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Extended lead times are adding to dealers’ frustration

More and more dealers are becoming increasingly frustrated with the lead times on an ever-growing list of new vehicles.

At the time of writing (September 2) some dealers’ order banks are nowhere near large enough for September at this stage.

Panic is perhaps starting to set in as sales managers up and down the country wonder where new vehicle stocks will come from in time for this month.

When some manufacturers were scheduling factory build for the UK in the second half of the year they were either expecting a slowdown in demand or particularly unfavourable exchange rates to threaten new car margins.

Now it looks like some manufacturers could have actually supplied and sold more cars than they have been able to provide for this September.

All is not lost for some manufacturers because they may have spotted the shortfall some time ago and, as long as their factories are not closed for holidays, they will be able to respond with additional units.

Not in terms of the supply of vehicles from the sold order bank, but the supply of core models which the dealers can sell quickly or that lend themselves to short cycle business.

Overall September figures may end up being respectable as the fight for market share continues, but how late in the month will it be before some bulk registrations are made as dealers register cars which they might not see for a week or two.

We all know that manufacturers have focused heavily on emerging markets and you wouldn’t blame them for that, but the danger is that during the months of October and November we may see far too many used cars entering the market for the market to handle.

As soon as late plate cars re-entered the market in bulk earlier this year we all witnessed the sudden dip in used car values.

Once September has passed we would expect values to move back in-line with the usual seasonal patterns.

But add to that the chance of some very late registrations over the last few days of September, along with sold order vehicles which would normally have been with the dealer in the first week or two of the month also turning up towards the last day of the month, then we might just see some real further downward pressure on values.

Dealers who have been following things very closely have already set out their stall.

During the later part of July and August these seasoned professionals have been stocking up with used cars ready for an initial shortfall over the first two weeks of trading in September.

They too expect the glut to come in the last week of the month and into October and they have bought enough stock to take them to that point.

Leasing companies who have always sold return vehicles through their desk sales programmes have been taking orders throughout August for early returns of the 57 plate stock, in anticipation of a shortage of used vehicles in the first two weeks of the month.

Dealers have been keen to order these first arrivals to the market to help with their stock shortfall.

 

Fuel rises will keep diesel values on top

As we all brace ourselves for some large hikes in fuel costs over the next few weeks we expect to see diesel values holding up better than petrol.

there is a trend of petrol used car values being outperformed by diesel models.

We have recently seen new diesel vehicle sales outperform those of petrol and it is reasonable to anticipate this trend continuing as fuel prices keep on rising.

Furthermore you might think that larger petrol vehicles would be affected the most by this trend in values.

However, traditionally we have always had a larger differential in values from petrol to diesel on these type of vehicles and that relationship is unlikely to change very much.

In reality this widening trend is more likely to be exhibited by family-type cars because previously both fuel types were valued much closer together.

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