Vehicle sales; A view from the other side

[Deleted member 37751]

Before I begin, I'll declare my bias because one of my businesses deal in trade-to-trade commercial vehicle sales.

I regularly see threads on here about how vehicle dealers try and sell cars for vast profits when the reality is that margins have never been tighter. Add to that the amount of professional time-wasters out there that think you've not got anything better to do than let them drive your vehicle 'because the one they've seen is 300 miles away, so I just wanted to see what this model drives like' or those that expect a 10 year old car with 150k on to be 'mint'. I know a trader that had to do a 300 mile round trip to fix a clip that had broken on an 8 year old car and his kind nature meant he went the extra mile and fixed it himself to keep the customer happy.

Luckily for me, I rarely have to put up with these people any more because all of my dealings are with other traders but I do feel for those genuine people that are struggling to earn a decent wage. This message also applies to every small, independent business trying to earn a crust.

Too many people expect a top product service for a cheap price (champagne lifestyle with shandy money) and in reality it just doesn't happen; if you want quality, it generally costs that little bit more...

 

[Lxb3]

Couldn't agree more - and I'm not a trader. There's a reason why a new car, with the full backup and support of an international dealership network and warranty etc etc etc, is £40k - but after ten years of a hard life it's only worth £4k. If you want an immaculate car, you either have to pay the money, or spend a long time looking out for a bargain and take a chance.

 

[wemorgan]

I went to a van auction with a friend the other month. Hoping for a good deal we were very disappointed. Nearly all the vans needed some TLC and the margins looked very low. So he walked away empty handed and bought his van from a dealer who had the van well presented and newly serviced.

 

[developer]

You're dealing with people Lee - any business where the front line is people based will be problematical.

People are a funny breed.

I recall going with Greetme to look at an E55 in Birmingham - great write up, great photos, sh*t car (in almost every respect).

People .

 

[wemorgan]

People are a funny bread.

especially the ginger ones

 

[Deleted member 65149]

... when the reality is that margins have never been tighter.

That's what my old boss, an independent trader with just one small garage, always used to say. Although he never said it just as he was heading off in his new Porsche 997 GT3 for an afternoon's golf at Wentworth (green fees up to £360, no idea what his annual membership was). After golf he'd head back to his 5-bed detached house with pool overlooking another Surrey golf course, I'd guess valued at well over £1m. But he did have to economise when flying off on regular exotic holidays with his family by downgrading to business class! I really felt sorry for him.

I must admit though that he only sold cars that were, as far as he knew, perfect in every respect. Prices were accordingly high but he had lots of repeat customers who were delighted to get an honest service. So I fully agree with SPX's final comment that you get what you pay for.

 

[aka$h]

The common misconception is we make 20-30% margin on car which simply isn't the case. So buyers thinking they are going to haggle £2k off a £15k car because they have cash and no p/x are going to be disappointed.

Lets take an example, 2008 CLS priced at £15k.
Cost to buy vehicle £12500
Fees and transport costs £350
Prep cost (valet, mot, wheel refurbishing) £200
Tyres/servicing (on average) £300
Warranty £180

Total cost £13530

So if that car sells for the full asking price the profit remaining is £1470.

Vat margin on the gross profit is £500 (less the vat paid on any parts, a lot of valeters, wheel refurbers are not vat registered)

So we make £1030, less advertising costs which for us are around £25 per car per week.

So that's £1030 profit left assuming you get the full asking price, and the car had no major faults. The likelyhood is that you won't get the full asking price and 1 in 3 cars need more prep than you had estimated.

So all in, less than £1000 profit on a £15000 car. Thats before any fixed overheads, so there isnt bags of money to be made from selling used cars.

 

[aka$h]

We try our best to describe the cars we sell as accurately as possible, it saves time for us and the potential buyer.

The worst thing is selling a car over the phone, the customer is happy enough buying a car without seeing it but will pick tiny faults in it once its been delivered.

