Independent used car dealer sales soar
Performance is at a two-year high for independent used car dealers as motorist demand drives an increase in sales for the third month running, according to the latest research by CAP Automotive, the used car information experts.
Independent used car specialists – who are the true ‘barometer’ of the second-hand market – have been enjoying their best summer for several years, thanks to factors ranging from PPI cash refund windfalls to focus by franchise dealers on new car sales.
Each month CAP questions a 'Dealer Insight Panel' of around 100 independent used car dealers. It is part of the research process for Black Book Live, CAP Automotive’s unique award-winning real time used car trade values trending tool.
In the latest survey of 98 dealers, 77% reported an increase in sales over the previous month and most of the remainder said they had maintained ‘around the same’ numbers of retail sales. Only 4 of the dealers in the latest CAP survey suffered a decline in performance.
Independent dealer business is also considerably improved on the same period last year, with almost identical proportions reporting more sales in recent months than during the summer of 2012.
One of the most interesting aspects of the changing market this year is the easing of supply problems which saw independents constantly frustrated by a lack of stock during the first 6 months of 2013. This was the main cause of low confidence in the independent dealer sector a few months ago, when around 70% of the panel were consistently reporting their own forecourts as ‘under-stocked’. Nearly half of those questioned were also reporting difficulty in finding the right kind of cars for their customers.
This has now begun to change, with only 18% now saying it is difficult to source good stock, and the proportion describing their stock levels as ‘too low’ easing to 63%.
Mike Hind, of CAP Automotive, said: “The majority of good independent dealers are enjoying their best summer for several years and there are several reasons for their strong performance.
“Although there has been no analysis to prove the overall impact of PPI refunds on the car market, commentators all over the industry are consistently citing the windfall of several thousands of pounds in numerous households as a big factor in many new and used car purchases. It’s a theory that has the ring of truth, especially when so many dealers are anecdotally reporting that their customers are preferring to spend their PPI refunds on a fresh car, rather than earn pitifully low interest on a savings account.
“The other factor playing into the hands of good independents is the stellar performance of the new car market. This has led to franchise dealers putting all their energies into new car sales, which means they are not having to compete as hard in the trade market for good quality stock.
“When everybody is clamouring for limited stock, neither dealers nor motorists win because prices are forced up. Dealers then suffer reduced margins and motorists are forced to pay more too. Instead, at the moment, we are seeing what can be described as a market that is good for everybody.
“New car deals are more attractive than at any time we at CAP can remember and, for the even more cost-conscious motorist, used cars now represent the best value they have ever been.
“Looking ahead to the next few weeks there is likely to be something of a lull in the market as, first, holidays take many retail buyers out of the market for a while and then an influx of part-exchanges appears in response to new 63 plate sales. This will reduce demand somewhat in August, while increasing the choice of vehicles available from September.
“All of that means slightly harder work for dealers but great opportunities for the motorist to step into the market and drive a good used car deal.”
