Set a course for troubled waters

The used car trade is going through its seasonal transition at present. The optimism and cheer from the heady days of Q1 are starting to evaporate and many in the trade are really worried about declining showroom footfall.

There has been a 30% drop off in traffic across the board and as news of a double dip recession and the coalition showing no signs of changing course to try and stimulate the economy, there is a feeling that we are in for a very bumpy ride.

Of course those potential buyers with cash to buy a car or a flexible monthly payment will be in a great position to take advantage of some fantastic offers, ranging from free insurance, 0% APR, credit and deposit contributions not to mention large discounts off the cars themselves.

Trade buyers at auctions are telling us they have never seen so many cars on sale and the disposals manager for a giant leasing company has said that his conversions to sale are at an all-time low.

The good news however is that where dealers have the right processes in place and are pricing their cars realistically – but perhaps more importantly are ensuring that these messages are communicated effectively to their audience – are thriving.

The use of the internet ensures that, via platforms such as Twitter, Facebook and blogs, they have a very inexpensive method of telling lots of potential car buyers that what they are offering is worth considering and this along with strategic special events they can certainly expect to entice customers looking for a good deal.

Perhaps the most telling aspect for car dealers, when the market shifts down so dramatically, is to understand how to navigate away from trouble and to re-align their prices in line with the market. On some large premium 4wd product for example a car bought on the wholesale market 3 months ago could be worth a staggering £6,000 less in today’s market and in cases like that it is vital for dealers to be micro managing their stock in order that they remain competitive and avoid big losses. It is equally important for buyers, as a result of this confusion, to follow the market accordingly as retail prices for similar models during a downturn can vary by thousands.

As one sales manager often used to remark:
“you do the volume or the profit and when the market falls volume is the key because of the knock on effect it has on the rest of the business not to mention increased market share. By turning stock quickly it can be replaced by cars at today’s money which can hopefully turn a profit as the market settles down and demand increases.”

Wise words, let’s hope a few people look to heed them.

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One Response to Set a course for troubled waters

  1. matt murphy May 16, 2012 at 5:16 pm #

    Vendors and Auctions just love the on-line bidders. Keeping them afloat up to a point. Easy to Ring-up, and never know the difference. We know however the knock on effect that this has on prices. Ask the Auction buyers. It would seem that it is the future never the less, but what other effects it has remain to be seen. M

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