Welcome to “The Motor Trade Apprentice”. Sir Alan sets a task for our young apprentices; they are given £100,000 to spend on 10 used cars across the whole range of subtypes and the challenge is they have to sell as many cars as they can within a month whilst still making a profit. The buying criteria for the cars: below 60k miles, no more than 2 owners and they must have a full franchised dealer service history. Luckily for one of the apprentices he has MTI on speed dial, nips round the back and gives us a quick call. Remember he has to stock a range of cars that cover all the subtypes (city car, supermini, hatchback, family car, MPV, 4WD etc.) he has to sell as many as he can in a month and he has to make a profit. So in this hypothetical scenario just what cars would be the best to choose and why, how much should he expect to pay for them, how much will it cost to get them ready for retail and, most importantly, how much profit can he expect to make?
Sir Alan has stipulated that prior to selling the cars they must be properly forecourt prepared:
They must all have had a multipoint inspection
They must all be checked against national mileage register
They must be HPI or Experian checked to confirm that they are free of major accident damage, not stolen and recovered and do not have any outstanding finance
They must be Fully valeted and offered with minimum 1 year warranty
They can be sold with six months road tax and a full tank of petrol if necessary but all these costs must be included in the “cost of sales” figure before declaring the gross profit (befor extracting the VAT etc).
Here are our choices based on the current market conditions, model popularity and ease of sale but perhaps most importantly, the most profitable based on the fact that there is only one month to clear the stock.
Worlds most popular hatchback. Great residuals. Match model come with end of line high spec. Aspirational car. Will sell in any market and usually very profitably.
Ford Ka Collection 2
Ideal first car. Most popular small car for first time drivers. Low tax, insurance and maintenance costs. Guaranteed seller.
Classic design, trendy, aspirational and although not reckoned to be a big profit maker still an almost guaranteed quick sale.
Audi A4 Avant
Superb technology. Ideal family car. Great driving experience. Good residuals. Aspirational. Always been a good seller and profit achiever.
The must have summer 2 seater convertible. Japanese reliability. Aesthetically pleasing. Great fun. Will always sell and at around £5k they will be queuing up for it as soon as the sun pops from behind the clouds.
Awful name, good car. With the weakness of the pound more people will holiday in the UK so MPV’s in general and the Sharan in particular will be a good seller. Compared to what the car was new a fantastic price second hand. Quick seller and good profit.
Our choice for the 4wd bracket although with the resurgence of these models almost all of them are good profitable sellers at the moment and even now these models still look like excellent value compare to new.
Popular supermini. Fits into a lot of peoples’ criteria for a used car. Good seller with reasonable profit opportunity. Should move fairly quickly.
This could be a gamble as we had to have a top of the range sports car. But at £75+ new it looks fantastic VFM second hand and the ultimate driving experience and potentially a good profit to be made. May not sell in a month but the one car you want to be left with to drive around in if it doesn’t.
Although has gone through many changes is still regarded as a classic. Appeals to a slightly older market but represents cracking value for money.
As you can see in the table below our apprentice managed to make £18,200 gross profit which equates to a margin of around 18% and he won first prize; a lifetime of never having to work for Alan Sugar!
Obviously our apprentice doesn’t have the overheads associated with running a car dealership and if he did then, of course his profit would be substantially less. All our choices are based on the fact that the used car market is particularly strong at present with demand overtaking supply in a lot of areas and therefore we are quite confident that all these cars will be quick and profitable sellers.
|Car||Buy at||Cost of sale||Sale price||Gross Profit||Margin %|
|06/56 Golf Match 1.6 petrol 25k||£7,500||£400||£9,995||£2,095||21|
|01/51 Ford Ka Collection 2 1. petrol3 petrol 60k||£1,500||£250||£2,495||£745||30|
|04/04 Mini Cooper Chilli Pack petrol 40k||£6,200||£500||£7,695||£995||13|
|06/06 Audi A4 Avant S Line Diesel 25k||£12,000||£600||£14,495||£1,895||13|
|05/52 Mazda MX5 55k||£3,500||£300||£4,995||£1,195||24|
|07/07 VW Sharan TDI S Deisel 25k||£9,500||£500||£11,995||£1,995||17|
|07/07 BMW X5 SE Auto Diesel 20k||£27,000||£1000||£31,995||£3,995||12|
|Vauxhall Corsa Club petrol 35k||£4,500||£200||£5,995||£1,295||22|
|Mercedes SL500 45k||£19,500||£1000||£22,995||£2,495||11|
|50/05 Jaguar S-Type Petrol 45k||£7,500||£500||£9,495||£1,495||16|