How can this Mercedes-Benz dealer offer me a new ML at "cost plus £1"?

Following up my interest in a new ML with various Mercedes-Benz main dealers, one has offered me a "sensational" deal, to the end of March only, at "cost plus £1". In the context of a new ML, what does this actually mean, or is it just another sounds good sales pitch? Should I bite his hand off, assuming the colour, extras etc are of interest?

Asked on 27 April 2013 by MB, via email

Answered by Honest John
Dealers are sold new cars by the manufacturers at a discounted price, typically 6 per cent. So list price minus 6 per cent is probably what he means. But after that, if they meet sales targets, they get additional bonuses from the manufacturer that might add up to 9 per cent, 12 per cent, 15 per cent or even 20 per cent per car.
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