By Rupert Pontin
Until October, the new car market had grown steadily for 43 months. In the face of such sustained growth, it is all too easy to ignore the fact that the used car market in the UK has been a growth area too.
Until recently, the used car market was a competitive place, due to the reduced number of cars coming from the trade and wholesale market off the back of low new car registrations following the 2008 market collapse.
As well as lower volume, the type of product coming to the market was rather bland and boring, a reflection of the fact that companies were changing business cars used by engineers, sales teams and other high mileage drivers rather than the often more interesting user-chooser profile of stock that had been readily in evidence until early 2009.
There are now higher numbers of new cars going to both the fleet market and the private user and the used market is beginning to see an increase in the choice of vehicles as well as a change in their profile.
With the advent of the PCP and its effect on the change cycle of private cars, the market is enjoying a far greater supply of younger, lower-mileage vehicles.
The chart, above, shows the increase in volume of used cars sold in auction so far in 2015 and extrapolates to the end of the year. Glass’s estimates the full-year uplift will be almost 7%.
It does not account for the number of cars being sold direct to the trade via alternative remarketing platforms owned by the contract hire and leasing companies. Unsurprisingly, it is very difficult to understand the scale of increase in these volumes, but it is clear that over the past few months the market has shifted in favour of the buyer as a direct result of the greater choice.
With enhanced choice for the trade buyer, the retail consumer is beginning to reap the benefits of a wider choice of models. It is fair to say that this change in market position has come at a poor time as consumer confidence has taken a bit of a hit in recent weeks. As such, it really is time for the dealers to look very closely at not only what they are buying but more importantly how they are presenting and pricing their used car stock. The only way to achieve this in today’s market is to use as much market intelligence and business information as possible.
In the past 12 months, Glass’s has experienced a marked increase in the number of requests for different styles of business intelligence. For most dealer groups it is retail asking price competition that has been of key importance as they jostle to understand how best to put their cars in front of the customer.
Go one stage further and overlay days to sale, profit on the metal and profit from F&I and a business can begin to make some well informed decisions on how they want to move their business forward and deal with local and national competition.
Understanding the pricing pressures and where they stand in the market gives the opportunity to understand what will drive customers to any individual business.
In today’s consumer-driven market, data really does give the transparency required to make the best of the opportunities available.