Is there any wonder we are suspicious of dealers? | Motoring discussion | Back Room Forum

Fri 15 May 2009 01:17

Is there any wonder we are suspicious of dealers? - Fullchat

Regulars will have recently picked up that I have traded in my gas guzzling 4x4 for something a bit more environmentally friendly (in white). Let me run my experience past you. I will try to keep it simple but as far as I am concerned something has not been transparent.

When I made the first telephone call to the dealer the salesman quoted me the manufacturers advertised RRP 'on the road' and an approximate valuation of my own trade in which was significantly more than I was offered back end of last year.

Hooked, I decided to visit the dealership and have a 'face to face' view the car and get a true valuation of my own. I was offered the top end of the valuation and I was well pleased. Did the deal based around the RRP minus my valuation, and signed a sales invoice which included a few 'extras'. The balance was rounded down to the nearest £1000 with the difference of a few hundred becoming the deposit. This invoice clearly stated my PX value.

Move on a week when I went to collect the vehicle. All paperwork signed up , pay the balance and off I go.

That evening I sift through the extensive paperwork particularly the new typed up invoice. I notice hidden on the second sheet that the my trade in was £1200 less than was quoted on the original purchase invoice. The breakdown of the car cost was extensive with tax, new car tax, VAT element, delivery etc etc etc.

Bottom line is that although the balance was exactly the same the figures have changed to reflect a lower value on the new car and a lower px value on mine. They have not charged me as much for the new car but not given me as much for my old one.

Now you may say "Well whats your problem?" I feel as though I have not been treated honestly and with integrity. That £1200 may have made my decision not to swop maybe not. The figures may seem academic but taking into account by driving off the forecourt I'm the price of the VAT down as well as instant depreciation. That figure is also £1200 lower before depreciation - if you get my drift.

So whats it all about? If anyone has any idea I'd welcome their views. Had I walked in with no PX and cash is that £1200 the area in which I could negotiate a discount? Which is right the advertised RRP or the cost price on the final invoice? Was the original valuation merely a hook?

Clearly something is occurring but what? Why does there always seem to be an angle?

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Fri 15 May 2009 02:49

Is there any wonder we are suspicious of dealers? - ifithelps

By discounting the new car, the VAT on the discount has been 'saved' - no one has paid it, neither you, nor the garage.

The garage had earlier given you a final price, and by invoicing in this way, they have legally avoided having to pay/collect from you the VAT on £1,200.

Taking this to its logical conclusion they could discount the car by £10k and avoid a lot more VAT, except they couldn't, because HM Revenue and Customs are not stupid and have guidelines on this sort of thing.

I think to say you have not been treated with honesty or integrity is putting it a bit strongly.

But I suppose the salesman could have mentioned the transaction would be shown as a discount from the new car, and an adjusted p/ex, to produce the bottom line you were expecting.

Although I imagine most customers given such information would wonder what the sales guy was on about and think their time was being wasted.

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Fri 15 May 2009 13:00

Is there any wonder we are suspicious of dealers? - Brit_in_Germany

I thought it was a VAT fiddle pure and simple, diverting money which the private purchaser pays as VAT to the pocket of the dealer.

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Fri 15 May 2009 07:26

Is there any wonder we are suspicious of dealers? - Manatee

tI've seen hundreds of invoices with part exchanges on and that is absolutely standard.

By leaving the "discount" on the trade in value they would just reduce their profit by the amount of extra VAT There's no point reducing the figures beyond the point where they would make a profit on your part exchange because they have to pay VAT on the profit on the used car, so what you have got is an indication of what they have really valued your p/x at (and indirectly, the "discount" you have got on the new car).

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Fri 15 May 2009 07:48

Is there any wonder we are suspicious of dealers? - L'escargot

There was nothing illegal about it because the dealer paid the correct VAT, but I'm surprised they didn't tell you beforehand what they were going to do. In the past I've been told to just look at the "balance to pay" and to ignore the other figures on the final invoice. I think it's common practice. The important figure to you (as always) is "the cost to change". How the dealer does his accounting is of no interest to you, and in fact (putting it bluntly) is none of your business.

