The markup on used cars refers to the difference between the price a dealer pays for a used vehicle and the price they sell it for. Dealerships acquire used cars through trade-ins, auctions, or buying directly from individual sellers. They then set a price for the vehicle, including the cost of refurbishments or repairs and a profit margin. The markup percentage is the amount added to the wholesale cost of the car to determine the retail selling price.
Dealership Profitability
The markup on a used car is typically the difference between what the dealer paid for it and the price at which they sell it, with an average range of 10% to 35%.
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How to Calculate Markup on Used Cars?
The wholesale cost is the price the dealer paid to acquire the car. The selling price is the price the dealer charges the customer.
-To calculate the markup percentage, subtract the wholesale cost from the selling price,
-then divide the result by the wholesale cost.
-Multiply the quotient by 100 to convert it into a percentage.
-For example, if a dealer purchased a used car for $10,000 and sold it for $12,000, the markup percentage would be (12,000 – 10,000) / 10,000 x 100 = 20%. This means the dealer added a markup of 20% to the wholesale cost to determine the selling price.
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