Vehicle sales; A view from the other side

[Deleted member 37751]

Of course you could turn that quote around like this:

"I agree with the sentiments of the original post but it just seems to me that theres something about buying used cars / vans that just attracts a particular type of slimey individual"

Part exchanging a 'duffer' into a trader is common practice and is bragged about at times on this very forum...

 

[mika]

Part exchanging a 'duffer' into a trader is common practice and is bragged about at times on this very forum...

thats a good point
and probably on balance more than a little unreasonable as we wouldnt like to receive said duffers out the other side

the other familiar cry on this forum is that cars are over priced some folk always seem to know of "one down the road at half the price which happens to be a minter"

 

[seven]

You're not going to shatter my boyhood imagination and say that you all don't look like Tinker?

Not any more!
Didn't think that look worked for me after 40.

 

[b1g1an]

I think the problem for a lot of punters is car dealing appears to be a money for nothing business. They work for a day they get a day's pay, a dealer buys something from someone and then immediately wants more for it which appears to be at the original owners expense and therefore they didn't earn it. The price checkers they've looked don't help either as the sticker price is always more and the trade in offer is usually less so it would be natural for them to think the price is a high starting point.

It's the same for all retail obviously but with used cars it's much more transparent as they have an idea of what it cost, rightly or wrongly, whereas most people have no idea of the wholesale price of what they buy in shops and would probably take the same attitude if they did.

With reference to the cash buyers it's difficult for them to accept that the market has changed and that bigger dealers at least make most of their money on all the extras...finance, GAP insurance etc so cash doesn't make their eyes light up anymore and the punter feels insulted that their hard earned savings aren't appreciated.

Because of all this they only buy from a dealer because they want the afterservice and therefore feel no qualms demanding it.

Just because some buyers don't understand doesn't make them idiots.

 

[Ierton]

Retail is a little bit different in that the quality of the product has no bearing (usually) upon the retailer - one Samsung TV will be the same wherever you buy it. Profit is based upon stocking costs and wholesale margin - not cost of preparing the product itself. Once this factors into the equation corners are cut.

 

[gIzzE]

But would you pay more to buy a tv in a shop with knowledgeable staff and well lit demo rooms that recreate your living environment?
I'm amazed at how bad most TVs are set up, people have a living room with two lamps on and then have a really bright LCD, where as a plasma would be far better, and cheaper too.

Most just don't think about that as they walk into a department store to have a quick look where they are All in demo mode (horrid) and make their decision and then go home and order online. Then go on the forums saying "my old tv I have had for years looks much better tha this new one, any ideas??"

I probably watch my tv more than anything else, actually i listen to music more than anything else, I wouldn't dream of buying a Hifi without listening to it, I wouldn't dream of buying a tv without viewing it properly and setting it up myself, but many are happy to buy it because it has x feature or it looks nice off.

We are all different, plenty of things I will happily buy online and I chase price on that I am sure others must shudder at, but many things I have to try.

Only one of my friends has ever test drove a car they have bought, many take the car out they are wanting to buy, but only one made a short list of 3 and drove them all back to back. Most of them just liked the colour.

 

[gIzzE]

I think the problem for a lot of punters is car dealing appears to be a money for nothing business.

Really?

I think it is one of the hardest games out there, certainly trying to start off.

The margins are terrible, what other business would you go into and say "if we buy 10 of these at £30000 each we can sell them for £32 maybe £33k each, we can make a 7-10% margin!!!"

Someone like next work on a 4-500% margin at worst, and more if they can.
Even John Lewis want 3-400% these days. *

I think the car game is very hard with huge gambles.



*that is not on everything, electronics will never see that.

 

[Deleted member 37751]

I think the problem for a lot of punters is car dealing appears to be a money for nothing business

How's this so? The trader has to physically purchase stock to sell on.

The average price of vans we buy are around £6k each (give or take a grand) and we will buy, on average, ten vans at a time. I add roughly £300 per van, making it a 5% margin.

Would you put up £6k to make £300?

 

[edstrom76]

Really?

I think it is one of the hardest games out there, certainly trying to start off.

The margins are terrible, what other business would you go into and say "if we buy 10 of these at £30000 each we can sell them for £32 maybe £33k each, we can make a 7-10% margin!!!"

Someone like next work on a 4-500% margin at worst, and more if they can.
Even John Lewis want 3-400% these days. *

I think the car game is very hard with huge gambles.

*that is not on everything, electronics will never see that.