Edited by L'escargot on 15/05/2009 at 07:51

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Fri 15 May 2009 08:07

Is there any wonder we are suspicious of dealers? - bonzodog

I guess your subject title sums it up - not explaining what he has done has made you suspicious, when in fact nothing illegal or detrimental to you has been done. It is simply to reflect the true value of your PX & allow some of your money to go to the dealer rather than the VAT man. This is because the dealer cannot claim a VAT credit if he loses money when he sells your PX at a loss. (It's early, I hope I've said that properly!)

I would not say, L'escargot, that it is of no interest or none of his business - it's his car he's selling so he has a right to know the true value he is getting paid.

!!!!!!!!One word of warning to buyers - there is one aspect of this which DOES have a potential impact - if you purchase GAP insurance you will only get paid to the value on the invoice, NOT the RRP. If you are taking out GAP, insist the invoice states the RRP!!!!!!!!!

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Fri 15 May 2009 08:12

Is there any wonder we are suspicious of dealers? - L'escargot

it's his car he's selling so he has a right to know the

true value he is getting paid.

No, all he needs to be interested in is "the cost to change".

Am I right, HJ?

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Fri 15 May 2009 08:24

Is there any wonder we are suspicious of dealers? - ifithelps

On a similar line we used to 'jack up' the deal in the days when you had to put down a minimum one third deposit.

So, customer with p/ex worth £500 wants to buy a £2,000 car, but his p/ex is not quite worth the deposit.

Put £500 on both sides of the deal and it works.

Customer is now p/exing a car worth £1,000 to buy a £2,500 car.

His deposit comfortably exceeds a third of the new car, but he is still only borrowing £1,500.

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Fri 15 May 2009 08:19

Is there any wonder we are suspicious of dealers? - Manatee

How the dealer does his accounting is of no interest to you, and in fact (putting it bluntly) is none of your business.

Obviously not true, as it affects the recorded (if not the actual) value of the car, and were the purchaser a business it would change the profit/loss on sale of the p/x and the depreciation/allowances on the new car, and the VAT paid. And as already pointed out, it would affect any kind "return to invoice" insurance payout.

How can a transaction to which the purchaser is a party be none of his business?

Edited by Manatee on 15/05/2009 at 08:22

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Fri 15 May 2009 08:34

Is there any wonder we are suspicious of dealers? - ifithelps

...were the purchaser a business it would change the profit/loss on sale of the p/x and the depreciation/allowances on the new car, and the VAT paid...

Never understood VAT implications on new cars for a business buyer, buy Manatee is quite right.

The 'VAT trick' should only be used with a private buyer.

If Fullchat's salesman was doing his job correctly, he would have confirmed that before invoicing the deal as he did.

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Fri 15 May 2009 10:07

Is there any wonder we are suspicious of dealers? - martint123

FC should really have read the paperwork before signing and paying ;>)

But I can imaging the slightly sour feeling about this - thinking that "if I'd tried a little bit harder, I could have beaten the price down a tad more".

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Fri 15 May 2009 10:36

Is there any wonder we are suspicious of dealers? - DP

In my own personal opinion, as long as the dealer honoured the cost to change that was agreed, I wouldn't care how he allocated the figures for his own accounting purposes.

However, it's easy to say that, as it's not me.

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Fri 15 May 2009 10:54

Is there any wonder we are suspicious of dealers? - MVP

You have the car you wanted at the price agreed, what's the problem?

Move on

MVP

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Sun 17 May 2009 00:13

Is there any wonder we are suspicious of dealers? - Bill Payer

But I can imaging the slightly sour feeling about this - thinking that "if I'd

tried a little bit harder I could have beaten the price down a tad more".

I certainly had that with my car. Price (cash buy of nearly new Mercedes) was fine, but the invoice had £399 for Mercedes StarShield - their version of DiamondBtrite etc - itemised into the total.
I said I never asked for it and no way would I pay for it. It all got very awkward and I seriously think they'd have let me walk (and I would have had to walk, as a driver had turned up and had already taken away my company lease car!) away if I didn't pay the total agreed price.

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Fri 15 May 2009 10:53

Is there any wonder we are suspicious of dealers? - L'escargot

Obviously not true as it affects the recorded (if not the actual) value of the

car and were the purchaser a business it would change the profit/loss on sale of

the p/x and the depreciation/allowances on the new car and the VAT paid.

