Dealer Mark up
#2
#3
Dealer Mark-up
JDog,
I've spent the last several weeks looking for a car, using online buying sites, and settled on a 2007 XK coupe being sold by a private party. I did not find these sites very helpful in giving me the mark-up on cars being sold by dealers. I used Kelly Blue Book as a guide to the listing prices of similar cars on the market, but it's only a guide and you have to take the condition of the car you are looking to buy into consideration.
You may be aware of this, but also ask the dealer what the "out-the-door" price would be, before tax. Dealers play games with prep fees, admin fees and so on, and this adds to their profits. The list price is only a "headline" price and hidden fees can bite!
Good luck!
I've spent the last several weeks looking for a car, using online buying sites, and settled on a 2007 XK coupe being sold by a private party. I did not find these sites very helpful in giving me the mark-up on cars being sold by dealers. I used Kelly Blue Book as a guide to the listing prices of similar cars on the market, but it's only a guide and you have to take the condition of the car you are looking to buy into consideration.
You may be aware of this, but also ask the dealer what the "out-the-door" price would be, before tax. Dealers play games with prep fees, admin fees and so on, and this adds to their profits. The list price is only a "headline" price and hidden fees can bite!
Good luck!
#4
At this point due to their age and rarity there is no standard formula for a retail price as there would be for something more common like a Toyota Camry. While it is likely the car was purchased or traded based on auction/black book or some other wholesale pricing, you have to consider mileage, ownership history, condition, maintenance history, color combination/features, and current physical and cosmetic condition. Consider what maintenance it will need in the near future as a cost of ownership factor.
#5
#6
But, to give you something to work with, I'll mention that in my dealership days (long ago, different life) if the dealer made $1000-1500 profit on a ordinary late model used car (Impala, Camry, etc) it was strong deal. On high-end cars (BMW, Escalade, Jag) a $5000 profit was considered to be a real home run and the sales manager would be doing a happy dance.
Sometimes there would be a sweetheart, high-retail-value car that we managed to get for a song....and there would be more profit. Other times we paid too much for a car, or for whatever reason it was a turd, where we were lucky to break even...or perhaps even sell at a loss just to get rid of it. Sometimes the only profit came from the add-ons: service contracts, accessories, insurance etc.
Lots of variables involved !
Cheers
DD
#7
This seems like a bit of a simple question but there is no answer. Dealers are independent owned companies, each with it's own objectives for profit, turnover, and revenue. In our new data driven society dealers will use software tools to help them to determine ideal markup, but so much is determined by the base price of the car they acquired. If they drove a better deal on the acquisition and market price is higher than markup guess which they will go with!
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#8
#9
One more kick at the dead horse...
I think dealers will price a little higher than their expected profit just to have some room to negotiate with the buyer. In my recent car search, I had a couple of dealers call me after the walk-away with the strong hint they would be willing to take less than the list price. If they can sell at the higher list, they found the greater fool!
BTW, @mosesbotbol, nice scuderia!
I think dealers will price a little higher than their expected profit just to have some room to negotiate with the buyer. In my recent car search, I had a couple of dealers call me after the walk-away with the strong hint they would be willing to take less than the list price. If they can sell at the higher list, they found the greater fool!
BTW, @mosesbotbol, nice scuderia!
#11
I have no idea about the used market for higher end specialty type vehicles like our GT's. But the "average Joe" used car market is red hot, vehicles are flying off the lots. My sister-in-law just bought a Sorento, we helped with some of the negotiation and search. When we were closing out I talked with the sales guy and finance guy, the numbers had gone into the tank at first, then the last several months a good 50% higher than a normal volume.
#12
#13
Honestly, what they paid is only partially relevant at best. How much profit they make on it is only partially relevant at best. You can try to negotiate harder knowing the gap from purchase to sales price for them, but really the dealer cares more about the going rate, how long they have had the car, how long they are likely to continue to hold the car if they don't sell it to you, how in demand the car is, how likely they think you will stick to your price, etc.
Basically, if you like the car, and the price is competitive to other cars, you buy the car. I normally try to get a bit off, but I have a number in my head that's my max, and its a realistic number; if we can be there or lower, I buy, if not, I walk.
Basically, if you like the car, and the price is competitive to other cars, you buy the car. I normally try to get a bit off, but I have a number in my head that's my max, and its a realistic number; if we can be there or lower, I buy, if not, I walk.
#14
Honestly, what they paid is only partially relevant at best. How much profit they make on it is only partially relevant at best. You can try to negotiate harder knowing the gap from purchase to sales price for them, but really the dealer cares more about the going rate, how long they have had the car, how long they are likely to continue to hold the car if they don't sell it to you, how in demand the car is, how likely they think you will stick to your price, etc.
Broadly speaking, at 30 days they'll probably begin getting a little anxious about moving the car. At 60 days (or sooner, usually) they'll realize that there is "something wrong". Something wrong with the car (might simply be an ugly color...or worse) , something wrong with the price, or something wrong with the market (like trying to sell a convertible in December). At 90 days panic has set in and they'll want to move the car, period. Dump it at a loss, move it to a wholesaler, whatever.
Basically, if you like the car, and the price is competitive to other cars, you buy the car. I normally try to get a bit off, but I have a number in my head that's my max, and its a realistic number; if we can be there or lower, I buy, if not, I walk.
