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Used cars: Dealers feel the chill of winter

Looking at retail used car sales performance and dealer expectations for the immediate future it seems the market is in reasonable health.

Sales results for the full month of January would of course be expected to show improvement on December but in the event there were plenty of dealers for whom the harsh weather really put the brakes on deals.

This meant that almost 30% actually reported fewer sales than during December and a further 34% saw business remain static.

Of the remainder who did enjoy increases in used car sales only 3.4% described this as ‘considerable’.

It is also interesting to note that while dealers are typically describing their current fortunes in brighter terms than a year ago, it is hardly a quantum improvement.

Asked about business performance compared with the same month last year only 11% say it is considerably better while 12% say it is considerably worse.

For customer enquiries the picture is better and this supports the interpretation that weather conditions kept customers at home and researching their intended purchases on the web.

Certainly some switched on dealers did record increases in website traffic during the cold weeks and this appears to have translated into increased enquiries for almost 40% of those questioned.

While many dealers are clearly frustrated with the business climate at present their mood is lighter when it comes to forecasting the immediate future.

Asked how they anticipate the retail market changing in the coming months more than 55% expect to see improvement while nearly a quarter see little change.

But there is still a hard core of 12.8% who are forecasting some decline in retail sales.

After last year’s unprecedented clamour for stock, which saw just about anything that would move snapped up by dealers desperate for something to sell, CAP researchers are once again reporting that sub-standard vehicles are being passed over in the open market.

The frequent claim is that there are a lot of poor quality cars doing the rounds and no shortage of stock in general.

This disparity between what is available and what is wanted is revealed by CAP’s dealer research which reveals that nearly 48% of dealers who are currently buying stock are struggling to find the right cars.

This figure has grown by around 10% since before Christmas.

However, to put this problem into context, six months ago more than 82% of dealers were unable to source sufficient quality stock.

In terms of values the February edition of Black Book saw a slightly weaker performance compared with January than seen in the previous two years, with an average reduction across the book of one per cent.

But this does not signify any particular weakness because values are still more than 20% highter than those recorded in Black Book in February 2009.

Unsurprisingly only the 4x4 sector at 3yr60k increased going into February, with an average rise of 0.7%.

Typical of the ongoing fortunes for 4x4s was a Land Rover sale in January which saw 100% conversion at 113% of CAP.

Diesel remains stronger than petrol in general, achieving an average percentage of CAP during January of 97.5% compared to 95.3% for petrol.

This is a pattern that seems unlikely to change in a year in which practicality and economy will take precedent over other factors in used car choice for consumers.
 

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