You got to remember, a dealer makes very little on a Motability sale, about £500.
Whilst it’s true that dealers only receive a fixed handling fee from Motability (around £350 from memory) plus another fixed fee for handling a returned vehicle, that’s not the whole picture. Motability orders count towards dealers volume targets in exactly the same way as private sales do. These volume targets determine the percentage discounts that they receive off ALL orders for the next period and it also generates bonuses for them. So, in total, most Motability cars will be worth several times the handling fee, and more in some cases. I’ve had almost £1,000 discount off AP and options in the past and the dealer still made a decent profit.
As for service levels, like others I find that it varies enormously. I’ve used 3 different VW dealerships. 2 were dire, 1 was average. Our local BMW dealership was superb as was our local Hyundai dealer. When we collected our Tucson PHEV recently the car had been fully charged, had a full tank of petrol and I’m sure had received a paintwork treatment, as the rain is just beading off it. In fairness, I have bought cars privately from both the BMW and Hyundai dealerships, but I’m fairly confident that all Motability customers are treated well at these dealerships.