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Used car market analysis for October 2010

One issue to rear its head again this year was what constitutes a clean car. Although CAP Clean is an almost universally recognised benchmark, it is not entirely understood.

In short, CAP Clean can be summarised as ‘ready to retail’, aside from issues of
presentation such as valeting and polishing. Dealers have a real issue with many fleet vendors in relation to this because in practice few, if any, ex-fleet cars appear for the first time in the trade market in such condition. The more typical condition seen is somewhere between CAP Clean and Average, the latter being typically around £500 less for a standard volume vehicle such as the Ford Focus. This gap, of course, increases for more prestigious brands.

Front and rear bumpers are the most common impact areas, closely followed by stone chips to the front end of the car and alloy wheel damage. Whether to invest in rectifying such damage can only be taken on a case-by-case basis and will be heavily dependant on the market conditions.

One vehicle manufacturer recently conducted an exercise comparing sales of cars which had been reconditioned with those which had not. Predictably, the former easily out-performed damaged examples. This should surprise no one, given that many retailers are constrained by a 60-day stocking policy and would clearly not wish to have any of those days taken up with extensive reconditioning.

There are, of course, trade customers who specialise in less-than-pristine vehicles. These industry experts are the ones looking for the real bargains, but selling to them does come at a cost. Typically, they will take the view that if a car needs £500 pounds in reconditioning work, they will expect to buy at nearer to £1,000 behind book. This keeps them £500 in front of the opposition or provides a buffer for any unforeseen work.

Vendors will have their own arrangements for smart repair and refurbishment, which means there are no hard and fast rules around whether they should invest or not.

But when it comes to developing a ‘following’ among dealers it is no surprise that those disposers who do rectify damage are the ones who gain the repeat business and an advantage when the market dips.

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