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AM Used Car Conference: Dealers need pro-active approach as market levels

The pre-owned car market has been a major source of business for dealers in 2009 and brought hundreds to the AM Used Car Conference last week, keen to hear views on what the future holds.

In this first excerpt from the conference, delegates were alerted to possible trends in the 2010 used car market in terms of stocking, sales and customer expectations.

Margins stay under pressure as used car market stabilises - Adrian Rushmore, Glass's Guide

Used car stock levels are finally reaching an optimum level after a disorderly market in the past year.

Part-exchanges from September registrations, dealers turning over their demos and rental cars being defleeted means dealers have less urgency to acquire new stock, said Glass’s Guide managing editor Adrian Rushmore.

But margins are under pressure as the gap between the wholesale cost of cars and the price on the
forecourt decreases.

Only £1,200 stands between auction and retail prices currently, said Rushmore. “The tables are beginning to turn towards a buyers’ market,” he said.

Through October and November, Glass’s predicted a “gentle price erosion” on used cars, between 2-4% of prices, but this will even out in December.

“Dealers will buy stock where they can rather than be short of stock in January like last year,” said Rushmore.

“This will stabilise in December where we would ordinarily see prices fall.”

Next year, new car prices will continue to rise because of sterling exchange rates, a return to 17.5% VAT, possible additional VAT increases post-election and a showroom tax from April 1.

By the end of quarter one, new car prices could be 6-7% higher than today, said Rushmore.

This means there will be less part-exchanges and, along with “high unemployment, an indebted country and limited consumer confidence”, used car business is unlikely to be higher than 2009.

Rushmore said seasonal adjustments will come back into prominence following the turbulent market of the past 18 months.

Used car dealers will need to be pro-active in searching for vehicles to make a return.

He added: “Profitability is very possible, but it does mean a dealer has to find the stock first.”

 

Running costs overtake status in buyers' used car wishlists – Kieren Puffett, Parker's


Value for money is the top priority for used car buyers, according to Parker’s editor Kieren Puffett.

A survey by the car website of its users also showed fuel efficiency was more important to potential customers than car brand.

While emissions and environment are of interest, the cost of motoring is key to a buyer’s decisions.

Puffett said people are increasingly brand promiscuous, but are more interested in looking at a specific model of an alternative manufacturer rather than a brand’s entire range.

Buyers are no longer concerned about status when buying a car: they are bargain-hunters who want to make a savvy purchase.

Many are waiting for prices to fall further, but still feel it has never been a better time to buy a car.

Scrappage held little weight with the 1,155 people surveyed. Only 12% said they would take part in the scheme.
Users’ perception of dealers varied by type.

Franchised dealers ranked highly for financial availability and choice, but poorly for finance value and general value of cars.

Independent dealers offer good service and value, but lack choice and finance value.

Car supermarkets have strong choice and value, but rate badly for aftersales service and staff knowledge.

Hatchbacks are the most popular cars with 36% of internet searches, while 50% of Parker’s users are looking to buy a car less than three years old.

The national average budget for car buyers is £9,382.14 the survey suggested. But demand for new and used cars overlaps at a price point between £7,000 and £9,999.

Users search on distance and lowest price primarily.

While people search for cars within 100 miles of their postcode, they then refine this to look at models within 30 miles.

  • For further news from the AM Used Car Conference, including video interviews with the speakers, view the AMe electronic magazine on Friday, November 6, at www.am-online.com/ame

 

 

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