Really? Are we talking markup here, or actual profit margins? In recent years, John Lewis have been operating at around 6% profit margins I think. Other retailers will be similar. I wouldn't have said a 10% return was bad and for a small dealer, keeping his/her overheads to a minimum they should be able to make a decent living out of it I would have thought.

 

[BruLan]

How's this so? The trader has to physically purchase stock to sell on.

The average price of vans we buy are around £6k each (give or take a grand) and we will buy, on average, ten vans at a time. I add roughly £300 per van, making it a 5% margin.

Would you put up £6k to make £300?

I agree completely I make 50 - 400% on lower value items and have often considered moving into cars but whereas I can at least double my Investment (Gross) can a Motor Trader do that ??

I take my Hat off to Traders having the Balls to buy without a safety Net no comeback no returns at purchase and yet have to offer a Warranty at point of sale- MOST Traders do it properly

I'm being as judgmental as most of the posters on here and guess the critics on here work for others and use their employers money / time to pay their Bills and have little or no idea idea just how tough it is to turn a profit using nothing but your own cash and initiative.

Consider the risk and margin before being so critical

 

[davidjpowell]

How's this so? The trader has to physically purchase stock to sell on.

The average price of vans we buy are around £6k each (give or take a grand) and we will buy, on average, ten vans at a time. I add roughly £300 per van, making it a 5% margin.

Would you put up £6k to make £300?

I'm thinking there used to be more money in vans than this and I'm guessing that you are looking for other markets to explore...

The car dealers that I know don't complain about the price they are achieving, but how difficult it is to acquire decent stock.

 

[BruLan]

I'm thinking there used to be more money in vans than this and I'm guessing that you are looking for other markets to explore...

The car dealers that I know don't complain about the price they are achieving, but how difficult it is to acquire decent stock.

The hardest part of selling ANYTHING is buying it right thats common sense

 

[Deleted member 37751]

I'm thinking there used to be more money in vans than this and I'm guessing that you are looking for other markets to explore...

Like I said earlier, we pretty much only deal with trade so we have a quick turnaround on stock.

 

[MrVix]

I agree completely I make 50 - 400% on lower value items and have often considered moving into cars but whereas I can at least double my Investment (Gross) can a Motor Trader do that ??

I take my Hat off to Traders having the Balls to buy without a safety Net no comeback no returns at purchase and yet have to offer a Warranty at point of sale- MOST Traders do it properly

I'm being as judgmental as most of the posters on here and guess the critics on here work for others and use their employers money / time to pay their Bills and have little or no idea idea just how tough it is to turn a profit using nothing but your own cash and initiative.

Consider the risk and margin before being so critical

How very true. I suspect the vast majority of posters on here are employees. It is a different and far more difficult game being an employer and it is easy for the 'paye boys' to start waving their critical fingers. Anyone who has a business and employs people in these trying times deserves nothing but respect.

 

[MD5]

Anyone who has a business and employs people in these trying times deserves nothing but respect.

How kind, especially if we don't come on here moaning about a £300 return on £6k outlay.

 

[Druk]

deleted.
.

 

[Deleted member 37751]

How kind, especially if we don't come on here moaning about a £300 return on £6k outlay.

I have to fund my money-pit, 13mpg AMG's somehow!

 

[MD5]

I have to fund my money-pit, 13mpg AMG's somehow!

Exactly, so life ain't bad - and long may it continue!

 

[John Jones Jr]

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.

Whatever about the basic profit & loss on selling used cars (or vans for that matter), buyers or potential buyers don't really care. They presume that if you are willing to sell a car at £X you are making a profit that you are happy with.

Now, as far as punters looking for a discount (large or small) on the advertised price, who can blame them even if it's not going to happen. The main reason I believe the majority of punters look for large discounts on used cars is simply they want to reduce the risk of purchase, just in case the car turns out to be a lemon, especially when the warranty runs out.

It's common sense and considering there seems to be plenty of shady/cowboy used car sales businesses or garages that just offer poor after sales customer service, the cheaper the car (within reason) the happier many buyers are to do business.

And for sure, there's no harm in asking for 2k off a 15k car, if you don't ask you won't get. At the end of the day what does it matter if a punter offers 13k, you say no because you know you can get more. Good on you and good on the punter for asking. Life...

 

[artyman]

Perhaps less so as interest rates are so low, but holding stock has a cost so, depreciation as well if held for too long, so selling a car with a bit off may have made sense a while ago, less so now depending on the traders need for cash flow.