If I was a buying on behalf of a business and the purchase had to be recorded in the businesses accounts I would state the purchase price, part exchange value, and VAT paid as being as shown on the invoice. I can't see anything wrong with that. They're the facts.

I admit that the insurance aspect might be a different matter.

Edited by L'escargot on 15/05/2009 at 10:55

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Fri 15 May 2009 11:29

Is there any wonder we are suspicious of dealers? - Mr X

I think what Fullchat is saying is that he thought he was buying a car , for example £20,000 but when he gets the paperwork its listed as £18,000. The asset is worth £2,000 less. If you were taking a loan out on this vehicle and it was granted on a value of £20,000, where would you stand when the asset values was reduced after the loan was offered and accepted ?

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Fri 15 May 2009 18:34

Is there any wonder we are suspicious of dealers? - Fullchat

Well thank you for your sometimes frank and varied responses. I would not even begin to understand the ins and outs of VAT.

"FC should really have read the paperwork before signing and paying ;>)"

Agreed but as the price to swap had not changed I had no reason to really examine the paperwork. Had I noticed and disputed the paperwork and walked away they were still holding my £700 ish deposit.

"But I can imaging the slightly sour feeling about this - thinking that "if I'd tried a little bit harder, I could have beaten the price down a tad more".

Maybe there is a bit of that.

" How the dealer does his accounting is of no interest to you, and in fact (putting it bluntly) is none of your business."

Putting it even more bluntly, it has everything to do with me. I have entered into a contract and purchased a vehicle. It could be said that as a customer I have had the audacity to actually engage in an activity that goes some way to paying their wages, bonuses, share dividends etc etc.

I have the right to expect that the figures are not manipulated from what was originally signed for whatever the reason. As I have signed all the documentation am I now implicated in some form of VAT fraud?

Yes I can go along with the argument that all I should be concerned about is the 'price to change'. For me that is not the point. I expect that when I am parting with my 'hard earned' dealings are transparent. I am being hooked in by one set of figures whilst the dealers are working on a set of different figures.

"Move on"

Yeah I can do that no problem but am left with a sour taste as I have been the subject of some form of deception (whatever it may be) and when I meet the next car salesman they should not be surprised when I treat them with deep cynicism maybe to the point of rudeness.

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Fri 15 May 2009 19:23

Is there any wonder we are suspicious of dealers? - pmh2

>>>I have the right to expect that the figures are not manipulated from what was originally signed for whatever the reason. As I have signed all the documentation am I now implicated in some form of VAT fraud?<<<

Interesting question as whether it constitutes VAT fraud. Over the whole deal the IR&C will probably not been defrauded since if the dealer sells the old car at a profit, VAT becomes payable on a now increased profit.

Since they have manipulated the figures after having made an agreement with you, resulting in the dealer retaining money (for the time being) that would (should?) have gone to IR&C, and you have been complicit in this, surely the safest thing to do is for you to approach Customs and Excise to put your version of the transaction. It could at the very least represent a misdeclaration and is apparently a widespread practice.

p

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Fri 15 May 2009 19:52

Is there any wonder we are suspicious of dealers? - Optimist

As far as I can tell fullchat was happy with the original deal and doesn't seem to have paid any more than he bargained for.

I'm sure HJ will know for certain, but I thought there was a special VAT margin scheme for second hand cars and the standard rate on new motors.

When fullchat was quoted his original price that included VAT at 15%, for which the dealer would account to HMRC. It's up to the dealer what he sells his motors for. HMRC have no interest as long as the correct sum of VAT on the deal is accounted for. When the price is revised the VAT element is smaller but no less correct.

So fullchat is happy and HMRC are happy on the same price to change computed in a different way.

If fullchat were a business claiming capital allowances on the car and maybe using the VAT element as input tax, there might be some difference for him, but small I'd have thought. There'd be the same on the car he p/ex'd.

Fullchat agreed to pay RRP and seems to have been offered a very good p/ex. In the end he got a discount off the RRP and a more realistic p/ex. If he could've got the discount and the top whack p/ex he should be buying and selling cars for a living, IMO.

