How to set prices for your vehicles in the motor trade

Thinking about setting up a car dealership? If so, there will be a whole host of factors involved in determining how successful you become. These factors include everything from your location and industry knowledge, to the quality of your website and type of vehicles you decide to buy and sell on.
 
How you price vehicles plays a big part, too. As Carbuyer rightly points out, valuing vehicles requires you to strike that golden balance between what’s fair for you, the dealer, and what’s fair for the buyer – i.e. the price they’d be willing to pay. If the price is too high then you’ll put buyers off, if it’s too low then this could raise suspicions.
 
Price a car right and it’ll fly off the forecourt, while guaranteeing you a decent profit for your efforts. Everyone wins!
 
Before you get to the stage of pricing vehicles, you’ll need to look into taking out motor trade insurance. Insurance Choice provides motor trade insurance policies for a wide range of auto trades, helping to protect your valuable assets. Because all businesses are different, we take the time to understand your unique needs before finding a policy to suit your requirements – as well as your budget.
 

So, how do you value a car?

As Carbuyer notes, there are many different variables associated with car valuations. The three main factors, though, are the vehicle’s age, mileage and condition.
 
Price Any Car notes how the average mileage of a car is typically between 10,000 and 12,000 miles per year. A general rule of thumb is to deduct or add 0.5% of the value per 1,000 miles, depending on whether the vehicle’s mileage is lower or higher than the average.
 
Obviously, you’ll want to sell cars in reasonably good condition, otherwise you could quickly get a bad reputation. If a car is in an average or lower-than-average condition, you’ll want to deduct the cost it would take to bring the vehicle to a decent and clean state. As a dealer, you’ll probably do some (if not all) of this work yourself before putting the car up for sale – for instance, changing tyres, carrying out simple mechanical fixes or giving it a deep clean.
 
Other factors that impact price include things like transmission – a diesel or petrol engine could reduce or boost a car’s value depending on what’s most desireable for that particular make and model. Location makes a difference to car values, too – prices are usually higher in the south than in the north. And time of year can also be a factor, with convertibles proving more popular (and therefore fetching more money) in the summer, for instance.
 
Bear in mind that you’ll want to set a higher price for vehicles than private, individual sellers. As a dealer, you’ll have overheads to pay – like rent, VAT, refurbishment expenses, etc. – and these need to be accounted for in the car prices.
 
The good news is that most used car buyers will be willing to pay a little more to purchase a vehicle through a dealer due to the added security. As Which? notes, the Consumer Rights Act gives buyers the right to return the car or have it repaired if they uncover issues with it that weren’t disclosed at the time, within a certain timeframe.
 
But the flipside to that is that most buyers will try their luck at haggling the price down, so if you’re open to offers, make sure this is reflected in your initial values.

Are there any tools that can help?

Luckily, there are a number of tools dealers can use to help ensure the correct valuations for their vehicles.
 
The most well-known in the industry are Glass’s and the CAP Black Book, which provide live values. You may need to pay for the service, but they’ll offer accurate, live dealer values once you’ve given information like the car’s reg number, make, model, age, mileage and general overview of its condition.
 
Using these tools will prevent you from ever underselling a car and maximise your profit by more efficiently managing stock volumes.
 

Getting the highest possible value for your used cars

Of course, you want to get the most money for every vehicle you sell, as this will be key to turning a decent profit and making your car dealership successful. Here are two key tips to help you on your way:
 
First impressions count – give all vehicles a good clean!
Whether you employ a valeter or do the work yourself, your want to make sure every vehicle on your forecourt is spick and span on the outside and inside. You’ll want to
 

• Remove any rubbish from the inside, vacuum and clean things like the dash and steering wheel.
• Deep clean the exterior using a decent car shampoo, then rinse and use a chamois leather to dry.
• Clean interior and exterior glass and mirrors using good quality glass cleaner.
• Use a specific alloy wheel cleaner if needed, and a special tyre polish.
• Consider removing surface scratches with a good quality remover.
• Complete the clean with a good polish of the paintwork – you might want to add some finishing touches like a smelly tree, too!

Write good ads and advertise in the right place

Advertising your vehicles on the right auto sites (including your website) is one thing, but you also need to make sure those ads are engaging and contain all the information buyers are looking for if you want to sell your cars fast and for the best possible price. Ads should at the very least include:
 

• Make and model
• Number or doors and seats
• Transmission
• The vehicle’s mileage
• Year of manufacture
• Colour
• Condition
• Make and model
• Service history
• Your dealership’s contact details

 
You’ll also want to include information unique to your dealership – for instance if you offer a warranty or even if you’ve scooped any awards for customer service. Anything that sets you apart from competitors is a bonus.
 

Motor trade insurance from Insurance Choice

Hopefully these tips will help you to value your cars correctly and get the most money for them. When you’re ready to take out competitive-priced motor trade insurance packed with benefits, get a free, no-obligation quote with us!