Come on guys, I did buy the magazine...

[Manics 0]

Hi all,

 

I know some of you don't much appreciate these posts. I'm not asking to be hand-held. Hopefully it'll come across that I've done a little homework before tipping up here post no.1 asking you good people for something.

 

The purpose of this post is to enquire what kind of margins you're working from (gross/net). Obviously not interested in your £ margins, just percentage. I've read plenty on this forum about thinning margins contrasted to the fabled "glory days", and if I've done my sums right, then are they really this thin...?

 

I purchased the "How to be a Car Dealer" magazine from this site. I'm not going to break everything down because I don't want to steal their thunder (I would recommend its purchase to anyone in my position by the way).

 

My loose model for the purposes of qualifying viability:

Cars priced £10k minimum

Markup at 25% (20% gross margin), so hoping (needing) to source around £8k

10 cars a month

Warehouse unit (secure under cover)

No stocking loans or fees

 

In the model above I've got £2k gross margin per car. I reckon it's going to cost me around £450 per car fixed costs (unit rent & business rates alone around my way sufficient for 10 cars + 2/3 rotating prep around £2.5k PCM). Then I've got around £1.3k cost of sale in VAT, prep, warranty, advertising -essentially leaving a net margin of under 3%!

 

I think my COS figures are worse case (some might only need the hoover & wax), though I was expecting it to be tight, 3% is razor thin. I don't feel I can go back and jack the mark-up because this forum is telling me that's unlikely. I'm reluctant to just bang sales up to 20 per month too (unrealistic off the bat, as indeed 10 might be). Increase the £ margin by modelling on £20k cars?! Or reduce the COS. I need to earn some money out of it...

...but £240 odd net on a £10k car?! I suppose influencing that number -therein lies the skill.

 

At 3%-ish am I still wildly optimistic(!!) or too pessimistic..? Is there any industry average? Any business in single digit net makes me squirm and I'm a million miles from that! Anyway, thanks for reading and any feedback you might have.

 

[trade vet 704]

Hi Manic

Maybe this job is not for you.It is a low net margin business.I would suggest getting on Companies House and trawling through car dealers accounts to confirm this.This job is now very complex and the profit just evaporates.The real COS is horrendous.

Any questions,just ask.

[EPV 631]

You can’t work it out as a margin percentage per car. Don’t bother trying it’s a waste of time. A 5k retail car may yield a 20% nett but a 15k car probably won’t. 

Nobody is going to discuss their margins on an open forum mate, I speak regularly to a few off here and it’s taken dozens of phone calls and months to trust even each other with such information. 

I will tell you that no one I know, including me, is working for £240 nett on a £10k car. £1k nett on a £5k car isn’t fantasy. You just need to work smart to get it. 

Good luck if you join in the party. It’s hard. Very hard. But I personally love the job.  

[Mojo121 229]

Are you saying that your rent and rates come to £4500 a month for 10 cars?

[Mark101 536]

What area are you in Manics

What is your background?

[justina3 518]

Sometimes you can spend to long crunching numbers and end up doing nothing, why aim for ten why aim for anything just go buy a car do what needs doing and see where it takes you.

 

[Arfur Dealy 823]

Your better off buying a burger and ice cream van... little outlay, huge margin, drive off and disappear.....

[Stalker 180]

Ignore this lot, you will be a millionaire by Easter.... crack on. 

 

 

[justina3 518]

How can you take any advise from someone called stalker, i foresee you being a minus millionaire by Easter ....crack on

 

[Nick M.K. 574]

25 minutes ago, justina3 said:

Sometimes you can spend to long crunching numbers and end up doing nothing, why aim for ten why aim for anything just go buy a car do what needs doing and see where it takes you.

+1. 

Why aim at £2K margin when some cars in the same price range carry twice as much. 

Want a razor thin 3% margin? Start an airline. 

[Stalker 180]

9 minutes ago, justina3 said:

How can you take any advise from someone called stalker, i foresee you being a minus millionaire by Easter ....crack on

 

Come on Justin, how many of these start up threads do we get. And they all ask the same thing. 

What they really want to hear is that it’s easy and you can become a millionaire instantly. 

[Nick M.K. 574]

2 minutes ago, Stalker said:

What they really want to hear is that it’s easy and you can become a millionaire instantly. 

Which is true and which is exactly what you said so fair play. 

I want to see more threads here about wealth management and investments. Anyone going to the Geneva Motor Show next month and to visit their money?

[MrV 66]

10 minutes ago, Stalker said:

Come on Justin, how many of these start up threads do we get. And they all ask the same thing. 

What they really want to hear is that it’s easy and you can become a millionaire instantly. 

This is what I believed when I started PHAHAHAHA FO**IN NO CHANCE!!! The reality is that for me starting from the bottom its a whole lot of work and stress for only sometimes a decent return

[Nick M.K. 574]

10 minutes ago, MrV said:

The reality is that for me starting from the bottom

I started from the bottom. 

After all the free advice you got here you started well above the middle I'd say.

[Tony911 79]

Buying cars anybody with capital can but selling them for a profit isn't so easy so like arfur said invest in a ice cream van

[Nick M.K. 574]

2 minutes ago, Tony911 said:

so like arfur said invest in a ice cream van

All I can do with an ice cream van is sell it at a huge profit 

[It's me 615]

8 minutes ago, Nick M.K. said:

All I can do with an ice cream van is sell it at a huge profit 

i cant top that

[Tony911 79]

8 minutes ago, Nick M.K. said:

All I can do with an ice cream van is sell it at a huge profit 

Jokes aside good money in buying and selling ice cream vans 

[Stalker 180]

4 minutes ago, Tony911 said:

Jokes aside good money in buying and selling ice cream vans 

Too right, there is money in anything different. It just sometimes takes more patience and some guts in the first place. 

Sometimes the ice cream machines inside them are worth more than the van itself! 

[Mark101 536]

25 minutes ago, boring dave said:

i cant top that

Are you saying he has you licked?

[Row 71]

It's not what you do it's the way that you do it.

[Arfur Dealy 823]

1 hour ago, Nick M.K. said:

+1. 

Why aim at £2K margin when some cars in the same price range carry twice as much. 

Want a razor thin 3% margin? Start an airline. 

This intrigues me..... what cars are you saying under say 15k carry a 4k realistic CAP retail margin ? I certainly don't know them...... 

Are you saying your stock is carrying close to 4k margins ?? 

[Nick M.K. 574]

3 minutes ago, Arfur Dealy said:

Are you saying your stock is carrying close to 4k margins ?? 

No. 

I am saying sometimes it can and sometimes it carries more. 

 

6 minutes ago, Arfur Dealy said:

what cars are you saying under say 15k carry a 4k realistic CAP retail margin

Also you can remove the word CAP from this. 

[Arfur Dealy 823]

1 minute ago, Nick M.K. said:

No. 

I am saying sometimes it can and sometimes it carries more. 

 

Also you can remove the word CAP from this. 

No. Why ?

[Nick M.K. 574]

Because CAP retail is a figure from a guidebook and sometimes my selling prices are not close to it at all. 

Or if you meant why I said "No" in my reply it's because I just sold a Honda Insight Hybrid that should've been red-hot in my area but only brought £944 gross margin.