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profit
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how much profit should a car dealer expect to make on a car trade in
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It depends what it is. If it is something that they can resell or if it will be traded out. If the part exchange is to be traded - they can even make a loss - especially if an over allowance is given on the part exchange. In most cases the profit is made on the car being sold - but it is the profit on the deal overall (including chassis profit, finance, warranties, add ons etc) that is important.
Depends on the vehicle, but a dealer will usually offset the profit on one vehicle against the other. e.g.
Dealer has �10,000 car for sale, but hopes to get �9,000 for it. If you pay cash - nice and easy. If you have a car that you privately value at �2,000, a dealer might offer you �2,500 for it leaving you a balance of �7,500 for you to pay. Now the dealer needs to make �1,500 for your car which he might easily get in the auction (blocking it!) or he could try and sell in on the forecourt for say �2,300 and actually get �2,100 for it, If he did this, it may take longer to sell the longer vehicle, and therefore get his money back, but he would realise - �9,600 all together.
There's a few variations, but if a dealer takes an older car in part ex, he won't normaly try and sell it on, he will trade or block it to avert any problems. Either way, a dealer will have a figure in his head that he wants, and will jiggle the figures to suit.
Hope this helps,
Steve
Dealer has �10,000 car for sale, but hopes to get �9,000 for it. If you pay cash - nice and easy. If you have a car that you privately value at �2,000, a dealer might offer you �2,500 for it leaving you a balance of �7,500 for you to pay. Now the dealer needs to make �1,500 for your car which he might easily get in the auction (blocking it!) or he could try and sell in on the forecourt for say �2,300 and actually get �2,100 for it, If he did this, it may take longer to sell the longer vehicle, and therefore get his money back, but he would realise - �9,600 all together.
There's a few variations, but if a dealer takes an older car in part ex, he won't normaly try and sell it on, he will trade or block it to avert any problems. Either way, a dealer will have a figure in his head that he wants, and will jiggle the figures to suit.
Hope this helps,
Steve
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