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Fri 15 May 2009 19:53

Is there any wonder we are suspicious of dealers? - kithmo

This happened to me a few years back and I reported it to IR for my own piece of mind, never heard no more of it though.

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Fri 15 May 2009 20:05

Is there any wonder we are suspicious of dealers? - ifithelps

... I have been the subject of some form of deception (whatever it may be) and when I meet the next car salesman they should not be surprised when I treat them with deep cynicism maybe to the point of rudeness....

Fullchat,

You have not been the subject of any deception.

As I posted above, new cars were being discounted to save VAT in the 1980s, and nearly 30 years later, the same thing is still happening.

HM Revenue and Customs accept a reasonable discount will be taken off the new car - they will not accept a new car being discounted by, say, a half, and the customer being offered £1 for his p/ex when it's clearly worth several thousand.

There's nothing to stop you asking for a full pro-forma invoice next time, so there would be no surprises when you picked up the car.

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Sat 16 May 2009 16:01

Is there any wonder we are suspicious of dealers? - maz64

Fullchat

You have not been the subject of any deception.

"Bottom line is that although the balance was exactly the same the figures have changed to reflect a lower value on the new car and a lower px value on mine."

I don't see how it can't be a form of deception - customer was told one thing, backed up with figures, which were later changed. A conjurer's magic trick is harmless, but it's still deception.

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Fri 15 May 2009 20:07

Is there any wonder we are suspicious of dealers? - barney100

I wouldn't be peeved on my own account and the dealer is doing what many are doing and playing the system. Twas ever thus.

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Fri 15 May 2009 20:29

Is there any wonder we are suspicious of dealers? - cuthbert

I am shocked you have never come across this before !! I have been buying cars for many years and this is a well known ploy of dealerships !!
At the end of the day they have agreed with you a cost to change figure !! Whats the problem ?? the figure is as agreed !!

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Fri 15 May 2009 20:54

Is there any wonder we are suspicious of dealers? - quizman

I can't fathom this post. The OP pays the agreed price to change. Job done.

As for the garage not paying enough VAT, good luck to them. It would only get wasted on mortgages, malteezers, toilet seats etc.

It's a sad day when a poor old chap can't get his moat cleaned out on the taxpayer. We should have a whip round, or go round and give him a good whipping.

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Fri 15 May 2009 20:59

Is there any wonder we are suspicious of dealers? - bathtub tom

Isn't this a bit like the current political scandals?

I don't make the rules, I only play by them.

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Fri 15 May 2009 23:01

Is there any wonder we are suspicious of dealers? - isisalar

The dealer dosen't keep any of the VAT,they just pay less of it to the government because they have charged you less for the car than they could have.If they were to retail your old car it wouldn't make any difference to them because they pay VAT on the difference between the buying and the selling price irrespective of any preparation costs.If they make a loss on your old car selling it into the trade /at auction etc they cannot count that loss against profits.I would guess that the price you got on the invoice is exactly what they traded your car for as soon as it came in.In theory everybody should be happy.If it had been explained to you that your price to change had been achieved by paying the government less tax than you could have ,would you have objected?
Unprofessional salesman IMO

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Fri 15 May 2009 23:35

Is there any wonder we are suspicious of dealers? - Blue {P}

Speaking as a former salesman I can assure you that this practice is very common, we did it all the time BUT:-

We only did it when we were clearly over-valuing the part-ex (i.e. giving a discount), if we had left the £1,000 banger showing as a £2,000 car on the paperwork then we would have paid more VAT than we needed to when the car was sold for £1,000 at auction. By adapting the figures we pay the correct V.A.T.

Fullchat - you have already admitted that the P/EX price was more than you were offered last year, and way near top of book, they have clearly offered you more for your part-ex than it was worth in order to give you a discount. What they have done wrong is not explain it to you. You were obviously happy with the cost to change though which is the only figure that matters so I can't see too much of an issue.

The reason that dealers are forced to do things this way is that due to shocking education a lot of the general public are thick. I've worked in a dealership and offered a customer market value for their part-ex (it was worth peanuts) off the price of a heavily discounted car, they ended up buying at a dealership down the road that wouldn't "rip them off". The reason? The other garage gave them £500 more for their old knacker and charged them £800 more for the car they were buying...

