How do dealers work?
Discussion
Wonder if anyone in the motor trade could answer this, if you have a car that has been sitting on the forecourt/been advertised on AT for nearly a year, surely that's money tied up into stock?
I understand they won't want to reduce the asking price however surely that's better than sitting on a depreciating asset?
Am I missing something?
I understand they won't want to reduce the asking price however surely that's better than sitting on a depreciating asset?
Am I missing something?
I think there are some dealers out there who are failing.
Maybe they can't afford to sell at a loss, it's better to hang on and hope?
Prices may rise?
They may be using the car, either themselves or as courtesy car.
It may be a car which attracts people to their premises and enough of those punters buy something else?
Maybe it's not even actually for sale?
Maybe they can't afford to sell at a loss, it's better to hang on and hope?
Prices may rise?
They may be using the car, either themselves or as courtesy car.
It may be a car which attracts people to their premises and enough of those punters buy something else?
Maybe it's not even actually for sale?
I've often wondered the same. No dealer wants to make a loss on a car, but surely if a car won't shift at a profit it's better to let it go at a loss than have it hogging a space that could have several cars quickly coming and going, each at a profit of more than the loss on the one car that wouldn't move easily.
OutInTheShed said:
I think there are some dealers out there who are failing.
Maybe they can't afford to sell at a loss, it's better to hang on and hope?
Prices may rise?
They may be using the car, either themselves or as courtesy car.
It may be a car which attracts people to their premises and enough of those punters buy something else?
Maybe it's not even actually for sale?
If it's a car with a big petrol engine averaging 20-25mpg I doubt they would be driving it much, some of them probably can't afford to sell at a loss. However others I think are being greedy and somewhat deluded, I might be wrong but I've always been told everything will sell for a price.Maybe they can't afford to sell at a loss, it's better to hang on and hope?
Prices may rise?
They may be using the car, either themselves or as courtesy car.
It may be a car which attracts people to their premises and enough of those punters buy something else?
Maybe it's not even actually for sale?
MrManual said:
If it's a car with a big petrol engine averaging 20-25mpg I doubt they would be driving it much, some of them probably can't afford to sell at a loss. However others I think are being greedy and somewhat deluded, I might be wrong but I've always been told everything will sell for a price.
Some amrkets have a seasonal element.Some things will sell when the right buyer turns up. the right buyer will pay way more than what you can get in a hurry.
Sometimes even big companies appear to trade irrationally, but ir's easy for outsiders to look at things with hindsight.
They've had that car for 9 months. But the trader may only look at it a week at a time and there's no point him looking back.
There is a limit to how much it's worth exploring this without getting more specific.
It very much depends on the type of dealership and how pro active is the sales manager.
Some dealers I visit, if a car hasn’t sold or been close to a sale after 21 days it’s discounted, if it’s still not moved after 35 days it’s discounted again, same again at 6 weeks and if it’s still not sold after 8 weeks it’s sent back to auction.
This is a very successful dealership, they are often busy and the prices are competitive.
I can think of another few dealers who are the total opposite, one dealership has cars that haven’t sold since 2022!
I don’t know them enough to give you their thinking, but I get the impression they rely on mug walk in punters especially pensioners and they sell enough cars to tick over.
They are not competitive on price IMO, by that I mean they wouldn’t compete with the likes of a motorpoint or a car giant on pricing, that is not how they operate,
They are low turn over high profit dealership, they benefit from being the only manufacturer dealership in a 2 mile radius on a busy A road and seem to have regular repeat pensioners as customers.
To answer your question, it depends!
Some dealers I visit, if a car hasn’t sold or been close to a sale after 21 days it’s discounted, if it’s still not moved after 35 days it’s discounted again, same again at 6 weeks and if it’s still not sold after 8 weeks it’s sent back to auction.
This is a very successful dealership, they are often busy and the prices are competitive.
I can think of another few dealers who are the total opposite, one dealership has cars that haven’t sold since 2022!
I don’t know them enough to give you their thinking, but I get the impression they rely on mug walk in punters especially pensioners and they sell enough cars to tick over.
