Because New Cars Lose as much Money?

It is a complaint of car buyers all over the secular world - if you drive your new car off the patio, he loses a quarter of its value. Anyone who has tried to sell his new car from the dealer can certainly attest.

This example uses the UK price, fees and taxes, but a similar situation applies virtually everywhere. So let's look for a new car with an arbitrary cost £ 20,000 on the road (including all taxes and fees) than its recommended retail price.

VAT (Value Added Tax) is a significant - 20% in the UK - in a car and £ 20,000 (less enrollment) who will come to about £ 4,000. Straight to HM Revenue and Customs. Thus, a new car £ 20,000 is really a little less than € 16 000 + taxes.

The dealer's selling costs - what it costs them to manage the business - it must be included in every car it sells. This means pay staff (the sales manager, sales manager and sales director all get a commission on each car, plus the cost of hiring administrative staff, technicians, cleaners, washerwomen, etc.), the management of a fleet demonstrators, keeping the salons, advertising costs and so on. It varies between the different dealers, and local brand, but you would be looking for £ 1,000 to £ 2,000 per car.

In addition to covering their costs, the utility will want to make a profit on every car it sells. So that the customer may pay £ 20,000 for the car, but the case may have bought the car for as little as £ 12,000. And if they pay for a new car, how much you think you have to pay for your used car (even if it is practically new)? Well, there is no need to worry about VAT in a used car (except in certain cases, such as dealer demo), but on the other hand, the manufacturer prefers dealers sell new cars rather as used cars, so there are sales objectives and financial implications related to how well they perform against those objectives. Additionally, a customer can buy a new car for £ 20,000 is unlikely to pay a similar amount for a used car - regardless of the reason why it is used. As people mourn the immediate depreciation on your new car, it is really a big deal for car buyers? If you keep your car for the average over 3 years, so there's really no need to be too worried about it. During this time period, the cost difference between buying new and used much diminished. Also keep in mind that when you buy a used car, you can not have to worry about VAT, but you still have to consider the cost of concession sales and profits - and costs preparing a used car for sale It might well be much larger than for a new car.