smart51
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| posted on 1/12/08 at 10:31 AM |
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new car profit margin
A chap I work with is, shall we say, quite keen on bikes. He's pre president of some bike club and is on first name terms with a number of bike
dealers. He tells me that a brand new big capacity bike that sells for £8000 typically costs the dealer £5000 to buy in. Some Japanese bikes have a
lower margin but basically, once you take out road fund licence and PDI, there's a 50% mark up.
So I was thinking, How much mark up is there on new cars? I reckon that most dealers will be keen to get rid of stock at the moment so that if
you're happy to take what ever colour and spec they have in, you could get a bargain. What is a bargain price on a small diesel to replace my
wife's C3?
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Mr Whippy
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| posted on 1/12/08 at 10:39 AM |
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Have you been in a diesel? Rattle rattle rattle etc etc man they suck, can’t stand going in herselfs little corsa, seems to be practically shaking
itself apart  diesels not even cheap now…I was saying yesterday I’m going to get her an automatic rather than wait till she learns how to change
gear properly and not stall the petrol cars
[Edited on 1/12/08 by Mr Whippy]
Fame is when your old car is plastered all over the internet
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mangogrooveworkshop
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| posted on 1/12/08 at 10:41 AM |
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At a car dealer in Fife I have seen cars with 3000 off. a wee mx5 has 2.500 taken off its price.
Shows you how they make cash to pay for those huge flash forcourts
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jabbahutt
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| posted on 1/12/08 at 10:42 AM |
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I had an Avensis estate diesel last week for work and it was fantastic. Wasn't like driving a diesel at all. I managed to do 450 miles on half
a tank averaging 80 miles an hour!!
There was an advert in our local paper this week that a dealer had 120 Vauxhals of different makes and models to sell at half price!!
If you're in the postion to buy a car at the moment it definately is a buyers market.
Nigel
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nick205
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| posted on 1/12/08 at 10:46 AM |
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Ignoring PDI and RFL that's a profit margin of 37.5% - not too bad.
If the £8k includes VAT (@15%) and assuming the £5 buy in price includes all import taxes etc, then that's £6956 to the dealer and a profit
margin of 28% which isn't too good.
I'm guessing that car dealers probably work to similar or tighter margins on most car brands.
Big bikes might also be an unfair comparison as they're surely more of a luxury item than a small diesel car?
The current petrol/diesel price difference IMHO makes small diesel hatches less attractive too.
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graememk
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| posted on 1/12/08 at 10:48 AM |
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proffit on a new or used car is around £1500 at a main dealer and £1200 at a used car lot if that helps.
anyone offering silly discount like £3k off has just put the price up to start with and they wouldnt be getting my trade for trying to rip me off
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AndyW
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| posted on 1/12/08 at 10:50 AM |
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I used to work for a Vauxhall dealer and although they work on margins, the dealer earnt bonus for amount of units sold and/or pre registered. Each
car sold did bring in profit but it was more of the amount sold in a certain qtr.
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nib1980
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| posted on 1/12/08 at 11:03 AM |
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i work for an OEM, and i know our pricing structure, but we are a bit unique, so i guess it depends on the OEM a bit
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DarrenW
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| posted on 1/12/08 at 11:45 AM |
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One of my mates works at Citroen dealer. He was telling me new car margins for the dealers tend to be very low but they get bonus ( i think) for
hitting quotas. He did say they make more money on the 2nd hand cars and the finance deals.
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smart51
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| posted on 1/12/08 at 12:26 PM |
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quote:
Originally posted by nick205
Ignoring PDI and RFL that's a profit margin of 37.5% - not too bad.
If the £8k includes VAT (@15%) and assuming the £5 buy in price includes all import taxes etc, then that's £6956 to the dealer and a profit
margin of 28% which isn't too good.
I'm guessing that car dealers probably work to similar or tighter margins on most car brands.
Remember that a dealer pays VAT on what he buys and charges VAT on what he sells.
£8000 inc VAT = £6956 exc
£5000 inc VAT = £4348 exc
The dealer pays £4348 for the bike, £160.87 for road tax and consumables for PDI. He sells the bike for £8000 and pays the inland revenue £391.30 in
VAT for the difference between the buying and selling price, leaving £3100 for him, a 71% return on his outlay. the £3100 is 39% of the selling
price, which is still a fair chunk.
The guy could sell the bike for £5,160.87 and cover the cost of the bike, VAT, road tax and his sundries, but make no money for his time.
BTW, she likes the diesel C3 and in 4 years it has given us no trouble. With a baby seat in the back, you have to push the front seat most of the way
forwards, which is inconvenient. Something with just a little more leg room would be nice.
[Edited on 1-12-2008 by smart51]
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Rob WM
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| posted on 1/12/08 at 12:32 PM |
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An accountant told me that as most car dealers make the "real" money on the finance you are best buying a car at the cheapest capital cost
possible apparently dealers will sell at cost if you say you want the finance. Then once you have the car pay off the finance within 30 days (Statue
gives you this cooling off period) with a loan from a bank etc at a cheaper rate. You then get a low capital cost and also get a reaonable finance
deal.
