! Very Monte Carlo! :-)
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>> A red centre console?! Very Monte Carlo! :-)
I rather liked the slightly zany trim and particularly the sports seats. The pano roof was also a massive plus.
When I bought it I paid a premium for the trim etc and I don't regret going for the better trimmed estate over the base model hatch next to it that was several hundred pounds cheaper.
It served me well for five and a half years.
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It does look great. It's funny what a little bit of extra thought in on the trim front can do to a car.
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back to the original question....
I think that the model for retail sales/ marketing of cars has changed over the last 10? years. The days of >30% discounts have gone with less emphasis on manufacturer set targets and bonuses with several marques now relying on manufacturer owned retailers. You are lucky to see 10% discount on many brands. However DtD still shows some larger discounts on new over ordered stock on certain hard to sell models, often topend ,goody loaded, overpriced models.
I suspect that many main dealers are making a bigger profit on used cars particularly if still in the manufacturer warranty period, resulting in less risk from expensive lemons. And more money made from the unwary purchasers on finance deals and over priced 'insurance' add ons. Several years ago I was treated as a mug by a salesman trying to sell me used cars at a price greater than the easily obtained discounted brand new model. A quick discussion with the sales manager resulted in a purchase at a ~30% discount and the information that the salesmans days were numbered anyway.
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The traditional model - now probably at least a decade or so out of date - was for a main dealer to service a local market. More frequent servicing requirements, and poorer vehicle reliability meant that a good dealer was an essential component of the car owning experience.
Not so now. Most new car sales, and many s/h, are lease or PCP. Servicing intervals can be up to two years. Internet has ensured almost total transparency on pricing.
The main variable is the "finance" deal. These will be littered with short term promotions - eg: manufacturers seeking to off load excess stock in advance of a new product launch. Often the promotion will relate only to a specific spec.
Calculating the best deal is a minefield depending on mileage, term, deposit, length etc. Most folk will find difficulty sorting the good from the bad.
Dealers will have a choice - go for high volume low margin sales, or higher mark up low volume.
The latter may work better in more remote parts of the country where the nearest dealer may be 50+ miles away. In the far more densely populated bits of the country there may be 3-5 dealers all with 30 miles of home - price then becomes the major issue, not dealer support.
Last edited by: Terry on Tue 25 Feb 25 at 10:17
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Now that finance commissions have become the latest PPI style compo-racket, the landscape must be changing again.
Discounts will presumably reduce except where there is manufacturer support to shift volume/prop up share/clear overproduction, and dealers will be squeezing whatever they can - private customers paying for servicing would be well advised to get quotes in advance.
I've been out of my involvement with the trade for decades so I don't really keep up. I've been waiting for the commission bubble to pop for most of that time - some of the payments were obscene.
The market is also being massively distorted by the requirement to shift EVs. Manufacturers I'd guess are supporting/incentivising dealers in ever more complicated ways.
>> Internet has ensured almost total transparency on pricing.
>>Most folk will find difficulty sorting the good from the bad.
Those two things should be mutually exclusive. I don't think much has changed, the intelligent and alert who are prepared to put the time and effort in can find the bargains, and the rest will subsidise them.
It has always been about disguising prices, since Adam was a lad. Rip off extras, admin fees, part exchange manipulation, finance commissions, dealer 'special editions', monthly payment promotions, PCP itself.
I'm certainly glad I have little to do with them now.
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>> >> A red centre console?! Very Monte Carlo! :-)
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>> I rather liked the slightly zany trim
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That's one of the things I like about our Berlingo - it's got a green dashboard and door trim and the seats are grey/black but with white orange and green stripes!
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Dealers mark-up - smokie