We all know those immortal words at the beginning of the “Star Wars” film, “Once upon a time in a galaxy far far away”……………. well that just about sums up the feeling in showrooms up and down the country at present.
Customers have deserted the forecourts of both new and used dealerships in their droves as they struggle to come to terms with the financial fallout of recent months. Falling house prices, spiralling energy and food costs, and not least rising fuel prices at the pumps (although thankfully now falling again) all compete to focus the mind of the car buying public.
The motor industry along with countless others had been here before, we all remembered the “other recessions” so this time it wasn’t so much the downturn that took us by surprise, but the speed at which it happened. The early warning signs for the Motor Trade came back in October 2007 when we first heard the words “Credit Crunch”. Car finance suddenly became a lot harder to procure, customers that had until then found credit readily available, suddenly found themselves being refused even small advances as finance houses and banks started to tighten their lending criteria. This in turn had an almost immediate effect on sales where cheap finance had been one of the driving forces in car purchases, new car sales in particular bore the brunt, with used sales and especially those offering “Sub Prime Deals” all suffering as a result. Remember those tempting low deposit and 0% deals?
It didn’t get any better as we started into the first quarter of 2008, huge swathes of the country were flooded yet again, all the signs of a housing slowdown were upon us, and a Government and Prime Minister that seemed out of step with public feeling and the times, there was certainly very little “feel good factor”. What customers there were seemed to be more cautious, reluctant to commit, the “Put it on the credit Card” brigade, of which there were once many had all but disappeared.
The following months saw new car sales at an all time record low, suddenly the bad news was everywhere, you couldn’t turn on the TV or pick up a newspaper without hearing how tough it was going to get for the motorist and to make matters worse rumours abounded about the new VED rates that the Government were set to introduce in early 2009, even though many of the figures were grossly exaggerated by the time they filtered down to an already sceptical public.
Customers returned to the showrooms once again, but this time to sell! They were, of course panicked by the ever increasing doom and gloom headlines that made up the nightly news programmes and morning newspapers.
The party really was well and truly over, in showrooms up and down the country sales teams did their best to stay upbeat as it slowly dawned on us all that customers, particularly those ready and willing to buy, were in very short supply.
Looking back now over a turbulent few months it has forced many of us to re evaluate our core business strategy’s, these are difficult trading times for us all, but there is some light at the end of the tunnel. The banking crisis has hopefully been bought back from the brink, fuel prices are falling, and in the past few days interest rates have been cut by one and a half percent, on top of all this, there has never been a better time to buy a new or used car as prices are slashed, sometimes to cost, to attract your business, as I said earlier, remember those low deposit O% deals? well they are making a return, if you are in the market for a New car some of the larger Manufacturers are offering eye watering good deals in an attempt to clear some of the unsold stock that has been sitting around in compounds these last months. As for used sales, it doesn’t take a degree in Nuclear Physics to see that late plate nearly new cars are now phenomenally good value for money, have a serious look at what £5,000 to £7,000 will buy you at present, and if you have in the region of £10,000 plus to spend, then the deals are truly remarkable. Don’t despair if your budget only runs to two or three thousand pounds either, at this level you will be spoilt for choice with literally thousands of bargains to choose from, just apply the usual Motor Trade Insider caution and rules.
The down side of all these great deals though is whilst prices have dropped dramatically across the board, so too has your own car. If you really need to part exchange try to be realistic when haggling for the best price, it is very much the case nowadays that the dealer simply doesn’t have the margins they once did for P/X allowance, if all else fails you can always sell it yourself in one of the classifieds, but even here you will need to be very realistic.
Things have changed so fast and now cash really is king if you are buying used and have nothing to exchange.
Do your homework, find the vehicle you want, compare prices, get an insurance quote, and when you are ready to purchase go armed with a sensible offer (note the word sensible!) and take some form of deposit to show willing. Never make an offer you can’t back up, there is nothing worse than spending an hour or more with a customer who asks all the right questions, scrutinises the paperwork, crawls over and under the car, takes it for a test drive, finally makes an offer, and when you agree says
“OK, I’ll let you know”!
Looking ahead to the end of the year and into 2009 things look set to remain tough for everyone, if you really want to purchase that new car, whether it is franchised dealer, used independent, private purchase or auction house, then there truly has never been a better time to buy! As they say in the film, “May the force be with you”……………………..