What Is the Average Markup on a Used Car?

It’s no secret that car dealers – and, in fact, any retailer – builds in a markup when pricing their products. They need to make a profit. When you’re shopping for a vehicle, it is important to know as much as you can about used car prices and how dealerships arrive at them. This will help you determine if you’re getting what you pay for, so to speak, and it will give you some idea of the “wiggle room” you have in terms of negotiating the price down.

The average markup on a new vehicle is between 2-5%. But what about the average markup on a used car? This is often more complex, and there are a variety of factors that can play a role. For example, it is difficult to know exactly what a dealer paid for a used vehicle, whether they acquired it from an owner, wholesaler, or auction. And they don’t really want to tell you!

Another issue is that used cars do not have invoices like new cars do. Each must be looked at and evaluated as an individual. You want to consider the type and condition of the car, the age, the mileage, fuel economy, extra features, etc.

The dealer typically uses these factors to determine a price, as well as looking at reconditioning costs and the overall used car market in their area.

So how do you know what good used car prices are – or if you’re paying too much? Do your research. Use online tools, like Kelly Blue Book, to get a sense of the fair market price. Take this information with you so you can go into a dealership with confidence. It is also beneficial to visit a reliable, honest auto dealer. Yes, they exist. Integrity is a priority to us at Palm Beach Auto Sales Outlet, as is providing you with the right car at the right price. Stop in and see us!