Dealers caught out – not the time for predictions

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We have been talking to many sources in the trade who do what we call the “4wd job” and without exception they are all very busy and selling lots of USED cars. OK no real surprise there when we recap the reasons behind a successful start for many (especially franchised) dealers with them selling large volumes of used cars fairly profitably; Interest rates lowest since forever, relatively low inflation, fuel and energy prices low but mainly such rapid depreciation in the last few months that the used car world could really only go one way… up.
Dealers who sell 4wd vehicles are telling us – almost without exception – that whilst they are still washing out expensive ex-demo models and new examples of the top end big boys (X5, Range Rover, Q7, Touareg) their equivalent used car examples are flying out of the door. A theme that seems to be emerging is that some of the buyers coming to their showrooms are not the typical customers they usually see wanting this kind of product.

This just proves that the buyers who have long held aspirations to own one of these machines but who have not taken their dream any further due to the prohibitive cost, are now thinking hang on a minute, a £40k car which is a year old I can now have for nearly half the list price! Add to this some of the amazing finance deals around these buyers are now realising their dreams of prestige car ownership!

The depreciation of these cars was so rapid and so hefty that nobody could really predict the bottom, so the market did it for them, bargains have been had and once dealers had taken their medicine and re-valued their existing stock to the market they started turning it around and are attracting many more potential buyers. All good? At first glance yes but delve a little deeper and it’s not so cut and dried. According to one of our dealers, they are still not selling anywhere near enough new cars and the 1-3yr examples which have been selling like the proverbial hotcakes are now drying up severely. This in turn is leading to dealers paying more on the wholesale market which means the customer will pay more. If buyers followed our advice they will look out of their window in the morning and feel that satisfied glow of knowing they have the car of their dreams at the deal of a lifetime. Especially with the 4wd examples, if you are thinking of buying one now it may not be so easy to find the right car or price, indeed when we asked one of our dealers to look out for £18k worth of Range Rover diesel for a potential buyer we know they replied if you find 4 or 5 could you let us know and we will buy them from you, such was the depth of their prospective buyer list and the dearth of choice they had on offer in this range.

We have even heard of prices rising rapidly and dealers reacting by trying to pass these rises onto their customers, meaning you may even be expected to pay £1,500 more than you did less than a month ago. Some auction vendors have reported their best ever profit performance for a month, and though all this seems to fly in the face of what others are saying, the fact is for some there is almost a buying frenzy which nobody predicted and certainly no knows for sure where it will end (despite pompous indications to the contrary).

By the way if anyone knows of a Range Rover 3.0 d Vogue for £18k that they want to sell please let us know.

We won’t hold our breath!