Over the years I've known many people who become so stubborn that they let a good car ....often something they really liked....slip thru their fingers over a price difference that, in the grand scheme of things, doesn't amount to a hill of beans. Truth is, I've done the same ....and ended up kicking myself afterward.
Cheers
DD
#15
Yes to all.
Don't compare the idea of markup to a new car - where it would be possible, at least, to come up with some kind of relatively standard wholesale price. You have no idea how much was paid at auction (or they took in trade). Look, if they're good in the finance office, and they say "oooohhh Jaguars, those are hard sells, we can only offer $4000 on in it in a trade-in," and the seller goes for it, they're certainly not going to price the car lower since they basically stole it from someone. And you have no way of knowing what they paid, so on that level "markup" on a used car isn't really relevant.
If you're into the push-n-pull of buying a used car, the small indy dealers who specialize in "Luxury Autos" (The usual suspects: Mercedes, BMW, Maserati, etc) can be fun. They buy almost all of their inventory at auction where no one really knows if it's a cream puff or a dog. So there's lots more "lets make a deal" at those places, but it's also more Buyer Beware. LA is littered with these dealers. But remember, to use the language of drugs, that car's been "stepped on" a few times. The original dealership and the wholesaler have both taken a cut of that car before it got to the small indy lot.
I've done well three times with buying a used car off that brand's new car lot (used SL bought from a Mercedes dealer, etc.). They tend to keep the cars that come in off a trade or lease with relatively low mileage that they think they can sell. And you can usually work, and a minimum, a few oil changes into the deal.
Don't compare the idea of markup to a new car - where it would be possible, at least, to come up with some kind of relatively standard wholesale price. You have no idea how much was paid at auction (or they took in trade). Look, if they're good in the finance office, and they say "oooohhh Jaguars, those are hard sells, we can only offer $4000 on in it in a trade-in," and the seller goes for it, they're certainly not going to price the car lower since they basically stole it from someone. And you have no way of knowing what they paid, so on that level "markup" on a used car isn't really relevant.
If you're into the push-n-pull of buying a used car, the small indy dealers who specialize in "Luxury Autos" (The usual suspects: Mercedes, BMW, Maserati, etc) can be fun. They buy almost all of their inventory at auction where no one really knows if it's a cream puff or a dog. So there's lots more "lets make a deal" at those places, but it's also more Buyer Beware. LA is littered with these dealers. But remember, to use the language of drugs, that car's been "stepped on" a few times. The original dealership and the wholesaler have both taken a cut of that car before it got to the small indy lot.
I've done well three times with buying a used car off that brand's new car lot (used SL bought from a Mercedes dealer, etc.). They tend to keep the cars that come in off a trade or lease with relatively low mileage that they think they can sell. And you can usually work, and a minimum, a few oil changes into the deal.
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Doug (09-17-2020)
#16
I have found that how long the car has been sitting matters more than anything.
I've followed cars around a few times. It's funny how dealer a can't move a car at 50k, it gets dropped to 40k over a few months, dumped at auction, then another dealer on the other side of the country picks it up and sells it for 48k right away. The right buyer comes along and it's done.
I've followed cars around a few times. It's funny how dealer a can't move a car at 50k, it gets dropped to 40k over a few months, dumped at auction, then another dealer on the other side of the country picks it up and sells it for 48k right away. The right buyer comes along and it's done.
#17
The KBB and NADA prices are not a guide to dealers, it's pretty much their bible. Dealers will use the LOW WHOLESALE TRADE-IN price to take in trades. They may up it a bit IF they find a nice example. Of course they also try to lower it, but what they use is the KBB/NADA prices.
#18
Every used car salesperson wants to make you believe that you just got a great deal. Sell the low profit car first, and then sell the big profit add-ons like paint and upholstery protection, and the wheel and tire protection package for those vulnerable and expensive 20" wheels and tires!
But the biggest money maker of all is the "Extended Warranty" because everyone knows that Jaguars are unreliable and are very expensive to repair. Gotcha! It's not really a warranty because it's not from the manufacturer. It's an extended service contract from a third party unrelated to Jaguar. They sell for $4,000 or more and the seller gets a big cut, often more than the profit on the car. Why? Those contracts are written to minimize paying claims, with exclusions and limitations.
Rule #1: Sell the car.
Rule #2: Sell the other stuff that generates the real profits.
But the biggest money maker of all is the "Extended Warranty" because everyone knows that Jaguars are unreliable and are very expensive to repair. Gotcha! It's not really a warranty because it's not from the manufacturer. It's an extended service contract from a third party unrelated to Jaguar. They sell for $4,000 or more and the seller gets a big cut, often more than the profit on the car. Why? Those contracts are written to minimize paying claims, with exclusions and limitations.
Rule #1: Sell the car.
Rule #2: Sell the other stuff that generates the real profits.
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Splendid Cat (03-16-2021)
#19
Dispute me all you want, it's true.
#20
I would be looking at private sales as prices would be lower and open to negotiation, C hecking for fsh and also looking for the transmission and spark plugs , belts etc being done on a car that age or would certainly be telling the seller that they need done shortly hence my low ball offer , Plenty out their