I think car dealers the world over tend to think that thier 'buying public' are mugs
Not quite that way really, more like the other way around.
The second hand car market is based on more then one thing, say the dealer pays £2,000 for a car and marks it up for £2,995, not a bad profit...If it sold straight away with no hassle, but unfortunately thats not the case, never is.
VAT around £200, income TAX debatably but likely another £50 / 60, servicing about £60 / 70, with most cars the buyer wants the cam-belt / kit changed, £80 plus £40 to fit, valeting about £20, the dealer has to edge his bets with any warranty come backs, and this hasn't even taken into account one or two tyres, or MOT cost and "IF" repairs.
Now the buyer ask's the dealer to take his old car in part ex, never anything wrong with it, the short road test the dealer can only do no faults show up, go another mile and they start. The seller thinks the dealer is a mug because he off-loaded his pile of rubbish onto someone else.
So the p/x allowance is £400.
The dealer might have had the £2,995 car for 5 / 6 weeks, he laid out his own money to buy it, he stored it, he prepared it...etc etc.
The £1,000 profit is now somewhere in the region of £550, (not accounting for the £400 p/x) if the car don't come back under warranty repairs, the part ex might make him some profit, he might lose.
Haven't included any outgoing insurance cost's, rents, rates, advertising costs, and if he employs people, well thats another ball game altogether.