Well there is only one thing to say about the current climate, buy used! I’m not sure this will be the long term view but with VAT on new cars a cost manufacturers simply have to pass on, they are more likely to be flexible and take a smaller profit on a used car which is not vatable but of which the extra VAT will cost them only £25 for every £1,000 of profit.
Of course in the car trade we have learned over the years to be resilient and creative and we certainly know how to get a deal done when it needs to be, from hitting monthly targets to moving ageing stock or just doing a deal because it is the right thing to do.
Most new car profit margins however are set by the manufacturer and the dealer can work within these parameters and decide how much of the margin he wants to give away based on the desirability and availability of the model. That’s not to mention the added potential bonuses which can often be given when certain volume targets are met.
Used cars are unique in their nature and, as a result, so are the margins that are across them. For instance if a car is highly specced or particularly rare then it may empower the dealer to put a premium price on the car based on the fact that he may not easily be able to replace it, but at the same time to get the customer to commit he needs to be flexible enough to make the sale having done the work of creating the desire for the model in the first place. Of course not much of this necessarily helps the buyer unless he is lucky enough to locate the car of choice at a dealer who, for one reason or another, needs to move the car on quickly, but often as we all know the best deals are done on the least desirable items.
How many times do we go to a clothes store during a sale and look at the tremendous savings on the sale rack but have absolutely no desire to buy anything on there because we don’t like it, but the jeans we set our heart on are still at full retail and therefore we either buy the jeans full up or look like a complete dork but saved money.
The feeling around, like most things in this country, is that we will all moan for a few days/weeks, not make a decision and then realise that perhaps it’s not quite as bad as we thought it would be and continue as normal. At least it is a situation that car dealers are very much aware of and know what they have to do to overcome it.
Keep an eye out for some bargains during the year long sale at your local car centre!
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