Motor dealer keeping deposit.

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I think a dealer would find it hard to argue that in the time between sale and contract cancellation that the value of the asset had significantly moved. They had a £3k car sold and still had a £3k sale after the sale was cancelled, for instance.

I think it could be subject to a counter-claim by the dealer against the OP at a later date if that was the case although it would be very difficult to prove until the dealer resold the asset. So putting a sum in upfront would be punitive on the purchaser unless the dealer could prove that the car was now worth less.

The seller could not sell for £500 and then claim the difference from the OP since they have a duty to mitigate losses and such a reduction would not be the case.

Edit: no it would not be fair for the seller to retain the deposit until the car is sold - that is completely out of the question and entirely punitive, especially when the deposit in question is not remotely associated with upfront costs and profit associated with the car - it is a number plucked out of thin air.