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Ripped off


Cazgraeme

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I think the garage gave you a very good deal if they are only putting a 15% mark up on it. Usually the trade price a garage gives you is roughly 25% less than they sell it for, and the private sale price is roughly half way in between the two. People usually accept the lower trade price as it can be less hassle than trying to sell your car privately and makes for a quicker process.

 

Dont forget they have to pay for their showrooms, staff etc, putting a warranty on the car etc,  MOT, any prep before putting it on their forecourt.

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There is a topic on PH about rip offs. Interestingly so many people saw garages charging large margins as a rip off, so many people on the thread thought that the money a garage made when they charged £80 an hour and had a young mechanic on it earning £20 an our was £60. Quite astonishing really. I mean what pays for premises, NI, liability insurance, maintenance, machinery, software licences, accountants etc etc. 

 

I bet most people on there thought nothing of buying a coffee from a coffee shop for £3 which surely is just a 5p paper cup with 2p worth of granules in and free hot water, right? ;)

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A mate of mine called me up and asked whether I wanted to get into a high end car sales garage with him. When I asked why, he told me about a 993 Turbo he had been looking at - offered the seller £110K but he refused, however he let my mate know when he did sell it. 

It went to a dealer at £115K, within 24 hours he had cleaned it and put it back up for £160K, two weeks later when I check it was sold. Nice work if you can get it.  

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1 hour ago, glrnet said:

Let's see the A7 then. TBH, you took it to a main dealer what did you expect?  I'm surprised they only lumped it by £1500.

 

1 hour ago, glrnet said:

Let's see the A7 then. TBH, you took it to a main dealer what did you expect?  I'm surprised they only lumped it by £1500.

2k Graham. :)  They did it on a Nismo Juke of mine.  Gave me  £9400 and advertised it 3 days later at £11400. The trouble is nobody has cash laying around so have to go to a main dealer to get finance.

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It's what businesses do, they make a profit. They can then employ people create jobs and drive the economy. Not sure what anyone would expect a business to do really. It's not like you have to accept the offer and you bought the car in the first place knowing that you would face the dilemma of selling. 

 

As stated above they don't take the difference business costs have to come from that too. But based on 2k from 15k on its own minus costs they are making margin of something like less than 10% which is crazy low.

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Average profits for general cars will be around £1500-2000, as said in previous posts they do need to make a profit, so I think you've done alright tbh. Could have maybe got another 500 but ..meh.

Edited by AMT
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The £2000.00 difference between the P/X price and the showroom asking price is simply mark up.

 

They will have an over allowance of about £1000.00 built in for any part exchange they may be offered against it.

 

If there is no part exchange then they would probably offer a £1000.00 discount.

 

So they are left with a £1000.00 potential "profit" which will be quickly diluted by the time they prepare the car for retail sale and stick a warranty on it.

 

That is before you even start looking at all the overheads that go hand in hand with running a business.

 

Golden rule: Never go back to the garage that you sold your car to because you will only get upset and feel that you have been shafted.

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Some good points well made. My point is this. Garage making 2k profit on my px and probably 2k profit on the one im buying.  As i said i understand the dealer has overheads and has to make a few quid but 4k profit  on 35k deal a bit much imo. 

 

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9 hours ago, docwra said:

A mate of mine called me up and asked whether I wanted to get into a high end car sales garage with him. When I asked why, he told me about a 993 Turbo he had been looking at - offered the seller £110K but he refused, however he let my mate know when he did sell it. 

It went to a dealer at £115K, within 24 hours he had cleaned it and put it back up for £160K, two weeks later when I check it was sold. Nice work if you can get it.  

Im defo in the wrong game.

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6 hours ago, Cazgraeme said:

Some good points well made. My point is this. Garage making 2k profit on my px and probably 2k profit on the one im buying.  As i said i understand the dealer has overheads and has to make a few quid but 4k profit  on 35k deal a bit much imo. 

 

With respect, I think that you are really missing the point.

The garage is not making 2k profit,

They may get a 2k mark up if  someone comes along and is stupid enough to pay the full asking price

However, at the end of the day, the garage will be lucky if they come out with £500.00 of a margin which will be subject to vat at 20% and a further 40% income tax at year end.

 

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6 hours ago, Cazgraeme said:

Some good points well made. My point is this. Garage making 2k profit on my px and probably 2k profit on the one im buying.  As i said i understand the dealer has overheads and has to make a few quid but 4k profit  on 35k deal a bit much imo. 

 

They’re not though, are they? As has been pointed out to you, they’ve got to spend money to get your car sellable which if nothing else involves labour time which has a cost, and then they will be knocked down on the selling price too (or the buyer will expect other stuff done instead, like servicing or fuel etc). Then you’ll have presumably haggled down the cost of the car you bought too, and they would have had to spend money to get that sellable too. 

