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Dealers must prospect and prepare for used car market changes

Dealers are being urged to get back in touch with their used car customers as well as prepare for an aging used car vehicle parc over the next couple of years in order to help them grow out of the recession.

The findings come from BCA’s latest Used Car Report 2010 which was revealed today.

Of 4,000 people surveyed by BMRB for the report, 44% said they had no contact from the dealer they bought their car from.

Professor Peter Cooke, KPMG professor of automotive management, University of Buckingham and writer of the report, said dealers couldn’t ignore the potential in the used car market.

He told AM: “Sales executives need to be prospecting on the phone to customers. Outsourcing to call centres is not the way to go. Many dealers would say call centres are more efficient, but you lose the personal rapport with customers.

“A call centre might ring 20 people and get one good lead. A sales executive would call three and make one good lead. What’s more efficient?”

Cooke said the BCA report confirmed the motor industry had began the long climb out of the recession last year, despite new and used car volumes reaching their lowest points this decade.

Although volumes fell in both the new and used markets last year, values held up well despite the many economic pressures.

However, Cooke said dealers had to prepare for a changing used car vehicle parc, which is likely to age “quite dramatically” over the next few years.

Cooke said: “Dealers selling older used cars will benefit from access to a greater number of older cars from the ageing car parc.

“On the other hand, franchised dealers, in particular, are likely to face a marked and lasting shortage of used car stock in their traditional ‘younger used car’ trading zone – cars up to five years old.”

There were 12.4 million 0-5 year-old cars on the roads at the end of 2005, falling to 10.8 million by the end of 2009 and to around just 9.9 million by 2012 – growing slowly, thereafter, as hoped-for, higher new car volumes eventually feed through to this age sector of the parc.

For used car retailers, who deal primarily in younger used cars (0-5 years old), there will be around 2.5 million fewer of these units ‘in stock’ by 2012 than the high point of 2005. This is around a million fewer than the figure at the end of 2009.

Dealers urged to review their range of used cars
Dealers need to take account of the changing shape and mix of the used car market.

The overall car parc growth has stalled for the time being and is ageing, particularly in the younger used car groups as new car sales have fallen badly and will take some considerable time to recover.

Cooke said: “The result will be that franchised dealers, in particular, need to review the range of used cars they sell, perhaps moving beyond their traditional strategy of selling younger used cars up to five years old.

“Equally, dealers may seek to review the total value-added opportunities they pursue
with both new and used car sales. The ageing car parc cannot be cured quickly, it is
therefore important to maximise revenue and profitability from existing opportunities."

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