We supplied a 2004 SLK recently, so a 9 year old car, was sold over the phone, the description of the car included marks on the wheels, interior, stone chips and photos provided. When the car was delivered the customer had found one of the side flaps on the parcel shelf (tonneau type cover, when the roof is open) had a 5mm gap, the other side did not. It did not impair the function of the car or operation of the roof in anyway.
We are in London and the car in Sheffield, under normal circumstances we would ask for the car to be brought back to us for rectification. Due to the distance, I suggested they take it to a local garage or MB Specialist and we would settle the bill, which I thought was more than reasonable. The customer insisted they should take the car to their local MB dealer and for us to pay the bill. In the end I ended up going to Sheffield and adjusting the flap, 5 hours of travelling for a 3 minute adjustment.

Yes the flap was out of adjustment, but its a 9 year old car, didn't you think it might be a good idea to come and see it before buying? I don't like to leave things on a sour note, so I went that step further to get it sorted.

Going forward, any vehicle to be sold over the phone must be inspected buy an independent company such as the AA before any payment is taken, therefore any issues like this can be avoided. Should the purchase then go ahead we will deduct 50% of the cost of the inspection from the balance.

 

[Will]

I think it comes down to people being realistic. Eg, there's a thread on here (which I can't be bothered with anymore!), about someone buying a 10+ year old 170k W210. The guy already owns an old 210 and expresses great surprise to find it has a few small jobs that need doing and that it is not cosmetically perfect. It was priced at a little over £2000...

Without either looking at the car, seeing the advert or speaking to the seller it would be a bit naive to expect it to have (1) absolutely no rust and (2) absolutely no wear/tear or any faults whatsoever.

I've bought and sold loads of cars over the years, am realistic when I buy them and I am realistic when I sell them. I think most people are but you do get a few...

 

[Colin_b]

The common misconception is we make 20-30% margin on car which simply isn't the case. So buyers thinking they are going to haggle £2k off a £15k car because they have cash and no p/x are going to be disappointed.

Lets take an example, 2008 CLS priced at £15k.
Cost to buy vehicle £12500
Fees and transport costs £350
Prep cost (valet, mot, wheel refurbishing) £200
Tyres/servicing (on average) £300
Warranty £180

Total cost £13530

So if that car sells for the full asking price the profit remaining is £1470.

Vat margin on the gross profit is £500 (less the vat paid on any parts, a lot of valeters, wheel refurbers are not vat registered)

So we make £1030, less advertising costs which for us are around £25 per car per week.

So that's £1030 profit left assuming you get the full asking price, and the car had no major faults. The likelyhood is that you won't get the full asking price and 1 in 3 cars need more prep than you had estimated.

So all in, less than £1000 profit on a £15000 car. Thats before any fixed overheads, so there isnt bags of money to be made from selling used cars.

Sounds just like my neighbour, a farmer.

 

[Deleted member 37751]

I must admit though that he only sold cars that were, as far as he knew, perfect in every respect. Prices were accordingly high but he had lots of repeat customers who were delighted to get an honest service. So I fully agree with SPX's final comment that you get what you pay for.

And that's loosely my point, if you don't research what you're buying and aim to pay as little as possible, you're going to run into trouble. Yet some people genuinely expect to get bespoke service for car warehouse money.

 

[Ierton]

We try our best to describe the cars we sell as accurately as possible, it saves time for us and the potential buyer.

The problem is you're in the minority. I've lost count the number of times I've viewed a car described by a dealer as 'stunning' or 'immaculate' to find it tatty upon arrival. That's not to say private sellers are any better - just that their cars are normally priced accordingly. If I'm paying a dealer a premium the very least I expect is honesty.

 

[boxbrownie]

The common misconception is we make 20-30% margin on car which simply isn't the case. So buyers thinking they are going to haggle £2k off a £15k car because they have cash and no p/x are going to be disappointed.