 

There’s also the risk that something doesn’t sell, or they get their pricing wrong and just want shot at no profit, or the car breaks down two miles down the road after the new owner buys it. They then have to get it recovered at £200, spend four hours diagnosing the odd engine noise at £200, then repair the engine at £1000, and suddenly there’s no profit at all. 

 

I dont understand why why you’re struggling with this concept. I’m not sure what you do for a living, but do you work for free? Or charge customers only enough to ever break even? Assuming your figures are right, 11% profit on the £35k sale is utter peanuts. That’s not a huge profit margin at all! 

 

in the case of high value stuff like a 993 Turbo, how is it the dealer’s fault that the other guy was happy to sell for much less than market value? You were happy to sell yours for much less than it might’ve been worth, so why surprised when others do the same? Plus there’s always the risk the arse falls out of the market tomorrow, and suddenly he would’ve been £115k down... The riskier the road, the greater the profit (Ferengi rule of acquisition 62 ;) ).

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+1 for the trek quotes!

 

Indeed large chains are masters for milking customers and generating profits but your average small indy is doing a tough job. Most of their cash is tied up in metal on their forecourts with no guarantee it'll sell or they'll break even on it. For every car you think they've made a killing on they'll have several which they've lost on. You just need to look how most cars loose in 3 months to see that the aim of the game is to keep the cars rolling as it were. That's before rates and tax! If it was that easy they'd all be minted and everyone would be setting up showrooms! Just think how many cars do they sell a week? Probably 1-2 so all of their weekly costs need to come from one sale, it's mental when you think of it, a few slow weeks and you need to start selling off cars for less than you paid just to sort your bills out and before long your underwater.

 

I've a lot of time for decent indys and when I haggle it's different to a large dealership where you know it's already marked up excessively and the cars are as common as anything. Indys generally have individually better cars at more reasonable prices and take a bit more time and care (the decent ones anyways)

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Again it depends what you call excessively marked up. A company marking up a product by 20% is not excessive by any stretch and although larger chains do report into a wider network and they can better survive harder times ultimately every dealership has targets they are measured against and if they fail consistently the long term result is closure of that branch.

 

The company I work for sells a service, the numbers I stick to on pricing for our department are COGS <35% and margin >30% otherwise we may as well be a charity/NFP. The numbers in the OP are not in any shape or form a rip off in my view, in fact its less than I thought dealers would be aiming for.

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7 hours ago, coldel said:

Again it depends what you call excessively marked up. A company marking up a product by 20% is not excessive by any stretch and although larger chains do report into a wider network and they can better survive harder times ultimately every dealership has targets they are measured against and if they fail consistently the long term result is closure of that branch.

 

The company I work for sells a service, the numbers I stick to on pricing for our department are COGS <35% and margin >30% otherwise we may as well be a charity/NFP. The numbers in the OP are not in any shape or form a rip off in my view, in fact its less than I thought dealers would be aiming for.

I agree with you there @coldel as the money they are making would make being in business seem pretty pointless.  It wouldn't even pay for a day or two of being open with all theiroverheads.

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14 hours ago, Ekona said:

They’re not though, are they? As has been pointed out to you, they’ve got to spend money to get your car sellable which if nothing else involves labour time which has a cost, and then they will be knocked down on the selling price too (or the buyer will expect other stuff done instead, like servicing or fuel etc). Then you’ll have presumably haggled down the cost of the car you bought too, and they would have had to spend money to get that sellable too. 

 

There’s also the risk that something doesn’t sell, or they get their pricing wrong and just want shot at no profit, or the car breaks down two miles down the road after the new owner buys it. They then have to get it recovered at £200, spend four hours diagnosing the odd engine noise at £200, then repair the engine at £1000, and suddenly there’s no profit at all. 

 

I dont understand why why you’re struggling with this concept. I’m not sure what you do for a living, but do you work for free? Or charge customers only enough to ever break even? Assuming your figures are right, 11% profit on the £35k sale is utter peanuts. That’s not a huge profit margin at all! 

 

in the case of high value stuff like a 993 Turbo, how is it the dealer’s fault that the other guy was happy to sell for much less than market value? You were happy to sell yours for much less than it might’ve been worth, so why surprised when others do the same? Plus there’s always the risk the arse falls out of the market tomorrow, and suddenly he would’ve been £115k down... The riskier the road, the greater the profit (Ferengi rule of acquisition 62 ;) ).

For the record im a petrochemical engineer. And certainly  dont work for free. The dealer in question isn't a small independent selling one or two motors per week either.  And my Z was in better showroom condition than the car i bought. The dealer would need to spend a big fat zero preping my Z.

 Just saying.

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No, he would have to spend money, he can't just punt it off in the same condition you sold it to him in. At the very least he's got to valet it, even if you don't think it needs it, plus pay for staff and a nice showroom etc.

 

Do you not think you just might be a bit wrong on this one? ;) How much did you get off the new car, and how hard did you haggle the PX on yours?

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