( Maybe it is best to get the most extended warranty ? )
Why Dealers Like Used Cars
(Mon 11 Sep 06)
Car dealerships are likely to devote more attention to sales of used
cars, according to a report released by industry watcher Trend Tracker.
In 2005, new cars accounted for 46.4% of the sales achieved by
franchised dealers, compared with 36.2% for used cars - but the used
cars represented 17.6% of those dealers' gross profits, as opposed to
just 4.0% for the new cars.
The greatest proportion of gross profit comes from service charges -
31.3% from just 6.7% of the companies' sales volume. But this actually
represents a decline over previous years, partly because of longer
service intervals and partly due to competition from independent
Similarly, the franchised dealers are suffering with their new car
sales because of the growth of car supermarkets, which can undercut
their prices for new models.
Trend Tracker notes that some franchised dealers - notably Lookers and
Arnold Clark - have responded by selling used cars on dedicated
separate sites, and that more are likely to follow. Trend Tracker also
predicts that existing independent stores are likely to be acquired by
dealer groups over the next few years.
(317%), Alfa Romeo (202%) and Skoda (140%), while Mercedes-Benz, Jeep,
Audi, SsangYong, Subaru and Porsche have all improved by over 100%.
Used car sales of Ford, Volvo and Proton models have declined by 11%,
12% and 20% respectively.
All this information - and much more - is available in Trend Tracker's
study, The Future of the Used Car Market 2006-2011, which is priced at
£795. More information can be found at www.trendtracker.co.uk .
I don't believe that's true , around here ( metro Detroit ) area , car
dealers buy a lot of cars through auction . Lease turn ins amount to a great
deal of their used car inventory. That why you see so many 3 year old cars
with 30 to 36000 miles on them.
Most of the profit on new vehicles is realised in kickbacks for hitting
sales targets, say a particualr dealer had been told by Mercedes, this month
you have to sell 45 C class models, if you manage to hit the target there's
a £1,200 bonus per vehicle sold in kickback commssion direct from the
So the dealer gets to 40 units and close to the end of the month, they'll
pre register another 5 vehicles to hit the bonus, effectively buying them
themselves then putting them on the forecourt as ex demo, or using them as
Then as already suggested most of the two and three year old vehicles are
generally lease exchanges. It's very unusual here in the UK for dealers to
actually sell part exchanges on the the forecourt of the garage that took
them, unless there is something exceptional about the vehicle.
New vehicles have a fixed price from the factory and a limited margin
potential as the retail price is well known.
Used cars can be bought for very little (or taken in trade), and then
sold for much more.
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