Lets take an example, 2008 CLS priced at £15k.
Cost to buy vehicle £12500
Fees and transport costs £350
Prep cost (valet, mot, wheel refurbishing) £200
Tyres/servicing (on average) £300
Warranty £180

Total cost £13530

So if that car sells for the full asking price the profit remaining is £1470.

Vat margin on the gross profit is £500 (less the vat paid on any parts, a lot of valeters, wheel refurbers are not vat registered)

So we make £1030, less advertising costs which for us are around £25 per car per week.

So that's £1030 profit left assuming you get the full asking price, and the car had no major faults. The likelyhood is that you won't get the full asking price and 1 in 3 cars need more prep than you had estimated.

So all in, less than £1000 profit on a £15000 car. Thats before any fixed overheads, so there isnt bags of money to be made from selling used cars.

Yes, sounds all reasonable.........but its not the customers fault the market is so depressed at the moment. I am not having a dig at you, as you sound like the kind of dealer that has a good name and retains customers due to good service and good cars, but there are so many other traders which tarnish the whole industry with thier shady practices, and then winge about the customer when the customer wnges about bad service.
There are two dealers around my area I regulary see at the auctions, one always tends to buy the better cars the other always goes for the cheaper "dogs", guess which dealer has the much better reputation?

This debate will carry on so long as we still use currency

 

[wemorgan]

This debate will carry on so long as we still use currency

I've been trading in peanuts for years

 

[boxbrownie]

I've been trading in peanuts for years

You need to stop advertising at the Zoo......

 

[Palfrem]

As a regular buyer of used cars - I'm happy to pay for a top price car if it's well specced and in top condition - for its age obviously.

If a buy an MB AUC it must almost be as good as new. My Landcruiser was relatively "cheap" as it has a few cosmetic faults and is a bit worn inside. It didn't have a very careful previous owner! But it came with a Toyota warranty and they have fixed without any bother everything mechanical I have brought to their attention.

Some may say I probably paid too much for my E36 but it was (still is) in very good condition, came with a good warranty and the seller has a solid reputation for sorting out top quality cars.

Never was the old adage "Quality is remembered long after the price is forgotten" more true than with a used car.

 

[Deleted member 37751]

but its not the customers fault the market is so depressed at the moment.

On the contrary, it's what the customer demands and by being fixated with a race to the bottom, doesn't anybody realise the consequences?

 

[davidjpowell]

My issues with traders has always been the one way street. The extra's that were so valuable when you bought the car are suddenly worthless.

I accept nowadays that there is not as much in a deal as there used to be - nor do I think I negotiate harshly (or even well!).

There are traders out there who misdescribe cars. They let down the side, but you can't blame all traders for that. Others I know have been very fair.

But (sorry Lee on this!), do I feel I get value for money on paying the extra to buy from a trader? Not really - and this is where I take issue.

But it's the one way street that invariably pee's me off.

ETA - I paid more for my current car that I would normally. Bought from a member who trades car. I'm generally happy with the car, but there are 'issues' which I should have probably dealt with if I had the confidence that they would be dealt with without me being messed about.

 

[grober]

In my experience there are many dealers for which " preparation of stock" means giving the car a wash and a quick hoover out. Sure they might be persuaded to put a couple of tyres on the front [ there's plenty= at least a couple of mm left on the back sir]--- after a sale has been made, but unless there's something outstanding required , which will have been reflected in the lower trade in price rest assured! --- many dealers spend the minimum of money on their unsold second hand stock.
The car car trade is a bit like the building trade there's lot of honest hard working businesses out there but equally a lot of cowboys. If customers are hard to deal with its possibly because past experience has made them extremely wary of believing anything anyone in the motor trade says.

 

[boxbrownie]

On the contrary, it's what the customer demands and by being fixated with a race to the bottom, doesn't anybody realise the consequences?

And there by lay the problem with dealers, it's the customers fault!