Getting a good deal from a car dealer

How it all works – the life of a dealer

To begin this guide, I’ll list some important facts about owning and running a car dealership in the UK. The detail can help you see things from a dealers position and may support getting a better deal.

Good things to know when buying a used car from a dealership:

Fact 1 – A dealer is aiming for a minimum net profit margin of at least £1,000 per vehicle (after associated costs such as a warranty, preparation and VAT).
Fact 2 – Dealers make a significant amount of money selling finance packages and extended warranties.
Fact 3 – In some circumstances, a dealer can make huge profit margins reselling your part exchange vehicle (depending on the vehicle you own and how much you accept for it)
Fact 4 – The majority of dealers will buy cars from an auction, prepare them for sale and sell from the forecourt
Fact 5 – Owning and running a car dealership has never been so difficult as more and more private motorists are buying directly from the auction which is pushing up prices
Fact 6 – Unlike many other industries, car dealers must pay 20% VAT on the Gross profit margin of each car. This turns out to be one of the greatest associated costs as the Gross margin is often far less than the net.

Pre-owned Motability cars

Most car forecourts have ex Motability vehicles for sale and from your position, such vehicles have positive and negative aspects.

What’s good?

All Motability vehicles are serviced under manufacturers guidelines by the supplying main dealer. For petrol vehicles, this tends to be 10,000-miles or every 12 months. Long life diesel may carry 24,000-mile service intervals or every 18 months, whichever comes first.

What’s not so good?

• Due to motorists physical disabilities, many ex Motability cars have been adapted to suit the driver. This can include a steering wheel or foot pedal adaptation that often leaves holes and stress points once removed.
• Wheelchair use often causes cosmetic damage to the boot area and bodywork in general with resulting dings, dents and scratches.
• Front seats may endure unusual stress in places like the lumbar or reclining part of the seat.
• Footwell carpets are commonly found with holes or rips.
• Door panels may be cracked or worn.
• Door shuts may have scratches, worn paint or dents.

Why do some dealers opt to buy ex Motability cars?

Most auction houses will sell a small fleet of Motability vehicles each week. These cars tend to be cheaper than the usual fleet auction sales due to the points listed above.

A dealer may buy ex Motability for a reduced price and take care of the repair work before selling from the forecourt. I have seen hundreds of examples where bumpers, doors, wings and sometimes even entire sides of a car are resprayed due to severe scratches and dents.

Other vehicles need seat and carpet reupholstering or have new dashboard panels or even steering wheels.

Identifying an ex Motability car

Just look at the V5C logbook for the last owner information. All Motability cars are registered with the DVLA as Motability rather than the driver (who doesn’t own the car at any stage).

The negative issues I have listed here may not be important to some motorists, but it is still good to picture the potential condition of the car before it was repaired and advertised for sale.

The part exchange value

Be wary if the value of your part exchange is more than you expected. Reasons for a high PX value include:

• An overpriced car (the one you are considering buying).
• The dealer has a viable way of writing off the difference between the true value of your car and the price the dealer offers (such as profit made from a hire purchase finance deal).
• The car being sold to you has been in stock with the dealer for some time and they are keen to sell and reinvest the money into something new.
• Your car is highly desirable. For example – you own a 2016 Volkswagen Golf TDI with low mileage. This car may be deemed desirable by the dealer with potential for a significant profit margin if bought in for a good price.

Buyer protection & Consumer Rights

A dealer buy may be a little more expensive than buying privately. But, in almost all cases, you have a great deal more protection.

Greatest protect is found in the first 30 days after purchase – read my Consumer Rights article

It’s common practice for motorists to haggle on the screen price. A dealer is more likely to offer you a free extended warranty or 12 months road tax than a price reduction. Keep in mind that a 12-month warranty sold for £350 will cost the dealer a fraction of that price to supply to you. The counteroffer may not be as appealing as you thought.

Trusted car dealers

More about common sense but do try to avoid buying a used car from a dealer that has only been in business a short while. Should they go out of business and you encounter a problem with your new car almost all of your Consumer Rights will be lost.

Franchised dealers are your safest option as they carry some robust protection for private motorists.

The internets finest guide to buying a used car

I’ve composed the complete guide for buying a car. It contains everything you need to buy a car that is genuine, reliable and good value. The guide is complimentary with every car history check bought via my sister website, CarVeto.

Did you already read my other guides to buying a used car?

Marcus Rockey
Used Car Guy