A typical buyback deal is a six- to 12-month agreement where dealers sell cars to leasing or rental companies and agree to buy the vehicles back at a pre-fixed price.This allows retailers to hit sales targets and unlock much-needed cash. Some ailing dealers use them as a short-term fix to offset wider cash problems.
But critics warn that buybacks have dire long-term consequences as dealers fail to offset back-end losses with up-front profits. Wrongly valuing a car by £500 could result in losses of more than £200,000 on a 400-vehicle buyback deal.
Camden's Jeff Peyton-Bruhl says: “We do not want to expose ourselves to unnecessary risks. If a dealer is expected to underwrite the risk, they need to set it against potential rewards.”