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CAP Trade Watch: Dealers are now working smarter

The anecdotal side of our market research – word of mouth from those at the coalface – inevitably poses the challenge of accounting for the occasional mis-match between the sentiment of those interviewed and the hard data available.

For example, take the near-universal despondency among franchise dealers in relation to new car sales and September targets. The hard data from the SMMT reveals that registrations in the first week of the month were slightly up on the same period last year and that the year-to-date figures are 1% ahead too.

Yet dealers are wringing their hands about the difficulty in selling new cars. That is one space that remains to be watched before jumping to conclusions.

Meanwhile, what can be verified is the increased focus on used car business among many in the franchise sector. Prompted by the greater profit opportunities on used cars, one thing can be said to have characterised this year’s used retail market; dealers are working smarter.

This has emerged over the course of the year from our research into the activities of the group buyers. Stocking levels have been gradually reduced – sometimes in defiance of wishes at director level – in order to work leaner and make the most of the opportunities to sell cars quickly.

During my research I discussed this with one experienced franchise dealer who reported he was coming under strong pressure from his masters to increase stockholding in the hope this would stimulate more interest from retail customers. He remains determined not to for the sake of his business’s health. He is therefore operating with 900 cars in stock, compared with a stockholding at the start of the year of 1,500.

Key to this is achieving a comfortable balance of supply and demand. The recurring themes around the retail trade include quality over quantity and no room for sentimentality. If cars are failing to sell within the normal stockturn period, regardless of the reason, they are moved back into the trade even if it means taking a loss on what looked like a certainty.

Working smarter not only means paying close attention to issues like stocking policies and stockturn.

A privately-owned 30-plus multi-franchise operation in the South is now avoiding late plate cars, having learned they can make their best profits by immaculately preparing two-year-old cars.

All this suggests that the industry is well able to change with the times – and smart working can bring success.

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