Negotiating for a car tomorrow - how do I play the VAT reduction?

[djm1972]

Hi everyone,

I'm in "new (used) car" mode at the moment, and will be taking a second test drive tomorrow; which for anyone who is serious (and I am) would almost certainly be followed by a negotiation on the final selling price.

The current "screen price" (which nobody pays) is £8999 which by my calculation includes £1341 VAT @ 17.5%. As of Monday, if the dealer simply walked out on to the forecourt and reduced the screen price of every vehicle in line with the VAT reduction, it would be reduced to £8807 - an immediate VAT related saving (to me) of nearly £200. :D

So how do I play this? I will be paying "cash" by the way.

Plan A is to pretend I haven't heard about the VAT reduction and negotiate down as much as possible based on £8999. Then, I'll go away and "think about it", and then go back next Monday when VAT is 15% and factor the new rate into the price previously agreed and offer him that. ;)

Plan B is to :confused:

Any thoughts! Anyone work in the motor trade and have any idea how the current situation is going to be played from his side?

Thanks!

[thescouselander]

You dont pay VAT on a used car do you?

[djm1972]

Thanks - i'd automatically assumed that used cars weren't any kind of special case.

The 6'o'clock news this-evening included a few "before and after" examples of what the VAT reduction would mean and one was a new car, but a quick search on VAT on used cars talks about a "margin scheme" whatever that is!!

[Alias_Omega]

vat discount does not come into effect next monday i believe..

[harveybobbles]

Depends...

Some used cars are VAT inclusive and some just haven't got any VAT.

As for the "screen price which no body pays" attitude, then i'm glad you're not buying from me...

I certainly wont be reducing the screen price on all 50 of my cars I have on the forecourt just cos the VAT is changing.
The screen prices will be the same. It just means that I'll be claiming 15% back not 17.5%...

[djm1972]

As for the "screen price which no body pays" attitude, then i'm glad you're not buying from me...

:D

Sorry, I meant that I won't pay the screen price. I don't doubt that you do get some people who won't negotiate with you and just pay what you're asking.

[sheslookinhot]

Offer £7,500 and take it from there.

[harveybobbles]

:D

Sorry, I meant that I won't pay the screen price. I don't doubt that you do get some people who won't negotiate with you and just pay what you're asking.

It's rare that anyone asks for a discount on our cars as we price them all very aggressivly from the start. So if a decent customer has done their homework they will find that were well priced.

[anewman]

I certainly wont be reducing the screen price on all 50 of my cars I have on the forecourt just cos the VAT is changing.
The screen prices will be the same. It just means that I'll be claiming 15% back not 17.5%...
Which is why the VAT reduction is pointless. It's just lower operating costs for businesses.

[Scuttsy]

Find out the source of a used vehicle. If it has one previous private owner this unfortunate person will have paid the VAT, therefore their is no VAT when it is sold as a used car. However if it was previously a company owned vehicle and used exclusively for business purposes the VAT will usually have been claimed back by that company, therefore the vehicle is VATable and you should be able to factor in the full amount of VAT into the price. Usually ex demonstrators and ex rental cars will be sold inclusive of VAT and are the best sources of these cars.

Unfortunatley you may find most salesmen are unaware of these complexities and will look at you with a baffled look resulting in more profit for the business as anewman points out.

[Lemonade Pockets]

Unfortunatley you may find most salesmen are unaware of these complexities and will look at you with a baffled look resulting in more profit for the business as anewman points out.

I think you will probably find most salesman are sharper than they may appear. Hence like anewman will try making an extra dose of profit on all customer's that aren't clued up and buying vatable cars.

But on used cars it doesn't really make that much difference as dealerships if their lucky may benefit from a few quid on a couple of transaction but it will not be long lived, i expect days rather than anything. Its a competitive market (especially given the season and economic climate) and any salesmanager worth his salt will constantly be adjusting his price expectations to suit especially on stock such as ex-rentals, demos etc.

For example if a car is priced at £117.50 (£100+VAT at the old rate) the dealer from december can now theoretically make a extra £2.17 (102.17 + 15% = 117.50) by leaving the price the same. Would the dealer still take £100 in return for a sale.......i reckon so. Obviously they'll have a go at the extra but if they were happy to take a £100 in Nov they'll be happy to take £100 in Dec.

The only exception would be if you are buying a new car for which the manufacturer isn't increasing the net price next month (most probably will be) it would be unwise to buy and take delivery of said new car before the end of November. As you would be paying net + 17.5% instead of net + 15% so neither you or the dealership would benefit (excluding sales targets bonuses etc).

[Lemonade Pockets]

Thanks - i'd automatically assumed that used cars weren't any kind of special case.

The 6'o'clock news this-evening included a few "before and after" examples of what the VAT reduction would mean and one was a new car, but a quick search on VAT on used cars talks about a "margin scheme" whatever that is!!

Margin scheme is basically that the dealership pays VAT on the profit between purchase price and the sale price of the vehicle. But unless you find out how much profit their making you'll never know this figure so its not worth worrying about.