What they made on that car you bought

Ever wondered how much money the average dealer makes when you buy an average car?
Well, here’s the answer: around about £764.
That, at least, is the average of what car dealer group Evans Halshaw raked in every time it sold a new or used car in 2007.
You’ll find the figures if you delve into the financial results of parent company Pendragon, which is based at Annesley. Not many people do, so I’ve done it for you.
Now, let’s be fair. That £764 is a) an average, and means the profit on some cars will have been much less, and b) a gross figure, from which the cost of sales, admin and other general costs must come out before what’s left goes in the bank.
And Evans Halshaw is, of course, only one chain of dealers and it sells only mainstream cars like Fords, Vauxhalls and Peugeots etc.
Pendragon also owns the upmarket Stratstone chain, which sells everything from Ferraris to Range Rovers. There, the average gross profit on each car sold last year was £1,801.
But even that’s down from 2006, which just goes to show that businesses and better-off people also like the look of discount deals. (By the way, if you’re starting to sound sorry for Stratstone bear in mind its profit margin on servicing your luxury barge is around 60%).
Why pick out Pendragon’s dealerships? Well, besides being based down the road from here, the company is the biggest car dealer group in Britain. So you could say these are representative figures.
Even though they're gross profits figures, these sums tell us a little bit about the health of the car market. Or the lack of it - it's pretty clear that car manufacturers and car companies are having to scrap for every penny of your business.
What does it all mean to average car buyers like you and me? Even more interesting than the figures (and I reckon people currently haggling for cars will find the numbers eye-opening) is Pendragon’s strategy for 2008.
You’d think a big business like Pendragon would be all about shifting shiny new cars from glitzy dealerships. Granted, it sells loads. But around half its sales revenue comes from used cars, and this is where it’s been struggling.
Why? Well, to keep the factories chugging and the new cars selling, car makers have been showering discount deals on buyers, making a new car just as affordable as a nearly new one.
The knock-on effect is that nearly new car prices have had to be slashed to keep them attractive – hitting Pendragon’s profits.
So it’s decided to go after a piece of the action normally dominated by small-scale independent car dealers – lower price used cars, which might be older or higher mileage but are still sound enough to sell with a warranty.
So next time you go to one of those glitzy showrooms, don’t be surprised if part of the site looks a bit like a back-street car lot.