With cretins like this allowed outside the walls of an institution is it any wonder that I have no faith in most people's intelligence?

By the way Fullchat, I should make it clear that I am in no way sweeping you up in my generalisation as clearly you have more intellect than these people, I'm just trying to explain where the dealer is coming from in doing this, the only thing is they should have explained it at the end.

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Fri 15 May 2009 23:38

Is there any wonder we are suspicious of dealers? - Fullchat

"If it had been explained to you that your price to change had been achieved by paying the government less tax than you could have ,would you have objected?"

All I ask is that the deal is transparent so that I can make my own decisions based on true cost and valuation and paperwork that I have put my signature on is not misleading.

The Sorrie only had 35K om a 05 plate so would realistically probably turn a reasonable profit for the dealer despite the sinking 4X4 market.

Some have wondered why I seem to be getting my knickers in a twist over this. I'm not really just using the forum as a means of education from people closer to the trade than I am.

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Sat 16 May 2009 19:36

Is there any wonder we are suspicious of dealers? - Another John H

>>Isn't this a bit like the current political scandals?

>>I don't make the rules, I only play by them.

Not really.

The Politicians make their own rules, and some didn't play by them.

Edited by Another John H on 16/05/2009 at 19:37

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Sat 16 May 2009 20:31

Is there any wonder we are suspicious of dealers? - Xtype

I agree with Blue. I worked at 4 garages selling used cars, happened all the time. No point in the garage paying extra VAT if they can avoid it.

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Sun 17 May 2009 09:42

Is there any wonder we are suspicious of dealers? - deepwith

Does this explain a car being valued at £700 for pt-exchange and then being seen on the forecourt for £3,750? This happened recently to someone we know - who is very peeved! The family had bought 4 cars from this dealership over several years - two at a time. They needed to trade in one for a bigger car and were told they would not get a better deal anywhere else.

Last week they visited 'their' garage to look for a car for their daughter and there was the car they had traded in, 2 weeks before. Not mentioning their connection with the car, the salesman showed it to them and explained it had just been reduced in price.

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Sun 17 May 2009 10:18

Is there any wonder we are suspicious of dealers? - b308

I'm with FC on this... I can't understand why they couldn't have explained it to him at the outset... whilst it makes no difference to the bottom line, if you as a salesman are altering the contract then you have a duty to explain whats going on...

Otherwise, like FC, and now me, we get suspicious and think that you have something to hide... or even worse that we are being used in some sort of con against the Inland Revenue....

And car salesmen wonder why we don't trust them... well this thread has just answered that one, anyhow!

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Sun 17 May 2009 11:49

Is there any wonder we are suspicious of dealers? - ifithelps

... are altering the contract...

Hardly, if FC's paperwork is fairly standard, the order form will only have shown the price of the car, extras, less p/ex = bottom line.

The invoice will be much the same, except the price of new car will be broken down into its tax elements.

The bottom line, as you appreciate, is the same.

When FC signed the order, I don't think he contracted to pay a certain amount of VAT - he contracted to buy a car.

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Sun 17 May 2009 13:39

Is there any wonder we are suspicious of dealers? - bonzodog

No, he entered a contract to buy a car for a sum of money from the dealer; they in turn entered a contract to buy his car for a sum of money.

If the price of the car he is buying says £15,000 on the order form & is then altered to read £13,800 then the contract has obviously been altered (or changed or amended or modified or adjusted or any other word which means the same!)

As you say, the bottom line is the same but that doesn't alter (no pun intended) the fact that he should have been informed as to what was taking place. It is this that the OP is saying causes the suspicion (if I'm reading him correctly).

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Sun 17 May 2009 17:22

Is there any wonder we are suspicious of dealers? - Fullchat

That sums it up nicely.

And if Kia have a manufacturers recommended retail price is that a screen that dealers can hide/work behind? What other product would you buy and pay the RRP? I would suggest none other than a car or motorcycle maybe caravans.

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Sun 17 May 2009 17:38

Is there any wonder we are suspicious of dealers? - miata

As has been stated this practice is common place and when its happened to me i havent batted an eyelid.

I am happy with the deal and shelling out the same amount of dosh whatever paper exercises take place.

