As Honest John of the Daily Telegraph pointed out recently, the reason these places charge so much is that property values have soared and a commercial property has to return 10% of its value annually to stay viable. Paying 120 quid an hour is the price you pay for watching the value of your (and I'm not referring to you personally) piece of shit London house soar to =A3300k.
My dealer has his service place on a low rent industrial estate in a poor part of Wimbledon. If they have to charge this much with their place - chock full of cars waiting for work - just to pay the rent, I *really* don't see how the other units on the same estate carrying on all sorts of business can be viable.
They've got pay for thier shiny showrooms somehow...
As "moray" says, it's the cost of the showroom on the High Street that has to be met - in any way possible.
That simply doesn't make sense. If the selling of new and secondhand cars was so lacking in profit there would be no high street secondhand car dealers anywhere.
When you consider the staff list for a reasonable size dealer is likely to be -
1x Dealer Principle on 50k+ 1 x Sales Manager on 30k+ 2 x Sales Reps on 25k+ 1 x Service Manager on 30k+ 1 x Workshop foreman on 25k+ 4 x Mechanics on 20k+ 1 x Warranty Administrator on 20k+ 1 x Parts Assistant on 20k+ 1 x Parts Manager on 25k+ 1 x Account Manager on 20k+ 1 x Service Receptionist on 20k+ 1 x Receptionist on 15k+Combine that with the number of special tools the dealers have got to buy (special tools aren't optional for the dealers, they've got to buy them), along with the ever increasing cost of diagnostic kit, you can understand why labour rates are so high in dealers.
That doesn't make any sense. Margins on new cars are generally small. Main dealers generally make up the difference selling spare parts and servicing cars at =A3140 per hour. The Second Hand car market is completely different.
Dealers make very little on new cars , they make most of the income from service and spares
What you forget is thier is no vat on second hand cars so the margins are far higher ,
friend of mine used to be a retail manager at a large dealership , they made more selling 6 month old lease returns than new vehicles , the average punter doesnt factor the vat out
steve robinson ( snipped-for-privacy@colevalleyinteriors.co.k) gurgled happily, sounding much like they were saying :
And what YOU forget is that there IS VAT on the margin between the dealer's buy and sell price.
I also had an old URL (now appears to be misplaced somewhere!) on the safety data sheet on Magnatec 10W-40 which stated clearly that it was a mineral oil. That sentence is missing on the current data sheet.
You are rightfully indignant about Castrol's misuse of the term 'synthetic'. In fact, Mobil took Castrol to task 10 years ago. This following article tells you what happened.
'My' main dealer has far more secondhand cars in stock than new. And their prices are top dollar. I can perhaps accept they sometimes have small margins on some new cars - but not on the secondhand ones.
It's just a typical bleat from the motor trade about how hard done by they are.
Dave Plowman (News) ( snipped-for-privacy@davenoise.co.uk) gurgled happily, sounding much like they were saying :
They don't carry stock of new cars, though - they're ordered from the importer to customer order. Difficult to do that with a used car.
So no storage problem on that expensive site?
Precisely. They *have* to sell second hand cars to make money. And charge =A3140 an hour at the back to make more.
Dave Plowman (News) ( snipped-for-privacy@davenoise.co.uk) gurgled happily, sounding much like they were saying :
Obviously they feel that the return on the cost of the site is economically viable.
Just think about the number of different new cars they'd need to carry in stock to be sure to meet even a reasonable percentage of orders - colours, engines, specs, options. Buyers *expect* to be able to choose the spec on a new car. On used cars, they *expect* to be more flexible - especially when you start to balance spec against age/mileage.
New car - No, I want one in that colour, with those options. Used car - Hmm. I can have blue with the flibberty pack I want, or the silver I want but without, or one with both but a year older and with higher mileage than I wanted...
Why then the competition for new car franchises? Seems a secondhand car dealer will make more money with less hassle.
But non of this makes any difference to the fact that regardless of what they charge for workshop time *the majority* provide poor service. I now use an independant who has more conveniently situated workshops - on a main road with PT facilities rather than an industrial estate - and they manage to provide a good service with properly trained mechanics and all the diagnostics at approx 1/3rd the labour rate. True their reception/waiting room isn't as posh as the dealer one - but then you don't spend so much time in it...
Being a main dealer is far more prestigious. And probably more profitable when one takes into consideration all the money made from servicing, parts etc. Who wants to be an Arthur Daly anyway?
Who goes to main dealers for service anyway, apart from those with more money than sense or those who aren't paying for it themselves?
Independents is the way to go, no question.
Dave Plowman (News) formulated the question :
If the margins on new cars are so slim, then why would they bother selling new ones?
Presumably because it allows them to call themselves main dealers, charge =A3140 per hour for service and put official stamps in service booklets.
Whether the margins on new cars are slim or not is a value judgment, depending on whether you are a buyer or seller. Generally speaking the margins are as follows:
"Main dealers buy new cars from the manufacturer at a discount of about
18%. They may obtain a slightly greater discount on the vehicles they buy to supply to retailers, so that the retailer, too, can buy at a 17-18% discount. The main dealer would expect to take a cut of about 4% for himself." and followed by "Part of the dealer's discount has to be spent on preparing the car for sale....first service...minor adjustments..."The above statements are taken from "AA Book of the Car". Although this was published decades ago, the structure has not changed much. A vastly different set of figures for now would be a surprise.
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