As an experienced salesman, I would not accept a margin of less than 3,000 on a 15,000 vehicle; even that seems somewhat constrained. Prior to initiating any negotiations or discounts, it is important to note that $3,000 is not a substantial amount. You initially incur VAT on the £3000 "profit" (which constitutes the VAT content, not inclusive of VAT), resulting in a £500 loss to taxation before any further deductions.Furthermore, if the engine malfunctions during the Pre-Delivery Inspection (PDI) necessitating the installation of a reconditioned unit at a cost of £3000, you ultimately realise no profit. Additionally, you are obligated to remit VAT on the entire £3000, as you cannot deduct any reconditioning expenses from your margin prior to taxation. Consequently, you would incur a loss of £500.
Subsequently, you are responsible for the warranty payment, which may be seen as insurance ensuring that the vehicle you sell does not malfunction; if it does, ideally the warranty provider will cover the costs instead of you.It is not intended to safeguard the customer; rather, it is designed to protect the dealer. This amounts to several hundred, potentially more if it pertains to a high-end vehicle. Neglecting to identify a low or damaged tyre during your appraisal may result in an additional expense of three to four hundred dollars. Subsequently, you must compensate your technician, who charges between 40,000 and 50,000 annually, for the pre-delivery inspection and/or servicing, in addition to the cost of parts. The valet will want compensation, as would the administrative personnel and any other individuals associated with car sales. Additionally, there are the escalating business charges, attributed to Rachel. Heating, lighting, information technology, etc. Consider it from that perspective; on a favourable to mediocre transaction, one may be fortunate to net £1200 to £1500 on the lower end of a £3000 margin vehicle. Indeed, we occasionally acquire exceptional bargains on select vehicles that we may "procure." However, when considering those with concealed issues that failed to sell within the designated timeframe for various reasons and were subsequently traded, it becomes evident why a substantial margin is essential and why dealers frequently face insolvency. Incorporating the additional mandatory operational criteria of a primary dealership, such as showroom specifications, curated vehicle selection, coffee machines, and other amenities, exacerbates the situation. Few primary dealerships will service vehicles priced below £3000 on a car valued above £20,000. If you observe your former vehicle on the forecourt priced only slightly above what they paid you, it is likely they anticipate difficulty in selling it. Consequently, they may have incorporated a portion of the profit from the new car into its price to facilitate its sale. Alternatively, if it is near the end of a quarter or fiscal year, they might include part of the quarterly bonus in the pricing to secure the final deals necessary to meet targets.