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Retail ready used car stock boost dealers’ race to COVID-19 recovery, says VRA

Sam Watkins, chair of the Vehicle Remarketing Association

Retail ready used car stock is in “high demand” among car retailers seeking ways to speed-up their business’ COVID-19 recovery by taking advantage of a post-lockdown surge in demand.

That is the trend seen by the Vehicle Remarketing Association (VRA), which conceded that logistical issues continue to cause a stocking bottleneck which can frustrate many dealers’ need for speed.

VRA chair Sam Watkins said that many dealers were trying to make the process of acquiring and retailing stock as straightforward as possible by acquiring retail ready vehicles at a time when the ongoing effects of the coronavirus crisis meant that key services such as transportation remained erratic.

“There is now a noticeably higher demand for retail-ready stock. It’s all about the fastest possible turnaround and the quickest return on capital,” she said.

Watkins added: “Thanks to the strong sales performance seen by used car retailers following the easing of lockdown, most are now entering back into a cycle of replenishing their stock and generally, nearly all of the important elements of the market are now working as normal.

“However, some difficult issues remain, especially around the movement of vehicles, which are not yet back to usual levels of efficiency. That is introducing sometimes quite lengthy delays into getting a vehicle to a dealer.

“What overall impact does this have? It means that the retailer has less time and a reduced inclination to prepare a car for sale themselves, because that creates further increased time-to-sale.”

Watkins suggested that the digitisation of vehicle retailing had served to provide additional transparency about a used car’s condition, building trust and confidence among car buyers.

She said that the trend towards dealers’ purchase of stock prepared to a high standard was leading leasing companies and dealers themselves to investigate using centralised resources to recondition and transport vehicles destined for remarketing channels.

“There is definitely more interest in this area and not just because of the coronavirus crisis,” she said.

“Increased complexity in vehicle technology, such as ADAS, is having an additional impact on dealer appetites to operate reconditioning services in-house.

 “It is possible that we are at starting to see a structural shift where an increasing number of dealers see themselves as no longer in the business of bringing vehicles up to a necessary market standard.

“Large-scale vendors of vehicles into the used market sector are realising that they will need to meet this changing need and so are increasingly looking to ensure that as much of their stock falls into the retail-ready category as possible.”

While remarketing providers including Aston Barclay have reported a rise in used car values during the post COVID-19 lockdown period, Cap HPI head of valuations, Derren Martin, warned that the current levels of high demand and buoyant pricing could be a short-term trend.

Speaking to AM last week, Martin said that values could be on course for a similar “market correction” to that seen in May last year as supplies increase and the end of the Government’s coronavirus job retention scheme (CJRS) impacts consumer confidence.

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