For a professional buyer in the motor trade the last year has been challenging to say the least. Once the feelings of wanting to kick ourselves for not being bolder or more forceful when the ‘job’ was on its knees at the end of 2008 had subsided, we have watched the used car market bounce back like Take That. We take comfort from the fact that no one predicted the pace and sustained momentum with which used cars have risen in price this year. But as we have waited patiently for prices to level and things to go back to normal only the bold and the brave are still marching on.
It was easy earlier in the year when vendors were looking to liquidate stock at massively reduced prices and seasonal demand enabled buyers to take advantage of the major bargains on offer due to the collapse of the new car market.
Profits soared as demand grew, realism returned and prices came back to what cars were really worth. Unfortunately for many dealers, as wholesale used car prices continued their upward surge and the introduction of the scrappage scheme, they could not manage the change in buying trends and the challenge that the lack of stock presented.
For those with the experience and expertise the current situation, although tough, is manageable and with the correct processes, mix of stock and realistic price point, they continue to turn stock for a profit, whilst the rest flounder and dither because they do not have the capability or stomach to continue selling large volumes of cars when the prices are so much higher.
The really challenging factors remain at the coalface with professional buyers looking to stock forecourt displays going to auction or trying to negotiate with rental companies when opinions on values vary not just between the trade guides, Glasses and Cap, but also between regions and even different dealers within those regions. You will often see some buyers shaking their heads in disbelief while watching a competitor bid sometimes £000s more than they themselves would bid only to to do the self same thing on a different model at the other end of the scale.
As one buyer said to me recently, when I exclaimed disbelief at the price the hammer went down on a car at, ’ this is the market, and the car must be worth that because somebody has paid it and will continue to do so’.
Although I can see what he was saying I myself put it down to one man’s meat is another man’s poison, and if a retail buyer has the confidence to pay these inflated prices, the associated fees and delivery, not to mention any other remedial work required, and are still able to inspire a dealer to envision a profit in the car, then surely that is the true value of the car? Or is it?
Watch this space.
Subscribe to Motor Trade Insider by Email