Dealer profit margins and contemplating a modification

[ML350_Colin]

In recent weeks, the household has frequently required a spacious car boot and/or a large back seat.

We possess the X1, and it suffices for that purpose.
However, it is the sole vehicle that my wife is willing to operate.


She refuses to operate the AMG, which is understandable, and expresses dissatisfaction with the foot brake, the low seating position, and the visibility of the E400 coupe, among other grievances. It is not the vehicle, but the act of operating it.

It may be time for a transformation.

The retail price of the car ranges from £15,500 to £15,000.
That is from a familiar local garage that exclusively sells SUVs and 4x4s, as well as a long-time acquaintance in Devon who sells vehicles at a lower price point. I enquired with each individuals independently, and they expressed confidence regarding that matter.
However, neither queried about it.

Excluding WBAC, estimates from Motorway, Carwow, a local automobile advertiser, and one from a distant location offering a potential replacement are all approximately £12,000 or marginally lower.
I am aware of the cost range, necessary preparations, contingencies, and profit margins required by a dealer, yet that markup astonished me.

In a period when traders report a scarcity of quality stocks, has anyone else recently had a comparable surprise?
Have you encountered this?

Ultimately, I understand that it pertains to the cost of change.

[CyberNinja]

I am not astonished by that margin. Preparation, correction, forecourt area, salesperson's commission, and warranty.

The dealer's retail asking price of £15,000 does not represent the actual selling price.


Indeed, dealers are lacking quality inventory; but, in my opinion, used vehicles do not sell rapidly during the winter season. Partly due to customers' prioritisation of other activities, and partly because the influx of year-end and new year vehicles saturates the used automobile market. The financial instability from last week is detrimental. Individuals are often unaware of the financial resources at their disposal.

Upon returning from my break, I compiled a list of potential "next cars" to monitor. No dealer vehicle I am monitoring has been sold. However, a few private transactions occurred.

Is there any possibility of locating a somebody within your network who requires a desirable X1 for £13,500? Would it pose an issue to list it on Autotrader for a few months?

[ML350_Colin]

The X1 is likely to remain, as is the E400; however, the E400 would be the one to be eliminated if....

We will likely navigate into the New Year to determine if it is a reflexive response to recent obstacles.


However, a markup of £3,000 to £3,500 exceeds the expectations of the two individuals I consulted. The market for 3.5 V6 petrol vehicles may be stagnant.

[DSM10000]

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.

[ML350_Colin]

Thank you for the comprehensive analysis.

All of it is frustratingly logical.
A private sale is the sole method to obtain what I believe it is worth, and I am not inclined to have the general public on my property.


Indeed, reality may be harsh.

I will likely retain it for an extended period unless the logistical issues escalate in Chateaux Fabes.

[ML350_Colin]

😋

[CyberNinja]

Disseminate the information inside your network.

An individual might be acquainted with another who requires a vehicle for this amount of money.


Ultimately, a car's value is determined solely by the price a buyer is willing to pay.

[CyberNinja]

😉