New Car Sales Margin

B.A.C.

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Would you have an idea what the margin is on BMW and Mercedes cars? What percentage would you expect to negotiate the salesman down to from the first price quoted on a new car?
 

Protocol

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We got 8.26% off an Octavia in 2015.

In 2019, I think we got 6% approx off, without pushing it.
 

Palerider

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Not sure how you would get a discount when using dealer finance, indeed finance generally.

Cash is king, I know BMW gave a new car discount of €3500 as a cash back payment from the distributor a couple of months back on a private purchase of a 520, that after you do your own negotiation.

Both manufacturers are competing against uk imports so negotiate hard and don't be afraid to walk away, phone every dealer you can, anecdotally I'm told BMW sold very few 520's to private buyers this year.
 

Zebedee

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New car sales have continued to fall this year. I get a lot of sales pitches when I go in for a service. I haven’t tried but I would guess there is plenty of discount to be had for cash.
However sterling is strengthening so the attraction of UK imports may diminish. Once this feeds through the discounts may reduce.
 

Palerider

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You may not, that does not mean there isn't.

In terms of any car purchase negotiation, if one is free due to separate financing or cash access then one can negotiate harder than any negotiation with a salesperson, a party that you rely on to get you the loan you want through dealer financing post negotiation...funded through the salesperson efforts.

It is well known that dealers can sell a car at a book loss if they secure finance as the commission is a profit centre.

Cash is King, in any transaction, that principle cannot be argued.
 

SparkRite

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You may not, that does not mean there isn't.
And equally, you may think there is, but that doesn't mean there actually is.

It is well known that dealers can sell a car at a book loss if they secure finance as the commission is a profit centre.
And if we follow that reasoning, the customer may well secure a lower price by availing of finance through the dealer, rather than using cash.

Edit: In July this year I purchased a new car, and ALL salespersons were only interested in whether i was trading in or not. I wasn't.
After battling out a price, it was then I would be asked cash or finance and they would say, "It makes no odds to us". But it does as they may well lose commission on the finance. My point is that anybody I dealt with set a price and cash/finance made no difference.
 
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Palerider

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You are correct with your reasoning, that does happen especially with cars that are sticking but let me clear something up, it makes a difference, every time, finance generates commission as you allude to, in the larger dealerships they employ finance managers, car dealers are not charities, every section is a profit centre, every salary accounted for.

Set all that aside, cash is the measurement on value for money and comparing like for like, every time, never mind salespersons telling you it doesn't matter, it does almost every time.
 

SparkRite

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I agree it does matter, as I have said.
However I was just trying to say that a discount ( and maybe even a bigger one ) can be obtained whether cash or finance is used to purchase a car, in answer to your statement:-

Not sure how you would get a discount when using dealer finance, indeed finance generally.
 

peemac

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When a car trader says "Cash Price", they don't care how the money is going into their bank account. Via finance, debit card or plain hard cash notes (but you have to show where the hard cash came from for laundering purposes)

All dealer prices have an artificial margin built in to give you the impression that you are getting near to retail price for your trade-in. In reality they are simply using up the "cash discount".

If you have a car worth under 10k, put it through someplace like merlin auctions.

Our experience from 5 years ago - wife had Terios, she wanted a bmw116 ex demo. We were offered 6k trade-in, then final offer of 6,500. We decided to put the car through merlin, got 5800 and about 5400 after commission. Then haggled for a "cash price" on the 116 and got €2k off the window price. - a net saving of almost €1k
 

24601

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You are correct with your reasoning, that does happen especially with cars that are sticking but let me clear something up, it makes a difference, every time, finance generates commission as you allude to, in the larger dealerships they employ finance managers, car dealers are not charities, every section is a profit centre, every salary accounted for.

Set all that aside, cash is the measurement on value for money and comparing like for like, every time, never mind salespersons telling you it doesn't matter, it does almost every time.
When you say cash, do you mean physical cash? In any event you're mostly wrong. Dealerships want to sell as many cars on finance as possible. The get kickbacks and also increase the probability of you changing your car in 3 years' time rather than 5/6/7 etc. This cash is king nonsense is just that.

EDIT: The margin on new cars varies wildly. It depends what you're buying. Something like a Dacia Duster has F all margin with very little room for negotiation beyond the small amount allowed for "scrappage (which is a total cod, but that's a separate story) whereas the margin on Vovlo or Mercedes could be quite high depending on the model and spec.
 

Egg104

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When you say cash, do you mean physical cash? In any event you're mostly wrong. Dealerships want to sell as many cars on finance as possible. The get kickbacks and also increase the probability of you changing your car in 3 years' time rather than 5/6/7 etc. This cash is king nonsense is just that.
I agree. Their faces fall when it is vehicle cash buy. They want the financing commission.
 

Gordon Gekko

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Really?

For example, how much commission do you think an Audi/Volkswagen/Skoda/Seat sales guy gets when he sells a car on finance at 0% from Volkswagen Bank?

Zero.
 

Palerider

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Cash is king always, not in notes, obviously, I never finance and cash enables me, the consumer to compare like for like and get the best deal..every time.

I agree new car margins are tight, I also agree sales guys like getting the finance, there is an income stream from financing.
 

seamless

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Anyone any success negotiating a discount on an new EV for cash ? Or are they in such demand that there's no wriggle room ?
 

24601

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Really?

For example, how much commission do you think an Audi/Volkswagen/Skoda/Seat sales guy gets when he sells a car on finance at 0% from Volkswagen Bank?

Zero.
Few enough are sold at 0%. Finance makes cars that would otherwise be out of budget available to swathes of customers making it easier for salesmen to get their 192 sales bonuses etc. There are finance bonuses for some main dealerships too and there’s are a wide range of commission structures in operation depending on where you’re buying your car.
 

SBarrett

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Is the margin on a new car pretty low but the bonus from the manufacturer on reaching target is high. So they may be willing to sell at little or no profit on a new car as long as they sell a certain number of new cars each year.

Trade ins is where the big margin is made
 

Andrew365

Registered User
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142
Not sure how you would get a discount when using dealer finance, indeed finance generally.

Cash is king, I know BMW gave a new car discount of €3500 as a cash back payment from the distributor a couple of months back on a private purchase of a 520, that after you do your own negotiation.

Both manufacturers are competing against uk imports so negotiate hard and don't be afraid to walk away, phone every dealer you can, anecdotally I'm told BMW sold very few 520's to private buyers this year.
I am not sure if Cash is King. I know that because of Financing the dealership gets a cut of the financing rate and thus can have more wiggle room in negotiating when the car is on finance.

Though look at new BMW / Merc prices in the North vs Ireland and you already have a discount on the price. Can often be better to buy a 2nd hand 1 year old car in the North and pay the VRT down here and still save or get a better spec'd car.
 
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