Confessions of a car salesman
How can you make sure you get the best deal on your next car? Let our inside man fill you in on the tips and techniques the dealers don't want you to know...
Recently, What Car?’s sister title PistonHeads ran a Q&A session with an anonymous car dealer on its forums. Both questions and answers inform, educate, entertain and provide plenty of handy tips for consumers buying cars.
Most of the questions were answered (‘A’) by the original car dealer, but in some cases other dealers chimed in with supplementary answers (‘AS’).
Photos used are for illustrative purposes only
Questions of cash
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.
Q: How much do you make on GAP insurance? I was badgered on this at least five times during the sales pitch. And then once more when I came to pick up a car. If it's £300 or thereabouts, do you make £50?
A: It's a good earner for both dealer and sales executive. Our guys can earn as much from GAP as they would from a below-target car deal. It's been spoiled a bit by ludicrous pricing and pressure sales.
Q: If a customer decides to buy a car and asks what kind of figures work best for you, rather than asking for a straight discount, do you feel more amenable to giving them a better deal?
A: Sort of, yes. I always feel inclined to help out on price as much as I can, if the people have been a genuine pleasure to deal with. It has been known for me to actually volunteer a little discount here and there, even when the customer hasn't asked for it and was quite prepared to pay the screen price.
I must be going soft, but some people are that nice and easygoing that you feel as if you have made their day when you volunteer a bit of money off, or some fuel, road tax or whatever. And these types will always recommend you and be a pleasure upon handover. I genuinely don't mind losing a few quid from the deal here and there for really pleasant people.
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