Profits on late plate used cars an endangered species

It’s funny how the summer seems to end so abruptly and as September starts the roads are again filling up with cars and we have to endure the inevitable traffic jams that go with them. This year though I have been quite pleased to see lots of cars on the road because it could mean that we are climbing out of this recession and getting back to some kind of normality. The amount of new 59 plate cars on the road doesn’t seem to support this, during my 2 hour journey on the M1 I spotted about 8 and although I felt like a bit of a train spotter at least it passed the time away.

During my visits to several auctions this week, more as an observer than buyer, I was struck with lack of cars being entered for a busy September but this of course, could be due to the fact that scrappage cars go to the breakers and therefore account for a large slice of missing trade-ins. Also although some other insiders have predicted a levelling of prices I saw no real evidence of this especially for the better quality examples. If anything the prices, when compared to what the guides tell us, were still fairly inaccurate, which again confirms the fact that nobody has successfully called the used car market this year.

I wondered, having spoken to some regulars, how the trade was achieving profits from these cars, as by trawling Autotrader that night I could find few examples of cars being advertised for much more than the prices for similar models made through auction. They reckoned that only main dealers could justify the uplifts because they have the facilities to offer more competitive finance rates and could bolt on more products backed by the manufacturers whereas smaller independent dealers could sell only on price and reputation.

Most professional car buyers realise that in this market, with the lack of stock around and abnormal prices, they will need to draw on all their experience and be extremely creative to keep the wheels turning so to speak. If customers still believe that it is a buyer’s market they will clearly still be encouraged to shop around on price cutting potential margins still further.

The fact remains that there are still winners i.e. the auction houses and their vendors, and as one old chap said to me, if the cars are selling despite the massive uplift in values then they must be worth it.

I still believe that if dealers continue to pay extortionate prices for late plate used cars the gap will be such that the only prospect of making a profit will be from the income generated from add-ons as the profit from the actual car will be all but nonexistent!