Without sounding pedantic in my circumstances i have far more important/urgent/needy etc issues to deal with in life than get bogged down in matters such as this.

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Sun 17 May 2009 18:30

Is there any wonder we are suspicious of dealers? - Andrew-T

As you say, the bottom line is the same but ...

The bottom line is indeed the same, and like many others here I am aware that it is 'normal' practice, and I don't particularly object to it - especially if the dealer is open about it. But perhaps there is a slight feeling that if a degree of VAT evasion is going on, why does all the saving go to the dealer? What's in it for the punter, who is funding most of the deal?

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Sun 17 May 2009 18:47

Is there any wonder we are suspicious of dealers? - isisalar

Whats in it for the punter is that he benefits by any discount given PLUS VAT.
No savings go to the dealer he's just collecting the VAT and passing it on to HMR&C for free.

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Sun 17 May 2009 19:02

Is there any wonder we are suspicious of dealers? - Andrew-T

No savings go to the dealer ...

If that were so, I doubt they would create two sets of different paperwork, would they?

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Sun 17 May 2009 19:08

Is there any wonder we are suspicious of dealers? - ifithelps

... doubt they would create two sets of different paperwork, would they?...

Eh?

The order form is not and never has been a tax document.

The invoice is the tax document which shows the amount of VAT in the transaction.

There's only one invoice, with copies to those who need them.

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Sun 17 May 2009 19:21

Is there any wonder we are suspicious of dealers? - b308

So why not just quote the figures they want to use at the outset, then?

Sorry, but the more this is "explained" by the dealers and those who "know" it goes on, the worse it sounds... for heavens sake, if thats what they want to do, then just be upfront about it!

I really can't see why the dealers can't just tell the buyer whats happenning, if they've nothing to hide then there's no problem is there... they just sound like our MPs... "But we've always done it that way, sir, so whats the problem?!"

It makes me wonder who is the most bent at the moment, the MPs or the car dealers... its a close run thing, and I'll leave it to you to decide the winners...

Edited by b308 on 17/05/2009 at 19:22

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Sun 17 May 2009 19:28

Is there any wonder we are suspicious of dealers? - isisalar

The only 'paperwork' that generates any output VAT is the sales invoice,and there can only be one for each new vehicle sold.There are not 'two sets'.
If a car is sold for say 10,000 +vat ie 11500 dealer gets 10,000 HMR&C get 1500
If same car is sold for say 9000+vat ie10350 dealer gets 9000 HMR&C get 1350
Lets say the PX is tradeable for 1000 would you as a customer rather get 2000 against 11500 or 1000 against 10350.Not rocket science is it?
As I said in an earlier post 'unprofessional salesman' IMO If the salesman had explained it up front there wouldn't be any misunderstanding.

Edited by isisalar on 17/05/2009 at 19:32

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Sun 17 May 2009 19:50

Is there any wonder we are suspicious of dealers? - b308

We are going round in circles here, I think we all now understand why they do it... all we ask is that they are upfront about it... what is so difficult about that?

Now I'm beginning to wonder why some of you are trying to defend the indefencible...

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Sun 17 May 2009 20:01

Is there any wonder we are suspicious of dealers? - Alby Back

It's a bloodbath out there. All manner of business parachutes are being deployed.

This dealer has used clever psychology on the OP. Good offer on his trade in and a reasonable deal on the new car. Warm feelings all round.

Clever accounting too. OP gets the same deal but the government gets less. Deal is less surface attractive because it "devalues" the trade in.

This dealer may just survive. Others won't.

Edited by Humph Backbridge on 17/05/2009 at 20:02

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Sun 17 May 2009 20:06

Is there any wonder we are suspicious of dealers? - miata

Simple answer look at and check the paperwork as with everything else in life.

If you have a query take it up with the originator and ask for an explanation if its of concern.

No doubt the sales person would have offered the explanation as outlined in detail on here.

If you still have an issue with it take it up with the appropriate authority and seek their advice/opinion.

Otherwise enjoy your new purchase and record it in the memory bank for any future purchases.

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Sun 17 May 2009 20:06

Is there any wonder we are suspicious of dealers? - Bill Payer

what is so difficult about that?

What's difficult about it, as a former car salesman has already explained in this thread, and a car salesman explained to me once, is that many members of the public are stupid.

