AM Online

Rigid de-stocking policies key to survival

The upturn in trade and retail activity has turned out to be a blip, rather than the start of a significant recovery and one of the factors causing this is the continuing realignment of new prices by manufacturers.

The trade is increasingly wary of price cuts, such as the recent slashing of Citroen Saxo by up to £1,200. This is bound to impact on late-plate values and therefore 99Ss are the latest big worry.

There are many 98S models hitting the market and in previous years their equivalents would have been highly sought after. Not this year.

Worse yet, nobody seems to have any clue what to expect from the T-plate. In fact, few people believe that the twin-plate system is a good idea.

All dealers can think of is that, historically, January, February and March were good new and used car months and this unwelcome development has killed that. As retail punters play the T-plate waiting game, the first quarter has turned into a vacuum.

Take a look around the auctions and you return to the later part of 1998. Everywhere is awash with average and below-average cars going in and out of the sales with no significant bidding.

As a result of the last 12 months' poor conditions, there are a lot of people with over age stock that they are reluctant to blow out. One small dealer has had an XR4i for so long that when he moved pitches the car had to be winched up to unseize the wheels.

Many main dealers are struggling because in the race for new car sales last year, a lot of stock was brought in far too strong. To add misery the books have been dropping more than ever.

While three years ago you could relatively easily retail your way out of a car after six months, it's no longer possible in most cases.

The sensible traders are those who operate de-stocking policies - and stick to them. The penalty for not doing so is being paid every day across the country. I know half a dozen small to middling independent traders who have fallen by the wayside in the past few months - some of whom had been in business since I was in short trousers.

Anyone who can stick out the next few months does stand to gain from the reduction in competition.

However, this won't help car values because there are fewer people around to bid. The important message must be that when a car looks like standing, take the smaller hit now rather than hang on.

The easiest thing in the world at the moment is to get £2,000 out of bed on a single car in a very short time. In other words - contrary to usual wisdom - my advice is to take a short term view of the market until further notice.

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