Q: If you sell a new car for £40,000 with average options, how much money does the dealership make and how much commission do you make?
A: Options have little to no bearing on the sales commission. The add-on products (GAP insurance, paint protection etc.) are what earn the good money.
Q: How much is "good money"?
A: Commission schemes are obviously geared towards those who 'do the numbers', but if you sell a profitable used car with a number of add-ons you can reasonably expect to earn £300-500.
Q: Do you ever negotiate on price or is it totally fixed? Also, what is the typical margin on a £4000 car? I've found traders never seem to haggle and will let you walk out the door rather than drop even £100. Whereas with private sales, it's pretty much expected for the price to include some decent wiggle room.
A: You would hope to start out with around £1300 gross margin on a £4000 car. Minus the reconditioning cost, servicing, MOT, valeting, tyres et cetera, then deduct VAT margin and warranty costs. Average profit per unit runs at £415 where I work, sometimes more, sometimes a lot less, even a loss occasionally.
Q: It makes you wonder just how much the cars cost to build, given the incentives the dealers get as kickbacks for hitting the targets.
A: A ballpark figure would be 45% of the pre-tax list price.