They will buy from whoever gives them the highest p/x price, ignoring everything else in the deal. There's a name for this - IIRC it's called the Pendle method. It basically relies on flattering the customer with a high p/x value for his car and then everything else drops into place.

Offering a discounted new car price and a lower p/x value means the salesman may lose the order as the stupid customer will go elsewhere having had a higher p/x offer against the car at list.

Edited by Bill Payer on 17/05/2009 at 20:09

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Sun 17 May 2009 20:54

Is there any wonder we are suspicious of dealers? - Blue {P}

Thanks for taking the time to read and understand my post Bill Payer, I was about to point out (once again) the obvious reason why it often has to be done this way in order to secure the sale but you've beaten me to it. :-)

As I think I also pointed out in my post B308, whilst we used this tactic regularly to secure the sale, we always explained to the customer what we were doing with the invoice and no one ever had a problem with it that I'm aware of, if they did have a problem I'm sure they'd have been told that we didn't want their business (unless it was a car that we were desperate to shift)

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Sun 17 May 2009 22:30

Is there any wonder we are suspicious of dealers? - Fullchat

I seem to have stirred a little bit of a hornets nest amongst those in the know. I am stupid and should have checked the paperwork :-S . What happened to trust and is it accepted that good business practice is to twist and manipulate the figures?

Now lets put the boot on the other foot. In my occupation if I were to alter and manipulate paperwork, or say one thing and do another I would be in the dock. There would be uproar. Perhaps I am being naive in expecting that anyone else's standards come anywhere close.

Edited by rtj70 on 17/05/2009 at 22:59

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Sun 17 May 2009 22:43

Is there any wonder we are suspicious of dealers? - Westpig

I do think you have a point FC...i.e. being open and honest....but there again no business wants to pay too much VAT either, do they...and if you tried to explain the in's and out's to some of the slack jawed, dribbling, Brits that always seem to be in front of me in my queue, then their eyes would cloud over and all would be lost.

i'm in danger of getting splinters, i'm so sat on the fence......;-)

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Sun 17 May 2009 22:56

Is there any wonder we are suspicious of dealers? - gordonbennet

I wouldn't be too bothered about this TBH, FC has paid the same amount to change so he's not been turned over, but i can understand his position especially with his job.

The rest of us may well look slightly differently at this.

My own view is if the garage has managed to save a bit of tax lolly good luck to em...i wouldn't feel this way except for the contempt that the present govt..hah.. (though the last few lots have been just as bad) have treated all of us whilst feathering their own nests and throwing our tax money around like confetti.

If the country was really pulling together with men and women of honour and decency in government i would feel quite different, however its not going to happen for many years yet and only then with courage and honesty and hard decisions...something the present shower of selfish grubbing trough feeders are incapable of.

Enjoy your new car FC, forget the paper trail.

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Sun 17 May 2009 23:08

Is there any wonder we are suspicious of dealers? - isisalar

There seems to be a gulf of misunderstanding developing here between people 'in the trade' and some others ie public servants.
The dealers are only unpaid tax collectors.
The only people who pay VAT are the paying customers.
If the dealer can structure the customers deal so that they pay less of their previously taxed income to HMR&C what's the problem?
A previous poster said that a proportion of the public were 'thick' and I think I must agree with them.

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Sun 17 May 2009 23:30

Is there any wonder we are suspicious of dealers? - Fullchat

Its easy to say that from a position of knowledge and understanding. A touch of arrogance perhaps?

So 'thick' gullible punters are easy prey to be manipulated by smooth talking salespersons?

I think that answered my original question.

Edited by Fullchat on 17/05/2009 at 23:31

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Mon 18 May 2009 22:15

Is there any wonder we are suspicious of dealers? - Blue {P}

Its easy to say that from a position of knowledge and understanding. A touch of

arrogance perhaps?

So 'thick' gullible punters are easy prey to be manipulated by smooth talking salespersons?

I think that answered my original question.

Fullchat - Honestly I agree with you that if someone has a car that is worth £50 at auction that it should be valued in the negotiations at £50 by all garages and the haggling should be done on the purchase price of the new vehicle, it would be much more transparent.

