Trade Price
Trade price is the price a vehicle changes hands at between two dealers — significantly below retail, without VAT on the margin (when sold Margin Scheme) and without retail preparation or warranty built in.
Trade price reflects the stock-replacement cost for a dealer: what it costs to put an equivalent vehicle on the forecourt ready for retail. The gap between trade price and retail price funds reconditioning, marketing, warranty provision, and the dealer's margin. A typical retail margin of £1,500–£2,500 on a £10,000 car implies a trade price around £7,500–£8,500 for that same vehicle.
Trade price benchmarks
- CAP Clean — top-band trade price; retail-ready condition.
- CAP Average — mid-band; typical PX / everyday trade stock.
- CAP Below — needs meaningful reconditioning to hit retail standard.
- Auction hammer — actual trade price realised in open bidding, net of fees.
Trade price vs retail price
Retail price is what a consumer pays on the forecourt, VAT-inclusive under the Margin Scheme. Trade price is what a dealer pays another dealer or an auction. The difference covers: reconditioning (£200–£1,500), warranty cost (£100–£400 per car reserve), marketing (£50–£150), forecourt holding cost (£3–£10/day), and dealer margin.
Related terms
CAP Clean
CAP Clean is the trade-valuation benchmark for a used vehicle in good, ready-to-retail condition — no paint issues, full service history, the right keys and documents, and mileage in line with the age.
CAP Average
CAP Average is the trade-valuation band for a used vehicle in honest, saleable condition with typical wear for its age — presentable enough to retail after light prep, but below the Clean benchmark.
Part-Exchange (PX)
A part-exchange is when a customer trades their existing vehicle in against the purchase of another, with the dealer giving an allowance for the PX that reduces the amount payable on the new car.
Margin Scheme (VAT)
The VAT Margin Scheme lets UK used-car dealers charge VAT only on the profit margin of a sale, not the full selling price — provided the vehicle was bought from someone not registered for VAT or a margin-scheme seller.
Put the terms to work
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