Shrinking number of used cars to retail leads to a change in thinking

We are always pointing out here at MTI how difficult it is going to be for dealers to find quality retailable used car stock in future due to the shrinking car parc.

There will be less of the previously owned cars which dealers have traditionally vied for. In other words 1-3 year old cars with fewer than 40k miles which are still in warranty and as a result are significantly less expensive to service and recondition to approved standards.

Many dealers currently send their part-exchange, non franchise cars to auctions or other re-marketers while some sell them back through the trade where other smaller car dealers sell them on to the retail market.

However there is a growing feeling in many quarters (long overdue some may argue) that dealers will shortly need to find ways of recycling the older cars they receive through the trade-ins at their own outlets, in a bid to find more customers and promote their business to more potential buyers.

Many franchised car dealers will often ‘have a go’ at something that is not within their usual selling criteria if an individual sales manager has a “feeling” for a certain car. Another reason may be that they have taken a hit on a particular trade-in for whatever reason and decided to try and retail the car to ‘wipe their mouth’ of the potential loss.

However many of us in the franchised sector acknowledge that we play at it. We either don’t fully buy into the process or we end up trying to sell non-franchised cars for the wrong reasons. Because of this we fail to engage our sales people to buy into the prospect of selling these cars or, just as importantly, fail to give car buyers the confidence to buy from you and not from a franchise that does represent the model in question.

Of course the alternative for many large dealer groups is starting a ‘trade’ centre or supermarket type operation where all the franchises they represent are encouraged to send their trade-ins for resale.

A great recent example of this is the JCT600 group who have recently decided to redevelop their old Chrysler Jeep showroom into a large car supermarket facility with which they can offer lower value cars to their customers and potentially therefore retail larger volumes of different cars to a wider audience (JCT opens car ‘supermarket’).

We wish them every success and feel over the coming years they will certainly not be the only ones.