However, in the real world people are too stupid for this to be the case, they will be much happier going to the dealer down the road who charges more and can afford therefore to give an over-inflated part ex price.

Lets look at it from another angle, the dealership uses this perfectly normal tactic (come on, don't try to tell me that you really thought your car was worth at auction what they offered you for it, deep down you must have known they were just giving you a discount?) to secure a deal, why should they then pay V.A.T on a profit that they haven't made? Bear in mind that if they mess around with the values and it shows a higher margin then they will pay the V.A.T. on that higher margin despite the fact that the part-ex will still only sell for £50 at auction no matter what they've pretended that it's worth to stroke the customer's ego.

It's not a case of dealers trying to get away with paying less tax than they should, it's dealers avoiding paying more tax than necessary on the deal. Ultimately if it wasn't done like this the extra (unnecessary) costs would only be passed on to one person, and it wouldn't be the Dealer Principle...

I think that nothing more has happened here than they haven't fully explained the paperwork (as they should have done for the sake of clarity), and perhaps there's a small element of disappointment if you had actually believed that your car was worth more than it really was worth at auction.

I personally feel that to use this as proof that the car industry is crooked throughout is extreme and not particularly warranted. All just in my humble opinion of course.

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Sun 17 May 2009 23:18

Is there any wonder we are suspicious of dealers? - Fullchat

GB, I suddenly feel a whole lot warmer :-). WP any room on the fence?

Seriously I am a big boy and can make my own decisions. I have been playing devils advocate to some extent. Car dealers are not charities and a 'deal' has to be worked on. I just wanted to know the methodology behind what was occurring.

Thanks everyone for the input.

Edited by Fullchat on 17/05/2009 at 23:22

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Sun 17 May 2009 23:24

Is there any wonder we are suspicious of dealers? - Bromptonaut

As HJ and many other motoring (and personal finance) writers point out the only thing that matters is the cost to change. Yet most of the public have an inflated view of what their trade in is worth and think they're being ripped off whne presented with a realistic figure.

Twenty years ago almost to the week I traded a knackered 1980 Mini City for a thirty month old BX. Negotiated a deal based on the sticker price & £1250 for the Mini. The invoice however valued the Mini @ £750 and reduced the sticker price by £500. I'd been pretty straight about the Mini's state and the salesman was equally frank in explainig the customer psychology as set out by some of our trade posters and also the fact that the company accountants would want values "by the book".

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Sun 17 May 2009 23:42

Is there any wonder we are suspicious of dealers? - bonzodog

Isisalar - "The only people who pay VAT are the paying customers" - well no. And that's part of the reason why dealers want to adjust the prices down. Dealers pay VAT on the margin they make on the used car.

And I wouldn't say the public are "stupid", it's just that everyone has different motivations for buying. One man looks for the best discount, another for the highest PX value; one man looks for the lowest APR, another for the lowest monthly payment.

What dealers do is try to identify what a particular customer's motivation is & appeal to it

I can recall many a customer saying to me that so & so garage has only offered him £PX value; I've offered him £200 more & got the deal despite my car being £300 dearer than the other dealer.

From a customers point of view, you should focus on the difference to change on a like for basis ie same RFL, warranty etc etc

Edited by bonzodog on 17/05/2009 at 23:45

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Mon 18 May 2009 00:12

Is there any wonder we are suspicious of dealers? - isisalar

Isisalar - "The only people who pay VAT are the paying customers" - well no.

And that's part of the reason why dealers want to adjust the prices down. Dealers

pay VAT on the margin they make on the used car.

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Bonzodog We have been discussing a new car purchase here where VAT is payable on the price charged for the car.Pay attention.
'Ive offered him him £200 more & got the deal despite my car being £300 more than the other dealer.'
Like I said some of the public are stupid.
'Dealers pay VAT on the margin they make on the used car' But only because the customer has bought that car and given them a profit.They're not paying VAT on unsold cars are they?
The dealers profit from the customer is what pays the VAT.
The customer pays the VAT the dealer only collects it for free.

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Wed 20 May 2009 14:00

Is there any wonder we are suspicious of dealers? - Pizza man

The VAT paid won't of changed it's worked out on the cars RRP not the final sales figure.

Ask Honest John

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