A dealer buying a car for USD 18,000 and selling it for USD 22,000 has not necessarily earned USD 4,000 of profit. That difference may be the starting gross margin, before selling expenses, inventory costs and support obligations.
An import business needs a model that separates the vehicle’s landed cost, the cost of selling it and the cost of supporting the customer. It should also distinguish cash paid at import from expenses recognised in the margin calculation. Taxes that are legally recoverable require different treatment from taxes that are a permanent cost.
Define the vehicle cost and sales revenue consistently
Start with the exact configuration and a delivered-cost scope. Include acquisition, export preparation, inland transport, freight, insurance, destination charges, applicable non-recoverable taxes, approved preparation and local delivery where these are the dealer’s costs.
Use sales revenue net of any output tax that is not the dealer’s revenue, where the applicable rules require that treatment. A local accountant should establish recoverability and reporting for the jurisdiction and buyer status; this article does not assume VAT is recoverable everywhere.
If the landed-cost quotation already includes a service, avoid adding it again. Document allocation methods for shared freight and port charges. Vehicle price, size or equal-per-unit allocation can produce different results across a mixed shipment; choose and record the method appropriate to the expense.
A worked dealer margin example
The following USD figures are hypothetical and are not prices, industry averages or tax advice. Assume all amounts are on a consistent tax basis.
| Item per car | Illustrative amount |
|---|---|
| Sales revenue | 22,000 |
| Landed and prepared vehicle cost | 18,000 |
| Starting gross margin | 4,000 |
| Allocated selling expense | 500 |
| Allocated inventory finance and operating expense | 1,000 |
| Expected after-sales allowance for the model | 800 |
| Planning contribution after these items | 1,700 |
Gross margin is USD 4,000 divided by USD 22,000, or approximately 18.2%. The USD 1,700 planning contribution is approximately 7.7% of sales revenue. It is not final accounting net profit unless all relevant business costs and adjustments have been included.
For ten identical sales under the same assumptions, that contribution totals USD 17,000. One expensive repair, an extended storage period or a price reduction can materially change it. Record such changes per VIN instead of hiding them in the next shipment’s average.
Test price and holding-time changes before ordering
If the example sales price falls by USD 1,000 while the listed costs remain unchanged, the contribution falls from USD 1,700 to USD 700. A discount that looks small relative to the car price can consume a large share of the dealer’s expected result.
Holding time also matters. Use the actual finance terms and outstanding amount to estimate the cost of additional days. Include storage, insurance, advertising and stock-maintenance costs where applicable. A quoted interest rate should be a documented financing input, not an invented market assumption.
Make three scenarios: planned sale, slower sale with a price reduction, and an after-sales event. The purpose is to establish the capital and margin needed to withstand realistic changes, rather than manufacture a promised return.
Keep the support allowance tied to the obligation
Identify what the dealer actually promises: parts only, parts and labour, vehicle recovery, substitute transport, diagnostics or a separately supplied warranty product. Budget against that promise and the availability of local support.
An allowance based on one assumed battery failure rate is not reliable without relevant evidence. Start with documented provider terms, supplier quotes and a record of actual claims as the business develops. Insurance or third-party warranty coverage should be checked for exclusions, limits and who receives payment.
Use the model to choose stock
A model with a higher gross margin can still require more capital, longer selling time or a more expensive support network. Compare margin with stock turnover, expected downtime and parts availability. A broad brand portfolio can increase training and inventory requirements even when unit purchase prices are attractive.
Maintain a per-VIN profitability record linking the purchase, shared-cost allocation, selling price and subsequent support expenses. That is the evidence that improves the next order. China’s export-support notices reinforce the importance of an identified service arrangement, but do not establish a dealer’s profitable operating model. See the relevant MOFCOM notice.
Request a quotation that fits your margin model
Send your destination, intended customer segment, model shortlist and batch quantity through our dealer sourcing enquiry. Request a clearly bounded supply and logistics scope, so acquisition costs can be inserted into your own tax, sales and support model.
Prepared on 9 October 2026. The worked example is original scenario analysis; it is not a forecast, a profit guarantee or an accounting policy.