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CAP Trade Watch: Pessimism can be self-fulfilling

Tracking market trends at the moment is a case of measuring how difficult conditions are and seeing whether things are worsening dramatically or simply remaining on a gentle downward trajectory. 

Out in the retail used car market there is evidence that it is more a case of the doldrums than collapse.

In the latest survey of dealer performance, this is signified by the fact that only 18% reported considerably worse performance during July into August, while 33% described conditions as slightly worse and 34% reported little or no change. 

Proof that there are still sales to be made if precise customer needs can be met comes from the 12% who enjoyed slightly more sales.

Despite the fact that dealers are certainly feeling a lot of pain at the moment, only 27% believe the market this summer was considerably worse than that of 2007. 

A minority of 6% even say recent trading has been stronger than in the same period last year and 20% believe today’s market conditions are about the same as last year. 

Five per cent say the current business climate is ‘good’ and 32% believe it is ‘stable’. But the largest response was ‘poor’ (40% ), while 22% described it as ‘very poor’. 

What we can glean from these statistics is that dealers are considerably more realistic in their attitude than media headlines suggest.

It’s a difficult market but not disastrous. 

Deals are being made, albeit with a lot of hard work, and more evidence of a considered and realistic outlook among dealers comes from the measure of expectations for the coming months. 

Only 12% believe conditions will decline significantly while 33% suggest there will only be a slight worsening of the business climate.

The optimists who believe there is an improvement imminent may only represent 6%, but 47% believe things will remain much the same. 

This is important because sentiment can often be self-fulfilling and nobody will benefit from a pessimistic outlook.

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