Understanding business helps with understanding car yards

When people find out that I worked as car salesperson, howbeit quite briefly, a good proportion will then pepper me with questions arising from their perceived miserable experience(s) in buying a car from a retailer.

Basically, its business. And if you think about it for a moment in a rational and reasoned way, all business is like that, but we get hung up on cars because they cost significantly more than any sofa or television, and depreciate much quicker as well. Any business that sells a product needs to have a portion added on to the wholesale price to provide a profit. And that profit doesn't just go into the salesperson's pocket, or the boss' pocket. There are a huge amount of costs that have to be covered.

This includes administrative staff, utility fees, advertising costs, GST, rental, insurance, government registration costs, franchise costs, stock overhead costs, interest on inventory outlay, costs relating to lost or damaged items, costs relating to theft or vandalism, insurance claim premiums, and finally a certain amount of the profit has to be set aside to be used for future growth and infrastructure investment. Additionally with vehicles, there is stamp duties, registration fees and mechanical servicing that is factored in as well. So this means that the car you are buying is not actually worth the $30,000 sticker price, because that price has all those elements factored into it. The immediate depreciation your vehicle experiences as soon as it leaves the yard, is primarily due to that, and hence that is why you can't bring the car back the next day and ask to sell it back for $30,000.

Now if you want to sell a vehicle to a caryard, you face getting significantly less than what the market appears to be paying for you car. People always struggle with this. "This same car is going for $15,000 in your yard. Why won't you give me $15,000 to buy mine?"

Well the reasons are, as with any product, the business valuing your car is also allowing for all the costs and overheads mentioned above. They are also factoring other elements as well, such as the possibility that the car might sit there for 6 months and it'll be depreciating the entire time. Also when a person walks into a used car lot, they rarely will pay the sticker price on the car, they will always seek to haggle. And that is factored into the price as well.

Now you'll always get more if you sell your vehicle direct to consumers, as you then remove alot of the costs that are eating into the price you can get. Selling it direct means that there is no middle man profit, no other overheads that a person has to allow for, but it is a hassle as it now means that YOU have to find and deal with customers, and that can be a real pain.

So people still take their cars to the yard, because they know that if they agree on price, the sale will be done right then and there, without an advert dragging on for weeks or months without a buyer.

I want to know if there is a more concise way to teach people how basic commercial transactions work, so that they can be prepared and not be offended when it comes to buying or selling a vehicle from a dealership. Once they understand it, then it becomes simple. It is just business.