“Challenging market conditions in 2012” doesn’t really begin to cover it

Car Dealers competing for less business is the likely outcome for 2012 as the downturn looks to have set in for a while yet. Maximising every enquiry will be a vital factor in the success of the business as a result.

According to many in the industry car makers are likely to push for registrations putting a lot of pressure on the late plate section of the market and bringing about a reduction in prices for newer examples as a result.

This of course will benefit some customers but the knock on will be damaging to residuals and that is likely to push up monthly payments on PCP deals. There has been a sharp rise in customers funding their vehicles with PCP’s. They’re good for dealer’s profitability and are more likely to tie buyers into a particular brand. Bad residual values do not really benefit the majority in the long run.

The possibility of many more consumers either sticking with their existing car or downgrading to a cheaper, and perhaps older car, is likely to see the trend of rising prices for small economical cars of 5 years and older continue in the short term.

It’s quite a heady mix; a shrinking car parc (for example in 2007 there were 2,404,707 new cars registered but by 2009 that had shrunk to 1,994,999 – that’s over 400,000 fewer 3 year old cars for everyone to buy and sell). People are keeping their old cars longer and the ones that do want to change all want the same thing i.e. small and economical. “Challenging” doesn’t really begin to cover the market conditions in 2012. (New car registrations 1980 – 2009)

So the big problem, which the trade is already experiencing just a few days into the New Year, is sourcing good quality examples of 3 year old, low mileage cars which are traditionally good sellers.

If it’s a problem now then it is likely to be a problem for the rest of the year.

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