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Franchises losing out to used car superstores

Automotive analyst MFBI claims dealers are losing vital market share to large used car outlets. Used car superstores accounted for seven per cent of all second hand vehicles sold last year while franchised dealers' share dipped to 25 per cent, according to its latest report.

The bigger sites sold 485,000 used units in 2001 giving an average sales volume of nearly 5400 cars per outlet, compared with around 290 sales a site for franchised dealers. Since MFBI's last report in 1999, the number of supersites has increased by 29 per cent with more than 90 outlets now trading in the UK while the number of franchised dealers has fallen by five per cent.

Dealer-operated superstores are approaching 30, but finance companies and car manufacturers are becoming more involved and the report says more will operate large used car sites in future.

“For finance companies the opportunity from owning a used car superstore is the increase in the penetration of finance on captive used car sales,” says the MFBI report. “For manufacturers, a rapid increase in new car registrations since 1999 means the number of cars being returned for re-marketing is growing.”

MFBI adds that with the number of dealers falling and their inability to sell used cars in large volumes without causing a corresponding collapse in residual values, car manufacturers will resort to opening super sites themselves or as a joint venture.

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