Adrian Rushmore, managing editor of industry valuation guide Glasses, states, in a recent press release, that “used car activity is slowing and dealers have now acclimatised to recessionary times.” Mr. Rushmore tells us, from behind his desk in, we’re sure, his nicely appointed office, what the weather was like a month ago, interesting to some maybe but not particularly relevant. To be fair to Adrian he has been with Glasses Guide an awfully long time and undoubtedly knows the publishing side inside out, as he does their enormous databases. But does he have a real feel for the living breathing trade? Perhaps not. We suspect the sorts of people Adrian meets and discusses the business with probably don’t either. I’m sure he’ll be the first to admit the guides were all over the show in the first part of this year and as we have pointed out before (Valuing trade-ins by the book, but which book?) many dealers were playing one guide off against the other (namely CAP).
One of the unique benefits of keeping up to date with MTI is that, unlike your usual trade or consumer publications, we have ‘live’ commentary from professionals in the trade living and breathing the reality of the marketplace and charting a course through the ebbs and flows of the business as they happen.
The fact that the market has corrected itself is obvious and the fact that the writers of the guides have at last caught up with current conditions means that price stability should remain for the remainder of 2009, and maybe beyond if the supply issues are not eased.
The most interesting part is that retailers of varying shapes and sizes are reacting to the market difficulties by entering a world which they normally wouldn’t venture into. For instance as we have widely stated there are more and more ‘non franchise’ cars being offered for sale on dealer forecourts and the age and mileages of cars being advertised has certainly broadened considerably. Dealers are now ‘retailing’ customer part-exchange’s which until now they would ‘block’ (send to auction) or sell on to the trade. The reasoning behind this is that there may be lessening profitability in the metal but there is an increased opportunity to benefit from extra workshop revenues, which in turn leads to cars in the £2-5,000 sector being very sought after as more dealers join the race to acquire this cheaper stock and also reduce their average sale costs in the process. The effect means they can stock a higher volume of cheaper cars and give themselves a far greater chance of selling cars in a downturn – in a market where customers will traditionally default to smaller more economical cars.
You only need to look at the scrappage incentive to see where most of the success stories are happening i.e. the sub £10,000 sector. We have looked at the constant need for dealers to keep updating their sites and to maximise the traffic they receive. As we pointed out in our recent article, there is still widespread uncertainty and the fear that another dose of turbulence could hit at anytime leaves many nervous dealers feeling keen to not get carried away by their relative successes, particularly in the used car sector so far this year.
Keep coming back to MTI as we will be at the forefront ensuring that we give our readers and followers the benefit of exactly what’s happening in the trade, right now.