Used car dealers are still under-pricing up to 60% of their forecourt stock, according to data published by Real Time Communications (RTC).
Despite 19th consecutive months of rising used car values being reported by Auto Trader to October, and the unavoidable trend of high consumer demand and limited vehicle supplies, retailers are still failing to price to the market, according to RTC.
And the digitalisation specialist said that the trend has resulted in retailers “leaving revenue on the table”.
Research conducted in collaboration with Auto Trader showed that the average retailer misprices approximately 60% of their vehicle stock, with vehicles under-priced by £300 to £350 on average.
The sum equates to £39,000 of lost revenue for a retailer with 120 under-priced vehicles.
RTC’s director of insights, John Law, said: “The proportion of mispriced vehicles initially seems very high, but what’s also true is that navigating real-time price changes is harder than ever.
“With well-documented new car supply issues driving huge demand for used vehicles, the market is fluctuating almost hour by hour, and conventional methods simply can’t keep up.
“These kinds of fluctuations should continue well into 2022 before new cars start to come back into the market at pre-pandemic levels. In this environment, retailers are looking for new ways to price their stock smartly and maximise their profit margins.
“We believe that the correct tools will be crucial to solving this issue. In particular, deploying the right digital solutions can enable a data-led and flexible approach to pricing, ensuring potential revenue isn’t missed.”
Appreciating used car values have made it vital for car retailers to sell at the right price.
Earlier this week AM highlighted that average used car values averaged £11,295 at BCA auctions last month – surpassing £11,000 for the second month running – as year-on-year values remained up £3,143 (or 38.6%) year-on-year.
As part of its research into the prices being advertised by car retailers, RTC’s insights team interviewed retailers on why stock pricing was so difficult to get right.
The main reason they cited was time pressure: with the speed at which the market changes, they found it impossible to check all their stock and make adjustments before the prices once again became out of date.
Law said that its REALinsights solution, and its integration into Auto Trader, as a solution.
“This means retailers can run a report that checks all of their vehicle stock against national price points, and our system will flag up the vehicles that need to be amended, suggesting the optimum price to sell them at.”