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Good news? Not from where I’m sitting!

0_tumbleweed
Something very strange is going on in the trade at the moment on the one hand we are hearing of nearly new car sales going through the roof and on the other, well there’s tumbleweed blowing through the showrooms. “Mark Antony” gives a different perspective on the current used car trade…
Lots of people, but are they buying? Let me tell you a true story….
There was once a time not so long ago when people used to pay the screen price for a used car, it was a fallacy that everyone haggled over the price, they didn’t!
Some people knew what they wanted, did some research, had a look around, compared prices, and if you were the lucky dealer who had what they wanted when they called on you, they bought it! Simple as that, and not one or two a year either, there were almost as many straight sale purchasers out there as there were hagglers, and that’s a fact, but not anymore!

Now nobody wants to pay full price for anything, not at car showrooms, or supermarkets, or electrical retailers, or even the local take away! We now expect it and in some cases demand it to be discounted or else we just walk away, and not just 10% off either, no way! Now we want at least 50% off, even 70% is possible in some stores and so much nicer! All very well if it’s a pair of shoes or a new suit, or a celebrity aftershave you’re never going to wear anyway, but when it comes to cars? Come on, let’s get real here for a minute, do you honestly think as standalone dealers we have huge profits to play with? Because believe me, we don’t.

Now if you have been following the pages of articles written by the “Insiders” here for the past few months, you cannot have failed to see in the current financial market just how incredibly tight the margins actually are for dealers, this is especially true of new car sales where any profit made is usually on “Add on” extras and “service packages” with little or no profit in the actual sale of the vehicle. That’s not to say we expect you to get the violins out any time soon, it is still possible (just) to make a profit and it has always been an accepted rule that customers (especially those buying a car) more often than not will want a bit of discount, nothing wrong with that, if anything its part of the process and can be enjoyable for both dealer and customer alike. Unfortunately now it’s all got a bit serious, with many customers being totally unrealistic over prices leaving some dealers literally fighting for survival.

Take the article “More Good News” written by an “Insider” in the last week or so, in it he reports on the increase of “footfall” into dealerships in the first week of January and in particular the amount of people (they haven’t yet qualified as customers!) who have expressed an interest but have little motivation to actually purchase, more “change of scenery” than serious purchasers. I have to agree wholeheartedly with him. Just this week I have seen a surge in interest and footfall through my own doors, but of the twenty or more people I have talked to via the internet or face to face in the showroom, only two have actually bought anything, and here’s the other thing, both vehicles were purchased not because they were so incredibly cheap (they were!) but because as old stock we sold them at a loss, not a huge one, but a loss all the same. It doesn’t take a maths degree to know that’s not good business.

The longer we see SALE signs on every street corner, the more we will all come to expect it, soon there won’t be any stock left to discount and what then? We are already beginning to see well established high street names collapse on a daily basis, how many more? We all want a bargain, and to some extent that’s just fine, but for any business in any climate to survive they need to make a profit, and in order to do that consumers need to know when they are getting value for money.

In the current market we appear to have lost that ability, Oscar Wilde’s quote from 1890 has never been more true;

“Nowadays people know the price of everything but the value of nothing”

Let’s hope for all our sakes we realise it soon.

Jan 16, 2009Mark Antony
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