Dealers face a critical balancing act as they try to tackle used car stock shortages while avoiding paying over the odds for vehicles, industry experts will warn at the AM Used Car Conference next month.
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A number of factors have led to a dramatic reduction in the volume of used cars reaching the market, as fleet operators and private buyers wait for economic conditions to improve before changing their vehicles.
With demand outstripping supply, bidding wars are breaking out in the auction halls and forcing up prices to unprecedented levels.
As a result, buyers could be risking dealership profit margins in an attempt to fill empty spaces on the forecourt.
Mark Cowling, director, Motoring Economics discussed the reported shortage of stock in a recent interview.
Mark said; “There is a shortage of good quality stock – there always has been.”
“What we’ve found this year more than anything is that dealers and their buyers are looking very carefully at getting vehicles back on to their forecourt that can move quickly and swiftly.
“Quite often it’s a like-for-like replacement as to what’s just been sold – being very specific and that’s a good thing” he added.
Adrian Rushmore managing editor of Glass’s Guide, who is also speaking at the event, has commented that franchised car dealers and car supermarkets have been forced to source an older age profile of used cars.
At the conference he will explain to delegates there is little prospect of an improvement in supply – in fact, dealers will have to work harder to ensure that already-depleted stocks do not diminish further.
But he warned: “The growing concern for dealers is that consumers will not accept the transfer of these higher trade prices to retail asking prices. In order to maintain turnover, many dealers are now accepting slightly shorter margins to ensure ongoing business.
“The trend has been repeated in the market for older second-hand cars, where similarly limited supply has driven up prices. Dealers are turning to older vehicles as the only means of maintaining a suitable level of stock.
“The severe reduction in new car sales has generated fewer part-exchanges and many franchised dealers have expressed more of an interest in purchasing cars from general auction sales than at any time in the past.”
The AM Used Car Conference, chaired by broadcaster Quentin Willson, takes place on October 14 at the National Motorcycle Museum, Birmingham.
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Jeremy Bennett editor, AM
Mark Cowling director, Motoring Economics
Tony Gannon communications director, BCA
Steve Hood managing director, Ford Online
Ross Jackson, Fleet Operations
John Lewis chief executive, BVRLA
Mark Norman operational development manager, CAP
Kieren Puffett editor, Parker’s
Chris Roberts managing director, Thurlby Motors
Phil Robson director - fleet & used vehicle operations, Peugeot Motor Company
Adrian Rushmore managing editor, Glass’s Guide
John Simpson managing director, Manheim Retail Services
Clive Sutton chairman, Clive Sutton Premier Marques
Peter Turner chairman, Advantage Business Group
Quentin Willson broadcaster & motoring expert
09:30 Editor’s welcome Jeremy Bennett, editor, AM
09:35 Chairman’s welcome Quentin Willson, broadcaster & motoring expert
09:40 The future of the used car market – an overview, Adrian Rushmore, managing editor, Glass’s Guide
10:10 Stocking for profit – what do customers want? Kieren Puffett, editor, Parker’s
10:50 Blast of innovation, Quentin Willson
10:55 Break & exhibition
11:20 Manufacturer strategies in the used car market
Phil Robson, director – fleet & used vehicle operations, Peugeot Motor Company
11:45 Marketing & lead generation –
driving showroom footfall in the long-term, John Simpson, managing director, Manheim Retail Services
12:05 Maximising opportunities in niche markets case study, Clive Sutton, chairman, Clive Sutton Premier Marques
12:35 Staying ahead of the stocking curve – ideas to tackle the shortage (panel debate)
John Lewis, chief executive, British Vehicle Rental & Leasing Association, Mark Cowling, director, Motoring Economics, Ross Jackson, Fleet Operations
13:00 Lunch, exhibition & networking
14:00 Blast of innovation
14:10 Trends and changes in the used car market, Mark Norman, operational development manager, CAP
14:35 Optimising dealer stock – from part-exchange to stock locators Tony Gannon, communications director, BCA
15:10 Blast of innovation Quentin Willson
15:15 Break & exhibition
15:40 Customer retention, Peter Turner, chairman, Advantage Business Group
16:00 Maximising profit in a growing market – the used car retailers view Chris Roberts, managing director, Thurlby Motors
16:20 The future of online sales – targeting the web for profit, Steve Hood, managing director, Ford Online
16:50 Chairman’s closing remarks
Quentin Willson, broadcaster and motoring expert: “With the market becoming ever more challenging, this is a must-attend event for everyone involved in the used car industry.”
Mark Cowling, director, Motoring Economics: “Scrappage means new footfall for dealers. But ranking franchise desirability requires very different criteria in the current scrappage incentive world; compared to the rankings when scrappage is removed.”
Mark Norman, operational development manager, CAP: “Underlying last year’s downturn and this year’s rise in trade values are significant changes in the dynamics of the market.”
Clive Sutton, chairman, Clive Sutton Premier Marques: “We find that we need to place a client’s existing car with another client to enable a sale to occur. In other words, we sell two cars to make one profit.”
Phil Robson, director - fleet and used vehicle operations, Peugeot Motor Company: “The issue facing the used car market over the next three years will be one of supply.”
John Simpson, managing director, Manheim Retail Services: “The days of dealers simply relying on ads in the local paper to drive footfall are over. The consumer has moved on…and online!”
Adrian Rushmore, managing editor, Glass’s guide: “Shortages will be an enduring feature of the market in the coming years.”
Kieren Puffett, editor, Parker’s: “The used car market has been on a roller coaster ride over the past 12 months and it has never been more confusing for car buyers. Clear advice and help for consumers has never been more essential.”