Spot on....and of course that trader loses nearly 20% of any profit made as VAT.......and that's based on the difference between the bought price and the sold price. Which is unfair but I can see why its done. So if as a trader you bought a car for 10k and sold it for 12k......but then you found a major problem that you had to put right before collection that cost you sat a grand to put right....you have in fact made 1000 pound profit......but you still pay the VAT on £2000!!!..This is because back when you used to just pay VAT on the real profit, people used to cheat the vat man by saying they had spent loads of refurb.....when in fact they had spend very little or none!!! I got caught out on a van once. Had a major structural fault that cost nearly £3000 to correct. I made nothing at all in that deal....it happens.....but still paid the vat on 3 grand profit (£500!)....that hurt!!
I have no doubt that traders have to turn a profit on each car they sell in order to - among other things - cover their own overheads and also take some money home at the end of the day to feed their families.
My point was that from the customer's perspective, buying privately will seem like a better deal because they don't have to pay for the trader's overhead and profit, which, I agree, are of no benefit to the customer.
However, if you have ever negotiated a write-off with an insurer and showed them the asking price of similar cars at a dealer, the insurer will rightly tell you that buying a car from a dealer is considered 'betterment' compares to the car you had, because the dealer will have to (a) rectify all major faults prior to sale, and (b) provide a 12 months statutory warranty, including potentially having to take the car back.
These are tangible benefits that you don't get if you buy privately, and they have a value. My point is that when buying privately, you are not simply avoiding the the dealer's own costs and profit, instead you are getting less value than when buying from a (reputable) dealer.
Another related point is that sellers don't take the time and effort to sell a car privately if all they expect to get for it is what the dealer would have paid them in trade-in (or webuyanycar etc). Instead, asking prices in private sales are often halfway (or thereabouts) between what a trader would have paid them and what the trader would have sold it for.
So in effect, when buying privately you are not eliminating the trader's margin, only part of it, and, as said, you are buying a car with potential faults and no warranty.
I am not saying that buying a car privately is a bad idea, just that believing that you are getting the same deal while cutting our the dealer's profit is an oversimplification.
The bottom line is that there benefits to buying from a dealer, which you lose if buying privately, and difference in price is what these benefits cost you.
. Probably best to buy cars privately with your own AA/RAC inspector. When buying from traders, your paying £1500-2500 over the odds and end up being a bigger loser when selling, just like me. 