How much does a dealership make on the sale of a used car

It is erroneously thought that if a dealership buys a car for € 10,000 and then sells it for € 12,000, it earns € 2,000 net.Nothing could be more wrong and far from reality , those who think in this way have no idea what the real costs are on the purchase and sale of a used car by a company with a regular VAT number used cars in montclair .

Practical example of dealership live costs

Practical example: a dealership buys a car for € 10,000 and after a couple of months sells it for € 12,000, thus creating a capital gain of € 2,000 The capital gain of € 2,000 must be divided as follows: € 1,636.00 represent the tax base for taxes , while € 364.00 represent the VAT to be paid . So in summary, out of 2000 euros of margin (capital gain), 364 must be paid to the state for VAT and 572.60 (assuming the lowest margin or 35%) must be paid to the state for taxes (taxes).

Therefore, on a hypothetical “gain” of € 2,000.00 between the purchase and sale of the car, in fact in the pocket, after tax and VAT are deducted, € 1063.40 remains to which the aforementioned mandatory out-of-pocket costs must be deducted (mini transfer, coupon and guarantee), in addition of course to management costs (rent, insurance, personnel, etc.).

used cars in montclair

Numbers in hand, the following is the best profit hypothesis for a dealership on € 2000.00 of capital gain:

Profit after taxes and VAT: € 1063.40

– 115 € for the mini transfer

– € 150 for the coupon

– € 200 guarantee required by law

Total without deducting management costs:  € 598.40

The concessionaire takes the full business risk

We have seen how mathematically, of those famous initial € 2,000 , the dealership temporarily remained “in his pocket” € 598.40 , but we have not yet deducted the management costs (rent, insurance, personnel expenses, etc.) which are difficult to quantify. , precisely because they vary from company to company, but that any company must support in order to maintain its sales structure.

Also keep in mind that a used car is sold on average after 57 days , but there are cars with little market that remain in stock for more or less long periods, in this case the dealership could risk zeroing the profit margin and even exit.

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