How much do they really make on a trade in ?

Dolby

Dolby

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What's the difference in value from a trade to retail?

I lost a deal today because they wouldn't drop the R372k price on a deal - but had they even attempted I'd probably have bitten at R360k - just R12k less.

When I work out what they would have made I actually *think* R40k in total off a deal I brought them - so do car dealers really make R40k on deals on not really interested in making anything less because of the effort, or maybe what seems like R40k maybe only be R15k - in which case I see why they didn't want to drop?

In the end, we're all pissed off - I lost a fantastic deal and blame them and they made zilch for the day
 
I'm also struggling to even get the current trade price on my car at the moment. It is in great condition and has some maintenance plan left over... I also walked away, but would have said yes for R15k more for the trade-in. They would have been able to still make about R15 - R20k from it and they get the sale of the demo model.
 
Dolby said:
What's the difference in value from a trade to retail?

I lost a deal today because they wouldn't drop the R372k price on a deal - but had they even attempted I'd probably have bitten at R360k - just R12k less.

When I work out what they would have made I actually *think* R40k in total off a deal I brought them - so do car dealers really make R40k on deals on not really interested in making anything less because of the effort, or maybe what seems like R40k maybe only be R15k - in which case I see why they didn't want to drop?

In the end, we're all pissed off - I lost a fantastic deal and blame them and they made zilch for the day
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Fazda's spoken on the topic before. It's really that much that they make. Remeber they still pay vat when they sell so 14% off the top, then comes rent, commission and all the rest.
 
Yea I think actually asked - I just couldn't find the thread.

But I recall the VAT being a big one that I forgot about now. Don't they claim VAT back though?
 
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I was chatting to my stepbrother earlier and he's traded a number of cars - he lost pretty much the same on an Audi A4 2.0T, a Mercedes B Class and a few other cars.

At least we're not alone with the Volvo and Jeep depreciating so badly
 
Dolby said:
Yea I think actually asked - I just couldn't find the thread.

But I recall the VAT being a big one that I forgot about now. Don't they claim VAT back though?
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No,

You are not a VAT vendor in your personal capacity.

So they cannot claim input VAT, only output, so they pay a pretty hefty sum on VAT.
 
Venomous said:
No,

You are not a VAT vendor in your personal capacity.

So they cannot claim input VAT, only output, so they pay a pretty hefty sum on VAT.
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I'm pretty sure that's wrong, Second hand good,they will be allowed to claim a notional/deemed input vat.
 
When they trade a car into their stock that counts as cost of sales \ stock. When they sell it that counts as turnover. Both are subject to 14% vat. They only lose out on 14% of the markup / difference between what they brought the car into their stock for and what they resold it for - ie Gross Profit.
 
Also, vehicles depreciate on a monthly basis. A dealer has to allow for the car to stand on the floor for at least 3 months. That is why your big luxury cars take a knock.
Try and trade any luxury car in and you will take a big knock. A Landy for example can trade R80k behind trade value.

As far as I a can see, the market and economical climate influence the value of trade ins.
 
Found that trade ins are inconsistent. Vw offered me R55k for my polo and Merc offered me R72k a week later. Merc put it on their bidding system and that's the highest bid received compared to Vw that had the technician write his own evaluation. So there is definitely room to mouniuvre with trade ins.
 
You can't be upset with the dealer who has to take the risk of not selling your trade-in for months before they reach the price they paid you, as well as the provisions they need to make for CPA repairs if the buyer of the trade-in has trouble with your car.

If you want a decent price for your second-hand car then you must go the private sale route. Wesbank even offer private to private finance if it is not possible to buy for cash.
 
Shellyb1 said:
Found that trade ins are inconsistent. Vw offered me R55k for my polo and Merc offered me R72k a week later. Merc put it on their bidding system and that's the highest bid received compared to Vw that had the technician write his own evaluation. So there is definitely room to mouniuvre with trade ins.
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There definitely is depending on what you are buying. Another reason why dealers trade behind book is that it gives them room to "play" when structuring deals.

eg. The gross profit on the new car is say R40k. The market value of your car is say R55k. They take R17k off the GP of the new car and write it back on the trade in so that the trade in stands them in at R55k. Commonly known as on O/A (over allowance)

You think you getting a better deal as you are been offered more on your trade in but chances are slim you will get any discount of the new car.
 
I think what most customers forget is that this is a retail business.

When in that business, the product is bought at x and sold at y and the difference between x and y goes towards it being a profitable business.

We don't question what Pick 'n Pay pays for their various groceries, nor does it bother us what Bradlows pays for their furniture...however, when it comes to a car, the dealer is expected to run at a loss, otherwise he is a crook. :rolleyes:
 
getafix33 said:
There definitely is depending on what you are buying. Another reason why dealers trade behind book is that it gives them room to "play" when structuring deals.

eg. The gross profit on the new car is say R40k. The market value of your car is say R55k. They take R17k off the GP of the new car and write it back on the trade in so that the trade in stands them in at R55k. Commonly known as on O/A (over allowance)

You think you getting a better deal as you are been offered more on your trade in but chances are slim you will get any discount of the new car.
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Well said!
 
LOL car dealerships. Gave me R45k for my 2004 BMW 320d, I saw it on the floor again a week later for R91k.
 
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