The confusion in the used car market is often more marked in times of trouble and national uncertainty. With the general election finally behind us there appears to be a growing belief that this coalition can somehow make sound decisions based on the national interest and not the normal bear baiting pit which had become the political system in this country. This should mean that the stormy waters may calm for a time.
Whereas last year when values of used cars rose month on month in an unprecedented fashion, this year the trend is seemingly reverting to more normal depreciation patterns.
The car valuation guides available to the trade i.e. Glass and Cap, have published values which have often been at odds with the reality in the trade but also each other and even the big 2 auctions Manheim and BCA differ in opinion as to which way the market is going.
So it is hardly surprising that buyers, looking to compare prices of cars they want to buy but also getting an accurate price for their existing car, end up receiving wildly differing information, leading to a lack of confidence which needs to be corrected.
We always try to look at the impact that this price confusion among the “experts” has on the retail buyer as well as the trade buyer. With the worst of the economic downturn still not behind us it could be a tough second half of the year with values coming under pressure, but hopefully leading to greater choice and more competitive prices for buyers.
Dealers certainly cannot afford to sit on their hands and wait, they need to be proactive and take decisive pricing actions to keep stock turning. There will be more emphasis on the ‘retail is detail’ aspect of the business and the stock will need to look attractive in presentation as well as price to attract what could be a dwindling consumer base,
However from what we have observed, dealers are working incredibly hard in their showrooms in terms of marketing, special offers and indeed the service they offer to maximise prospective sales opportunities.
For that reason we are cautiously confident that the business has learned lessons from recent disasters and are capable of managing their cost bases to ensure long term prosperity.