2k deposit contribution continues.

[ab17790]

On Friday i went down to local VW dealership to see if there was a GTi in Black to give me an idea of what my Clubsport S would look like - a young lad came up to me and asked if i wanted a gti ...?! He had a 5 month old GTi with Performance pack, upgrade wheels, nav etc etc and had just been offered £20k and was set to lose £9k .... So be careful guys - these cars seriously depreciate!!! Andrew

Sounds like he paid list price and was wanting to trade in, there's no surprise there that the trade in offer is significantly less than list price for a new car.

Yep .... But a 30% loss in 5 months .... 

30% Loss which is irrelevant if he paid full RRP.You also have to include 20% is lost straight away in VAT.

Example Below

Golf GTI my mum just purchased RRP £31,147 she actually paid £24727 difference £6400 (23%) off list price.Deals are to be had,the more you get off when new the easier it is when changing in the future.

[monkeyhanger]

20% of the value doesn't evaporate when you drive it off the forecourt due to VAT, if that were the case then every used car out there would be at least 20% cheaper (actually 16% as 20% VAT is 16% of the total VAT inclusive price). You immediately lose at least 15-20% due to the dealer's margin if they were to sell it again for the same price.

[ab17790]

20% of the value doesn't evaporate when you drive it off the forecourt due to VAT, if that were the case then every used car out there would be at least 20% cheaper (actually 16% as 20% VAT is 16% of the total VAT inclusive price). You immediately lose at least 15-20% due to the dealer's margin if they were to sell it again for the same price.

Technically VAT does evaporate once the car has left the forecourt as VAT is only paid once,When the car is sold secondhand is a different matter as the price might be higher due to supply and demand.

I was also lead to believe this is why Demonstrators have a considerable saving as the VAT has already been deducted.

Dealer margins on high selling models would be closer to 10-15% I would think.

[monkeyhanger]

VAT is only paid once by the buyer (but not necessarily once by the seller - they will pay VAT on their profit margin in the resale via the "second hand margin scheme"), but the lack of it payable by the buyer on a second hand car is not the reason for the drop in p/x price offered should you change your mind days later, it is the margin in the car, the need of the dealership to make a profit on every car sold, whether that be new or p/x. A dealer will pretty much always look to make at least 15% on your p/x.

The dealer will always charge what they can for the car and always expect margin in the p/x, even if they made a killiing in the sale of the new one. If a pre-registered car (technically second-hand, VAT already paid) can be sold for RRP of the new one because the new one will take 6 months to order and supply (as some of the first Rs were), they will charge RRP and get it from someone choosing not to wait for the new one. VAT (or lack of it) does not dictate second hand prices at all.

[jjgreenwood]

Quite right VAT makes no difference the market value of the car is dictated by the market and what someone is willing to pay for it.

Also any dealer needs to make a profit, nobody is going to give you more than what they can sell a car for. Selling a car is surprisingly expensive and a £2000 margin goes very quickly. Here is an example:

£2000 margin
pay the VAT of the margin - margin is now £1666.66
Multipoint check through the workshop - £400 - now margin is £1266.66
Valet car for sale, reclean whilst on sale every day, valet before buyer takes car - £75
Advertise car for 6 weeks through several websites - £75
Pay interest on stocking car - £60
Now margin is £1056.66
Discount car by £250 for buyer - £208.33 cost
Pay bodyshop man to smart repair scratch on bumper - £60
Pay salesman £100 to sell car - £100
Car makes £688.33

This assumes car is immaculate other than a small scratch on a bumper and doesn't need anything in the workshop. Also in this example nobody has paid for ancillary staff, rent, electricity, rates, maintenance etc etc.