Almost half of dealers build “haggle margin” into used car price

RESEARCH has revealed that 47% of dealers build a small “haggle margin” into the price of their used cars.

April’s Startline Used Car Tracker also shows that 22% agree customers feel better about their deal if they achieve a small discount – although 33% believe fewer customers walk away because they don’t get the discount they want.

Paul Burgess, Chief Executive at Startline Motor Finance, said: “This is a really interesting piece of research, showing how it is very common in the used car sector for a small haggle margin to be built into the price, essentially to satisfy customers who ask for a discount.

“The psychology appears to be, at least in part, that customers feel better about the deal if they are able to negotiate some money off – although a large number of dealers also believe that not giving a discount doesn’t usually affect the chances of ultimately making a sale.”

However, 23% of dealers surveyed would rather give a higher allowance on the part exchange than discount the price and 16% would rather build more features into the deal – such as an extended warranty – rather than discount.

Burgess added: “There’s more than one route to offering the customer increased value within the deal and some dealers would obviously rather do this in other ways than bringing down the windscreen price. The key is arriving at a deal with which the buyer feels satisfied.”

Finally, 23% of dealers believe that online data means everyone knows what a car is worth. 14% that there’s not enough margin in used cars for a discount to be given and 9% say they never discount at all.

Burgess said: “It’s become common for the online used car portals that are the entry point for most consumers to indicate whether the price listed by a dealer is competitive. Most people are now aware whether they are getting a good deal.”

The Startline Used Car Tracker is compiled monthly for Startline Motor Finance by APD Global Research, well-known in the motor industry for their business intelligence reporting and customer experience programs. This time, 302 consumers and 64 dealers were questioned.