A cautionary tale from the front line

I want to pass on to you some valuable insight from the motor trade front line.

I was at one of my branches on Friday and following is a flavour of what I came across as a direct result of the fuel situation and the government’s decision to crucify the already battered car driver still further with a more punitive system of road taxation. If you had an inclination that big engine petrol cars were nose-diving in value then let me tell you what is happening in the trenches

Firstly a 05/55 Land Rover Freelander 1.8 5 door, petrol with half leather, climate control, all the usual extras which had covered 16,000 miles and was immaculate. The normal book price for this model is £8,000 but the best bid we had was £6,000! It gets worse. A 03/03 Audi A8 4.2 Quattro Tiptronic, loaded with spec (TV etc) again immaculate and had covered 46,000 miles. Normal book price for this car would be £16,000 and our best bid? £9,500! I could go on, but the general gist is that people are like lemmings; they hear bad news and immediately want to bail out. My theory with these big engine high spec cars is that the people who can afford them want a new or nearly new one which can be £50,000 plus while the older ones, such as the A8, which are cheap to buy but expensive to run and maintain, are just not practical for the people who can afford to buy but would ultimately struggle with the running costs.

The auctions are full of these cars and customers and dealers alike are feeling real financial pain.

The challenge for the motor dealer who will still have their volume and profit targets to reach is this:

Mr Smith comes in with his Audi A4 2,4 SE 02/02 plate with 46,000 miles in dark blue metallic (terrible colour for that model) with no leather and manual transmission, this now looks a dated car but the plus points are;

• The car is really nice has a full service history no major dings or dents and has 1 owner.

• Mr Smith really wants to buy a new car and is prepared to commit today.

The sales manager has a decision to make. He may not have sold a car this week and his boss is breathing down his neck pressurising him to bring in results He is behind target for the month and his salesmen need to earn a living. The car he wishes to sell Mr Smith has been in stock a long time and needs to be sold to bring in fresh stock, but the sales manager knows that Mr. Smith’s Audi is not popular (especially in today’s climate) it is uneconomical and fairly boring and there are probably loads in the market place so what does he do?

Well what is happening regularly at present is this;

He looks at the book price, maybe makes some calls to local traders or his local auction to get a feel for the "real" value of this car. He then goes back to Mr. Smith and makes him an offer. Mr Smith says;

‘No way could I accept that price, its way too low, but if you give me another £1500 I will do the deal now’.

The sales manager will then think if he stands the car in at slightly more money and discounts his car he could do the deal, send Mr Smiths car to auction and hope it sells for the SIV (stand in value).

Unfortunately for the dealer the car goes to auction and because of everything I have mentioned the car doesn’t make the reserve so it either has to be sold at a loss meaning selling Mr Smith a car in the first place maybe wasn’t such a good idea or the sales manager takes the car back and tries to sell it himself to a local trader or another dealer that stocks these cars. Obviously the value of these cars does not increase it just devalues every month.

Of course in any market downturn there will be winners and losers but the moral of this story is that if you are a customer, make sure that you target a car that is going to be;

• Cheap to run and maintain, cheap to tax and has the best spec you can get for the money.

• Play dealers off against each other.

• Make sure that when you take your current car to be valued for part exchange that you take all the relevant paperwork and make it look as lovely as possible so that you give yourself every chance of driving a good deal.

Today, more than ever, saving money will be precious and as we say in the trade a nice car will always sell in any market and the rats will just sit and gather dust and bird droppings.

There is so much choice right now that people don’t want to put their money into old rust buckets!


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