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2012: A challenging time for dealers

By Chris Crow, chief editor, CAP

There was an almost universal view as January wore on that the New Year upturn was very short-lived.

This suggests that after a relatively positive final quarter of 2011 the trade was sufficiently well stocked not to need a major spurt of purchase activity at the start of 2012 and that caution is now the order.

At the time of writing, those who were hoping for a significant rise in the values published in Black Book looked likely to be disappointed. But what does the rest of this year hold?

In CAP’s view there will be some challenges and developments which, while not necessarily new, will be more intense. Some of these will be welcome while others will make for tougher conditions.

For example, auction companies will seek to attract wider audiences and engage directly with traders and the public through more user-friendly websites with enhanced imagery and vehicle inspection reporting.

This will increase buyer confidence and so introduce greater efficiencies in terms of transportation and travel time and costs.

For the auctions the reduction in supply of three/four year old vehicles will create special problems. We have already seen one auction business close a site.

And if they do choose to engage more with the public then this will introduce more buying competition for dealers looking to find already scarce stock.

CAP estimates that there will be a reduction of 337,000 units on the 2011 low point – more than 600,000 units fewer than 2007.

From a retail perspective, conditions will be similar to 2011.

The popularity of small frugal cars will continue and this will be reflected in relatively strong used values

This will be helped further as the new ultra efficient petrol-engined models filter through.

Of course, strong values are a double-edged sword for the dealer – on one hand reducing their exposure to forecourt depreciation, but also eating into margins while the retail customer remains afraid of big financial commitments.
 

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Comments

  • gjwhite - 15/02/2012 11:07

    Speaking from experience BCA Auctions have a long way to go with regards to the quality of thier appraisals before you can buy on-line with complete confidence.