Random Q re: new vs used car sales
 

A friend's dad used to own a used car dealership in Vancouver more than 10 years ago, and he told us that the government earned more in taxes from the sales of new vehicles than the dealership did on profit. He also said that used car sales made more than new cars -- anyone here know if this is true/give any details?
Cheers!

Sounds about right. Used cars can have a huge markup.

Just think of how much 12% is on a $30000 car compared to how much tax would be on a $5000 car. Also the cheaper the new car the less room there is for mark up
Posted via RS Mobile

$30,000 car
dealer may make $2000-$2500
12% of $30,000 is $3600.

there you go.

Used cars are generally marked up about $2000-3000 I find if they are under $25k, once you get higher like 30-40-50 you can be looking at 3-4-5-6K in mark up...

New cars can be similar for most expensive vehicles, but lower end ones liek base model hondas have about $1000 if that in them.

And yes, most of the new cars the government makes more in tax than dealer does profit.

that's because they are guaranteed to make 12% on the sale price, regardless of what it is. where as the dealership will have to adjust their profit margin to make the sale. so it will move around.

for example, the sticker price has 15% profit for the dealer, but they drop that to 10% to make the sale.

these numbers are just ones i pulled out of my ass to make a point, haha. but you get the jist of it i think.

Not to mention that the govt takes another 12 percent tax if the car is sold again.

So the govt makes astronomical amounts for every new car that leaves a dealers lot.