Adenoid alert
Just so we all know what happens.
I walk into a MINI dealer.
I sit with a sales person and talk about the car I am interested in.
They offer a demonstration, we drive, come back and talk numbers.
They will sometimes say that there is a discount embargo from MINI due to them not wanting to "Dilute the brands residual values"
This is perfectly legal.
The people the dealer buys the car from make the car and they can dictate what price it gets sold for.
Therefore there is NO discount.
However.
The dealer will take your car in part exchange and give you what is called an "over allowance" as opposed to the discount.
This is something they can lose in their "profits and losses" with higher stand in values (the amount a car actually owes the dealer) and then put it out to auction and take the hit when it doesn't sell for as much as they paid for it.
They will "lose" money here but remember they made money on the sale as there was no discount.
When a dealer sells a car, factory fitted options are NOT a way of them making extra money on your sale. Yes there is a certain amount of extra profit from these items but it is a percentage of the cost and NOT the entire cost of the option.
For E.g,
My MINI costs £20000
The Nav costs £1000
The leather costs £600
The sunroof costs £700
The audio costs £600
All together that price is £22900
The dealer will pay a price for this that is set out by the MINI U.K or U.S.A or whomever.
They will have specific discount rates that are target driven.
They will get possibly 12% off of the PRE VAT (Sales Tax) price. Maybe this will increase to 13.5% should they sell their targeted amount of vehicles that quarter.
They can only deal with what they know they are going to get thus 12%.
This is 12% of the entire vehicle cost (remember prior to tax) that means that they get the discount from £19083
This means their total profit at this point is £2290
That is ALL they get from the deal of selling the ACTUAL metal.
Delivery and PDI costs are all set by the manufacturer. Admittedly the Service and Parts departments get the PDI money but that is NOT in the Sales departments coffers.
So a total Profit of £2290 is what they are achieving at this stage....
Your part exchange is only worth a finite amount of money.
Maybe one dealer may see it as being a couple of hundred pounds more valuable than another but any car is only worth what it is worth.
So you want to get £10000 for your part exchange and they KNOW the value of it is £9000.
This means there is a disparity of £1000.
They will offer an over allowance of £500 thus getting to £9500 valuation for the part exchange.
You say okay, what can be done on the price of the MINI, they say there is NO discounts but we could probably work something out with accessories or the TLC pack.
Again, this comes out of the profit margin.
Say you score another £800 in extras that are dealer supplied, that is to you a good saving and to the dealer the margins in dealer supplied goods are a great deal more profitable than the selling of the car. Say these cost them £500.
However, you now want to pay cash for the balance.
This is where the dealer stops making money unless they can sell you some GAP insurance or some Superguard (THE real rip off costing the buyer £300 and the dealer £40 -£50 AND they get the Valeter's to apply it when they are cleaning the car for delivery anyway)
That means that the dealer will make for selling you the car (if you have no other bits and pieces) £1290.
I am not siding with them but remember they have to run a showroom, stock used cars, run a fleet of demonstrators, tax them, fuel them, pay people to sell their cars etc out of that amount of discount. It not really very much is it?
The best client a dealer can have is one that they can sell a car to with a no part exchange and wants to buy the car on finance.
They make good money from the sale, have no exposure on a PX depreciating as MINI delay the delivery date and they also make money from the finance as the finance company target them to lend a certain amount each quarter, making a certain amount in fee's and interest for the finance company.
Everything is main franchise backed nowadays and believe me when I say, the dealer is nine times out of ten on your side.
They want the car delivered as soon as possible as they don't earn money from delays.
Cut the guys some slack unless they are real tools like G7 had to put with a Berry Heathrow.
Thats all for now folks, I hope I have written that as well as I think and you can all understand it.
Questions will be answered.....:nerd:
It's my first time buying a custom car myself and I'm seriously lost.. 
