Good evening and welcome back for another blog post from Bywater Motors.
This week I will be talking about the difference between Car leasing companies and car dealerships. There are pros and cons to both so which is best for you as a customer?
Well first of all let me explain something you will no doubt already be aware of but to what extent? Dealerships are VERY expensive to run. They cost well over £100,000 a month just to keep the doors open and that needs paying for.
Who pays for the dealerships? Who pays for your free coffee when you go for a test drive or the demo vehicle or the fuel, the reception team, the salesman’s wage, admin etc?
You do when you buy a car with a 10-25% mark up over cost price. You then might take finance at an interest rate high enough to pay the dealership a kick back which can be in the thousands per car. Gap insurance, paint protection, extended warranty, tyre and alloy protection, SMART protection. They are all marked up so the dealership takes a cut on all of it.
Don’t get me wrong, I’m not suggesting there is anything wrong with this I’m simply stating the facts. Dealerships cost a fortune to keep open and operating and as consumers that must be paid for. We can’t expect a trained salesman’s time, knowledge, advice & lets be honest…….patience for free.
Manufacturers build and market their vehicles and decide a price, lets say £35,000 for a Land Rover Evoque (purely an example) and they then tell the dealerships the maximum they can sell that car for, say £42,500.
The dealerships will advertise that car at £42,500 and it’s your job to fight your way down to a number where you feel like you’ve had a good deal but you don’t get to know what the cost price is and it changes wildly from one manufacturer to another.
This is where Car leasing companies come into the mix. Dealerships are targeted by manufacturers to sell HUGE numbers of cars each month. If they hit this target the y get a massive bonus. If the target isn’t met they lose allocation.
To give you an idea, Mercedes might say to a dealership they can have 120 A class for Jan-Mar but they must sell all of them and 30 S class. If the dealership does this they might get an addition £100,000 bonus but if they miss the target Mercedes will say that for Apr-Jun they can only have 50 A class.
This motivation for the dealerships to hit targets means they have put in place fleet departments that will only deal with car leasing companies and we get huge discounts if not cost price vehicles.
As a car leasing company we don’t have to pay for a dealership etc so we can afford to work for a very small margin passing all the savings on to you.
When I say a very small margin I’m talking hundreds not thousands of pounds per vehicle. At Bywater we typically work for a £250 admin fee as we feel volume and customer service is more important than trying to be on the Forbes list next year. I know first hand there are car leasing companies out there working for £2000 a vehicle but they may have a large office and a team of salesman to pay for.
So where do dealerships have an advantage over us? Well we don’t have demo vehicles for you to test drive or a lovely modern dealership for you to sit in and I don’t go on training courses to learn all the ins and outs of every car we offer.
Realistically we couldn’t do this anyway as we deal in everything from a Ford Fiesta to a Bugatti Chiron. Can you imagine the range of demo’s and knowledge we would need!!
Do you need to test drive your next car? We find most people nowadays, ourselves included don’t really test drive cars anymore as they’re all pretty good, even the likes of Kia and Hyundai that used to be the lower end of vehicle options are now making amazing cars that drive and perform just as well as their competition. If you really must test drive, you can still visit a dealership to do this.
Where the training comes in we find it’s really not an issue. Both myself and Adrian have come from dealerships where we have both worked for years and covered a wide array of manufacturers so we have a very good knowledge between us of what the different cars do, performance figures and how they differ. Anything we don’t know we find either Google has almost all of the answers or we speak to the dealerships ourselves as they supply our vehicles and want to help us.
If you need to know the exact boot capacity of a 2013 Seat Toledo and if it will tow your caravan with ease then I can tell you I absolutely won’t be able to help you but realistically would a Seat salesman even know that by heart?
To sum everything up in a pretty little bow.
Pros – Salesman knowledge, nice building, demo cars, coffee machine.
Cons -Very expensive, long process, will try to up sell you on finance, Gap, paint protection etc etc.
Pros – The cheapest way to buy a car by country mile.
Cons – No test drives, can’t tell you if your brothers, wife’s, sisters, dog will fit in a Volvo V40.
If you’re convinced please click the link below to view a selection of our new cars. New Cars
Thank you for reading and we hope you’ve enjoyed it.