Long lead times playing havoc with part-exchange valuations

Dealers are increasingly worried about new car supply; with less production from factories as a result of the downturn dealers are selling many more factory ordered cars. The knock on effect of this is that, as we have said before, lead times for more highly specified examples from some manufacturers can be more than 16 weeks in some cases.

This is difficult situation for dealers especially when trying to manage the expectations of the buyer and let’s not forget how frustrating it is for the customers. But even trickier, given present market conditions, is that dealers have to try and predict what a trade-in might be worth 3-4 months later.

This of course is not easy during normal trading conditions but given the general uncertainty of the economy and the fact that the market has been behaving unpredictably for some time, makes it an almost impossible job for sales managers to do with any real confidence.

Most dealers will err on the side of caution but the higher spec prestige brands can depreciate considerably in that 3-4 month time frame. But during the current downturn it could lead to dealers selling new cars for profit but losing it all on the trade-in if they get it wrong.

Although depreciation patterns are returning to more normal cycles and customers should expect dealers to offer a current market price and to re-price at point of delivery, although this could clearly disadvantage a car buyer who may find their trade-in worth considerably less in a few months time.

Wherever possible buyers should at least be offered a realistic ball park figure if they do their homework properly as it really rests on the dealers to ensure that they can keep selling new cars. Although this problem should not be underestimated the experience and expertise of the dealer should lead to an amicable agreement of how to conclude the sale satisfactorily for both parties.

Of course, where possible, we would suggest that buyers compromise a little with their new car choice and try and get the deal done now.

Naturally this situation will only worsen if VAT does go up and other cuts are to be introduced.