Sounds good but ensure you check for any admin costs on the finace deal.
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nick205
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| posted on 1/12/08 at 12:37 PM |
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quote:
Originally posted by smart51
quote:
Originally posted by nick205
Ignoring PDI and RFL that's a profit margin of 37.5% - not too bad.
If the £8k includes VAT (@15%) and assuming the £5 buy in price includes all import taxes etc, then that's £6956 to the dealer and a profit
margin of 28% which isn't too good.
I'm guessing that car dealers probably work to similar or tighter margins on most car brands.
Remember that a dealer pays VAT on what he buys and charges VAT on what he sells.
£8000 inc VAT = £6956 exc
£5000 inc VAT = £4348 exc
The dealer pays £4348 for the bike, £160.87 for road tax and consumables for PDI. He sells the bike for £8000 and pays the inland revenue £391.30 in
VAT for the difference between the buying and selling price, leaving £3100 for him, a 42% return on his outlay. the £3100 is 39% of the selling
price, which is still a fair chunk.
The guy could sell the bike for £5,160.87 and cover the cost of the bike, VAT, road tax and his sundries, but make no money for his time.
I see your workings now 
More favourable, but you'd still want to sell a fair few bikes.
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designer
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| posted on 1/12/08 at 06:39 PM |
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The best small diesel and girlie car is , by far, the Polo Blue Motion.
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JoelP
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| posted on 1/12/08 at 06:47 PM |
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quote:
Originally posted by smart51
quote:
Originally posted by nick205
Ignoring PDI and RFL that's a profit margin of 37.5% - not too bad.
If the £8k includes VAT (@15%) and assuming the £5 buy in price includes all import taxes etc, then that's £6956 to the dealer and a profit
margin of 28% which isn't too good.
I'm guessing that car dealers probably work to similar or tighter margins on most car brands.
Remember that a dealer pays VAT on what he buys and charges VAT on what he sells.
£8000 inc VAT = £6956 exc
£5000 inc VAT = £4348 exc
The dealer pays £4348 for the bike, £160.87 for road tax and consumables for PDI. He sells the bike for £8000 and pays the inland revenue £391.30 in
VAT for the difference between the buying and selling price, leaving £3100 for him, a 42% return on his outlay. the £3100 is 39% of the selling
price, which is still a fair chunk.
The guy could sell the bike for £5,160.87 and cover the cost of the bike, VAT, road tax and his sundries, but make no money for his time.
BTW, she likes the diesel C3 and in 4 years it has given us no trouble. With a baby seat in the back, you have to push the front seat most of the way
forwards, which is inconvenient. Something with just a little more leg room would be nice.
Im probably posting this before ive been though it thoroughly, but your vat calculation is all wrong. When a car dealer sells a car for £8000
including vat he owes the government £1191.49 in vat, not just on his profit.
He would also not buy the bike for 4348, he would pay the full £5000 and knock the VAT he has paid off the VAT he has collected.
Your calculation knocks it off twice.
My appologies if i have skimmed it too fast and got the wrong end of the stick. I am vat registered though.
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smart51
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| posted on 1/12/08 at 07:05 PM |
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quote:
Originally posted by JoelP
Im probably posting this before ive been though it thoroughly, but your vat calculation is all wrong. When a car dealer sells a car for £8000
including vat he owes the government £1191.49 in vat, not just on his profit.
He would also not buy the bike for 4348, he would pay the full £5000 and knock the VAT he has paid off the VAT he has collected.
Your calculation knocks it off twice.
My appologies if i have skimmed it too fast and got the wrong end of the stick. I am vat registered though.
My understanding is that you pay the VAT on the bike, so you pay the £5000, but you can claim back all the VAT you pay from all the VAT you charge.
You only send the balance to the treasury. Right. it has just clicked. For quick mental arithmatic, you pretend that everything you buy is VAT free
and you're charged VAT on the full sales price. so:
£5000 to buy the bike. £160 for sundries. £8000 sale price, less net VAT of (8000-5000)@15% = £450. Profit to dealer = £2390; 48% of his outlay.
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JoelP
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| posted on 1/12/08 at 07:07 PM |
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sounds more likely! 
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Simon
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| posted on 1/12/08 at 08:39 PM |
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quote:
Originally posted by designer
The best small diesel and girlie car is , by far, the Polo Blue Motion.
I quite like the new Fiat 500 (even if it's quite big!!)
Buy a bus like my Espace - I bought an ex demo - 4 months old and saved about £7500
Discussing it with wifey yesterday and reckon I'll be keeping it for 5 - 10 years as it does everything a tintop needs to do (albeit in a very
uninteresting way).
ATB
Simon
[Edited on 1/12/08 by Simon]
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