They are not competitive on price IMO, by that I mean they wouldn’t compete with the likes of a motorpoint or a car giant on pricing, that is not how they operate,
They are low turn over high profit dealership, they benefit from being the only manufacturer dealership in a 2 mile radius on a busy A road and seem to have regular repeat pensioners as customers.
To answer your question, it depends!
I've noticed that a lot of franchised dealers and many bigger dealers cut their prices modestly but regularly until they obtain a sale. Other dealers seem to let cars fester on their lots for months on end.
In this age of the internet the market is pretty efficient in that customers can have access to nationwide pricing information for their car of choice and see what is good value and what is not. If a mainstream vehicle does not sell in a couple of months it is clearly over-priced which I would have thought motivate any dealer to want shot of it particularly given the opportunity cost of having money tied up in a depreciating asset in a high interest rate environment.
In this age of the internet the market is pretty efficient in that customers can have access to nationwide pricing information for their car of choice and see what is good value and what is not. If a mainstream vehicle does not sell in a couple of months it is clearly over-priced which I would have thought motivate any dealer to want shot of it particularly given the opportunity cost of having money tied up in a depreciating asset in a high interest rate environment.
fflump said:
I've noticed that a lot of franchised dealers and many bigger dealers cut their prices modestly but regularly until they obtain a sale. Other dealers seem to let cars fester on their lots for months on end.
In this age of the internet the market is pretty efficient in that customers can have access to nationwide pricing information for their car of choice and see what is good value and what is not. If a mainstream vehicle does not sell in a couple of months it is clearly over-priced which I would have thought motivate any dealer to want shot of it particularly given the opportunity cost of having money tied up in a depreciating asset in a high interest rate environment.
You can look at national data for cars of the model in question, but never forget, it's an individual car for sale, not the average of the model.In this age of the internet the market is pretty efficient in that customers can have access to nationwide pricing information for their car of choice and see what is good value and what is not. If a mainstream vehicle does not sell in a couple of months it is clearly over-priced which I would have thought motivate any dealer to want shot of it particularly given the opportunity cost of having money tied up in a depreciating asset in a high interest rate environment.
If it doesn't sell, it may be under-advertised, or there are better examples for sale.
Some people look to buy the best model xyz they can find, when the car for sale is the best one, it will sell.
Some markets are quite small, particularly out in the regions. A lot of cheap cars advertised in Manchester don't translate to low values in Plymouth.
What 'we would have thought' as punters is not something dealers are bound by.
They play the market their own way.
The other thing is, some advertised prices are not selling prices, there are negotiations, generous trade ins, deals to be done.
I prefer no-nonsense firm pricing but some people like to think they've 'haggled'.
When my old man was doing it he would buy to order, or only buy a car he knew could be shifted quickly. He closed shop and retired a few years ago now.
I wonder how some of the higher end dealers are going to fare in the coming months. Porsche are notorious for it (Taycans and so forth) but I know of an Audi dealer with about 10 RS6s on their forecourt all now owing them 4-5 figure sums, and that's if they all sold tomorrow. There are just as many E-tron GTs and other circa 100k cars they cannot shift.
I wonder if VAG would prop them up if it came to that?
I wonder how some of the higher end dealers are going to fare in the coming months. Porsche are notorious for it (Taycans and so forth) but I know of an Audi dealer with about 10 RS6s on their forecourt all now owing them 4-5 figure sums, and that's if they all sold tomorrow. There are just as many E-tron GTs and other circa 100k cars they cannot shift.
I wonder if VAG would prop them up if it came to that?
CLK-GTR said:
I wonder if VAG would prop them up if it came to that?
I did wonder if that happens on the nearly-new stuff that apparently dealers gets leaned on to take.A Skoda dealer I was talking to was unhappy about how much the nearly-new Enyaqs they had had dropped, but at the same time was thankful that's the only EV that Skoda have in their range.
Edited by Sheepshanks on Monday 12th February 15:45
I have a friend that turns his stock quickly, won't buy if the pricing isn't right, would rather have half the cars than fill it up with over priced stock
and prices cars to sell and he is self funded, sells around 300-350 cars a year, but he's had one car an awful long time (I'm not talking months either) it's a very nice one but it hasn't sold and he won't trade it on and thinks someone will come and buy it eventually
Sometimes that's just how it is no strategy or story behind it.
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