Large scale dealers and margins on used cars

[Ghisallo]

Recently Ive been looking to buy a used car in the £15000-£18000 range and have been going through the mill with the really big outlets - Charles Hurst, Arnold Clark and Evans Halshaw.

They all seem to work from the same crib sheet. All of them maintain that their profit margin is £200-£500 on a car at this price range, and because they deal in huge scale they stay in business.

I thought profit margins would be closer to £2000-£3000.

Does anyone know the true number roughly speaking?

I'm suspicious as the same dealers routinely have special offers on the same car types where some are marked down £1000 off the sticker price. So much for £200 margins.

 

[Eager]

each car will be different and the deal they can give, maybe depending on cash purchase, finance, how much they need the car sold, if your giving a trade in that they can retail again, was the car in question a trade in or auction bought, any paint or maintenance it required to retail, etc

I imagine none are selling (once all is said and done) with less than 500-1000 profit.

 

[Paddy_R]

When I was buying the Scirocco it seen it on CH website but never got a chance to go and see it. By the time I did, about a week after first seeing it, it had been reduced by £1,500. I still managed to get another £600 off it. I doubt they sold it at a loss either.

 

[KevM]

I imagine none are selling (once all is said and done) with less than 500-1000 profit.

£5-600 would be a good return.

Dealer buys a car at £10k, pays to have it cleaned, serviced, mechanical reconditioning, possible paint work, warranty cost & VAT on any profit, and will ask £11995. Then, some know-it-all with a Parkers guide will come in, expect £500 over the odds for a scrap part-ex Passat or Avensis and screw you for £300 discount (because they've seen the exact same car down the road for less, even though it's a year older Cat D with 110k on Gumtree).

Then they'll clear off and complain that the dealer was a liar & screwed them lol

 

[Eager]

£5-600 would be a good return.

Dealer buys a car at £10k, pays to have it cleaned, serviced, mechanical reconditioning, possible paint work, warranty cost & VAT on any profit, and will ask £11995. Then, some know-it-all with a Parkers guide will come in, expect £500 over the odds for a scrap part-ex Passat or Avensis and screw you for £300 discount (because they've seen the exact same car down the road for less, even though it's a year older Cat D with 110k on Gumtree).

Then they'll clear off and complain that the dealer was a liar & screwed them lol

The dealer does not need to let anyone screw them over, if the dealer reckons "feck im giving this thing away" he can say "sure go buy that other one it be easier for all us"
If he is happy with the deal he lets it go and throws the reddies in his wallet, goes buy a chinkers and gets tucked into a bottle of wine that night, everyone happy

 

[KevM]

Remember back when life was that simple, eh?

 

[Woodcutter]

I'd say they'd be looking for net profit on any car of 5% or thereabouts.

Huge costs to run any sort of dealership, never mind the prep on the car to retail it.

 

[Chris_702]

Large profits are a thing of the past now. Most would have a margin I would say of £1200ish give or take depending how long the car has been on site.

Large companies such as CH, Ballyrobert etc really hope for finance to make them profit. I seen Ballyrobert pay £7050 for an Insignia at auction (plus auction fee's on top) then advertised it at £7995 on their forecourt. Their finance commission is where they make a few quid profit.
(I remember this particular car as I was bidding against them to buy it for a customer).

 

[Ghisallo]

The car type in question is Ford Galaxy Titanium spec. I think a large proportion of the 3-4 yr old used stock is ex-mobility, don't know if that affects the price these dealers pay. Some are in great barely used condition, others are well worn, but always less than 30k miles. Some are ex hire cars (which I avoid no matter what).

None of the dealers have ever mentioned taking finance out to me, and I've never brought it up as I've Only wanted a straight sale.

 

[Chris_702]

The car type in question is Ford Galaxy Titanium spec. I think a large proportion of the 3-4 yr old used stock is ex-mobility, don't know if that affects the price these dealers pay. Some are in great barely used condition, others are well worn, but always less than 30k miles. Some are ex hire cars (which I avoid no matter what).

None of the dealers have ever mentioned taking finance out to me, and I've never brought it up as I've Only wanted a straight sale.

I'm surprised you've been in Hursts without trying to be pinned down with their 'attractive' finance packages, paint protection and GAP insurance. That's the only way they make their money to be honest.

 

[mckeown]

You might negotiate money off the car, but then the salesman puts you on a higher rate of finance so they get their money back. The salesman will get the majority of his commission off the finance deal, if you go for one.

