January looms large on the horizon for car dealers

With dealers having played catch up for most of 2009 when it comes to stock levels, it is only now, during a slight seasonal downturn, that forecourts are crammed with used cars of every type and price point.

The irony is that dealers have spent long periods of this year bemoaning the lack of stock and despairing of the uplift in prices, which has been happening these last 8-9 months and the fear that these increases would eventually try the patience of the buying public.

Well now those same forecourts are chock full and stock has become, for the moment, easier to source and a lot cheaper than it has been for what seems like a very for a long time. Even though most analysts are sure that this situation is only temporary the pain and fear of what happened this time last year is still all too fresh in the memory. This means that many dealers are becoming over cautious and insisting in moving stock valued 2-3 months ago on very quickly to take advantage of price reductions and a temporary lack of demand.

As we have previously pointed out, among other factors, the record weakness of Stirling against the euro will almost certainly mean major RRP increases on new cars. This is why dealers are seeing an unseasonal uplift in new car registrations as buyers bring their purchasing decisions forward to take advantage of what could be a potentially huge saving by buying this year.

Many sellers, however, will look at last December and January when they saw demand take-off while at the same time stock levels were at their lowest. The buying frenzy, which consequently developed only served to push trade and retail prices much higher. The difference this year is that dealers are holding much higher levels of stock and therefore those vendors, anticipating that dealers will look to pay new year prices, may by holding on to stock and hoping to achieve much more for it in January. In this brave new world of car retailing they could however be playing a very dangerous game.

A buyer from a large dealer group recently told me that after he had negotiated a large discount on a big basket of cars from a small vendor, the guy dealing with the disposal exclaimed that the price he had been offered was “insulting” and that these cars would be worth much more in January when prices will indeed rise once more.

In response my contact exclaimed ‘but we aren’t in January now we are in November and that is what they are worth today, if you want to hold them until January and sell them to me at January prices be my guest but today, right now that is what they are worth’
Of course the deal was subsequently concluded and my man was obviously very pleased with himself having, for the first time this year, managed to secure a deal on some cars which would make a real difference in the market,

Let’s just hope those savings can be passed on to the buyer and he doesn’t get greedy.