What is trade price? Trade vs retail price for used cars
What trade price means for a used car, how it differs from retail and wholesale price, and how big the gap must be for a dealer to make money.
· 7 min read
What is trade price? For a used car, the trade price is what one motor trader pays another (or pays at a trade auction) for the car as it stands, before preparation, warranty and profit. The retail price is what a private buyer pays a dealer for the same car, prepared and guaranteed. The gap has to cover VAT, preparation costs and the dealer's margin.
What is trade price? The meaning in the car trade
Trade price means the price at which a car changes hands between businesses in the motor trade. It is the price a dealer pays when buying a part exchange, a car at a dealer auction, or a batch of ex-fleet cars, and the price at which a dealer sells unwanted stock to another trader.
Different markets use different names for the same idea. In Germany, valuation guides talk about the dealer buying price (Händlereinkaufspreis) and the dealer selling price (Händlerverkaufspreis). In the Netherlands, dealers speak of the trade or purchase value (handelswaarde, inkoopwaarde). The logic is the same everywhere: the trade price is the retail price minus what the retailer needs to earn and spend.
Two things make a trade price different from a discount:
- It assumes no warranty and no preparation. The car is bought as seen, often with known faults.
- It is a business-to-business price. VAT treatment depends on the scheme the car is sold under, and trade buyers are expected to know what they are buying.
Trade, wholesale and retail price compared
The three prices describe the same car at different points in the chain.
| Price | Who pays it | Condition of the car | Typical context |
|---|---|---|---|
| Trade price | A dealer buying from another trader, an auction or a fleet | As seen, unprepared, no warranty | Part exchange, auctions, trade sales |
| Wholesale price | A dealer buying in bulk or from a wholesaler | As seen, often in batches | Fleet de-fleets, remarketing, wholesaler stock |
| Retail price | A private buyer at a dealership | Prepared, serviced, with legal guarantee | Forecourt and online listings |
In everyday use, trade and wholesale price are often used interchangeably. Strictly, wholesale refers to volume deals and the wholesaler's own selling price, which already includes the wholesaler's margin. A car bought from a wholesaler has passed through one more pair of hands than a car bought directly from a fleet or a private seller.
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MyCarDealer compares any car from an auction or listing with the market in your country and shows the net margin after VAT, transport and costs – and the maximum bid.
Request accessHow large is the gap between trade and retail price?
There is no fixed percentage. The gap between trade and retail price depends on the price of the car, its age and condition, the VAT scheme and how quickly it sells. Cheaper cars need a larger percentage gap, because preparation and warranty costs do not fall in line with the price of the car.
To see the gap on a real car, take a 2019–2020 Audi A4 TDI. According to listings tracked by MyCarDealer in Germany in October 2026, diesel A4s from those model years had a median asking price of €18,950, with the middle half of listings between €16,999 and €22,000 and a median of 130,000 km. Suppose a dealer expects to sell a typical example for €18,500 after negotiation. The trade price the dealer can afford follows from the costs below.
What costs the dealer has to cover from the gap
Everything between trade and retail price is either a cost or profit. A realistic list:
- VAT – on the margin only (margin scheme) or on the full selling price (normal VAT).
- Transport from the seller or auction.
- Auction or buyer's fees if bought at auction.
- Preparation – service, tyres, brakes, smart repair, valeting.
- Inspection and registration, especially for imported cars.
- Warranty reserve for claims under the legal guarantee.
- Advertising on listing portals and your own website.
- Financing and stock days – capital tied up, insurance, space on the forecourt.
- Negotiation discount – the difference between asking and selling price.
- Net profit – what is left for the business.
If any of these is forgotten, the trade price paid is too high and the "profit" disappears in preparation.
How trade price is calculated
Trade price is calculated backwards from the retail price:
Trade price = expected selling price − VAT − costs − target profit
For the Audi A4 example, assume the car is bought from a private seller, so the dealer can sell it under the VAT margin scheme in Germany at 19%:
- Expected selling price: €18,500.
- Costs: preparation €700, transport €200, warranty reserve €300, advertising and stock days €300 – total €1,500.
- Target net profit: €1,200.
Under the margin scheme, VAT is 19/119 of the margin. The dealer needs €2,700 left after VAT (€1,500 costs + €1,200 profit), so the gross margin must be €2,700 ÷ (100/119) = €3,213. The trade price is €18,500 − €3,213 = €15,287, about 17% below the expected retail price.
If the same car is bought from a VAT-registered company with a VAT invoice, the dealer has to charge 19% VAT on the full selling price. The net selling price is €18,500 ÷ 1.19 = €15,546. After €2,700 of costs and profit, the trade price falls to €12,846 net (plus VAT, which the dealer reclaims). Same car, same retail price, but the affordable trade price is more than €2,400 lower. The full rules are in our guide to the VAT margin scheme for used cars.
How much discount is trade price?
Trade price is not a fixed discount off retail. It is whatever is left after VAT, costs and profit, so the percentage changes with the VAT scheme, the cost of preparation and the dealer's target profit. The Audi example landed at about 17% under the margin scheme and about 31% below the gross retail price under normal VAT (when you compare the net trade price with the gross retail price).
Treat any rule of thumb with caution. A €4,000 car with €800 of preparation needs a much larger percentage gap than a €40,000 car that only needs a valet. Calculate it per car.
Retail, trade or pass: using the gap to decide
Once you know the gap, the decision is simple:
- Gap covers costs and target profit – buy and retail the car.
- Gap covers costs but not profit – buy only if the car fills a gap in your stock or sells fast; otherwise pass.
- Gap does not cover costs – pass, or buy only to sell on to the trade at a known price.
MyCarDealer shows this gap as a net margin for each car: it takes the market price in your country, deducts VAT at your national rate and your costs, and returns the maximum purchase price. That is your personal trade price for that car. You can check one car with the free valuation, and our article where do car dealers buy cars lists the trade sources across Europe.
Frequently asked questions
What is the trade price of a used car?
It is the price at which the car is sold between motor traders, as seen and without preparation or warranty. It is lower than the retail price because the buying dealer still has to pay VAT, preparation, warranty and selling costs, and make a profit.
How is trade price calculated?
Start from the realistic retail selling price, deduct VAT according to the scheme the car will be sold under, deduct all costs such as transport, preparation and warranty, and deduct your target profit. The result is the highest trade price you can pay.
What is the difference between trade price and retail price?
Retail price is what a private buyer pays a dealer for a prepared car with a legal guarantee. Trade price is what a dealer pays for the car before any of that work. The difference covers VAT, costs and the dealer's margin.
How much discount is trade price?
There is no fixed discount. In our Audi A4 example it was about 17% below the realistic retail price under the margin scheme, but cheap cars needing work can require a much larger gap. Calculate it for each car from the actual costs.
What does wholesale price mean for cars?
Wholesale price is the price at which cars are sold in volume between businesses, for example a fleet selling a batch of cars or a wholesaler selling to dealers. It is close to trade price, but a wholesaler's selling price already includes the wholesaler's own margin.