 

[Ghisallo]

@Chris_702 oh yes, Hursts did the whole seat protection products, gap and cosmetic insurance, extended warranty pitch. If you took the lot they'd be making an extra grand or more.

Finance is a funny old thing, never fancied paying and extra £3k over cost price in the long run. You can get a cash advance credit card that will give you £15k in the bank at zero interest for 36months for a £400 fee.

 

[JayT]

Money is in the finance now a days. Sell a car for a few hundred quid and black horse etc gives the car dealers a good handshake for the business. I always assumed the guys make about 500 when all was said and done. I know at the caravans they look for two or three times that but we sell a lot less annually but again the finance company's do like to grease the wheels.

 

[chris_b]

You've it pretty well sussed by the sounds of it.

If you're after a Ford there's no way I'd go past our local garage. The amount of business he gets from Belfast, England and everywhere else is unreal. Happy to make an intro for you with the owner if it's any use.

 

[2fast4u]

The likes of Hursts use the Used Cars department as a disposal site for trade ins. The group make the bigger profits from manufacturer bonus for shifting new units and from the likes of the Mobility schemes etc, As long as the used car end is breaking even they are happy. Average chassis profit on would be £500 on a car about £10k, £1000 on a £10K+ car.

 

[CharlySkunkWeed]

Ballyrobert wanted me to take a finance deal even though i wanted to pay full amount cash. I said i would as long as it didn't cost me more than asking price. He suggested 0% on 3k of it over 2 years. Don't know what they get out of it though ? I can only assume they hope you can't keep up payments ?
I battled for any discount (seeing i had the full amout) but he wouldn't budge. Just "discount" on GAP insurance and treatments etc but i kept telling him that meant paying more than i had budgeted myself on the asking price.
All i got out of them was they brought the car from mallusk to Bangor

 

[Chris_702]

Ballyrobert wanted me to take a finance deal even though i wanted to pay full amount cash. I said i would as long as it didn't cost me more than asking price. He suggested 0% on 3k of it over 2 years. Don't know what they get out of it though ? I can only assume they hope you can't keep up payments ?
I battled for any discount (seeing i had the full amout) but he wouldn't budge. Just "discount" on GAP insurance and treatments etc but i kept telling him that meant paying more than i had budgeted myself on the asking price.
All i got out of them was they brought the car from mallusk to Bangor

They would have a certain figure of finance to sell each month to meet targets.

 

[Ghisallo]

Thanks for all the replies so far, very useful advice and experiences shared here.

 

[CharlySkunkWeed]

They would have a certain figure of finance to sell each month to meet targets.

But what use is 0% to them ? Why wouldn't they just take the full amount there and then rather than have to wait 2 years.

 

[da.murf]

They will get a small cash bonus by finance company.

 

[svensktoppen]

They all seem to work from the same crib sheet. All of them maintain that their profit margin is £200-£500 on a car at this price range, and because they deal in huge scale they stay in business.

I thought profit margins would be closer to £2000-£3000.

I reckon few main dealers actually sell cars.

What they really sell is finance/servicing deals/insurance/etc. And very high margin services like "paint protection", that cost them next to nothing.

This is why you get discounts when taking finance, but not for cash offers.

Selling a car for cash is a one-time income of a few hundred at best, then that is it. Selling finance/servicing deals/insurance/etc. means money every month from every customer.

Probably goes for most buyers as well, certainly in your price range. The "price" on the tag is more or less irrelevant, what matters to most is the finance deal. And the "price" of any trade-in really is negotiated to cover the deposit for the finance on the new car.

The same goes for new cars as well. Manufacturers make small or no margins on each car. They make their money on finance, servicing deals, insurance, spares, etc.

 

[Coog]

Yep. Our finance division does great business

 

[chris_b]

They will get a small cash bonus by finance company.

LARGE cash bonus you mean

 

[da.murf]

LARGE cash bonus you mean

Dont know what u could possibly mean....

 

[Ghisallo]

I reckon few main dealers actually sell cars.

What they really sell is finance/servicing deals/insurance/etc. And very high margin services like "paint protection", that cost them next to nothing.

This is why you get discounts when taking finance, but not for cash offers.

Selling a car for cash is a one-time income of a few hundred at best, then that is it. Selling finance/servicing deals/insurance/etc. means money every month from every customer.
.

possibly explains why mainland outfits seem meanest on deals, they know there's no chance of me wanting any of their warranty, servicing or protection products as the car will be away on a boat