New car supply issues skew the market

Understanding your market is perhaps more important than ever and the ability to match cars with customers has never taken on such significance. As dealers begin to comprehend that they cannot quickly and easily provide the exact model with the exact spec for every customer, they need to understand the need to be more creative and “switched on” when taking a customer through the buying process.

The simple fact of the matter is lead times have increased as the new car market in the UK has shrunk.

Car dealers have more tools available to them which enable them to acquire the correct stock profile than ever before. Using the internet dealers can establish what the most searched for cars in their own stock are and also regionally and nationally. Although this will never be an exact science, because what is being searched for will largely be connected with what is available, it will still give dealers a vital competitive edge if they can identify what have been their best sellers over a certain period of time.

If they can see a pattern which could be repeated in terms of what mix and price range they stock their forecourts with, then that is very powerful.

Most good sales managers will always tell you that they like to have a varied mix of stock including price range, spec, differences and colour and variety and that has certainly been the accepted way traditionally, but with good quality retail worthy stock being at a premium it will be more important than ever for dealers to maximise profit on cars with a USP because it might be some time before they see one again.

From the point of view of a car buyer in the short term future it will be important to have perhaps a plan b and c unless they are happy to pay over the odds (and by over the odds we mean potentially more than list!) to have a second hand example or wait a long time for their new car to be built and face the real possibility of their dealer being reluctant to heavily discount a model which will not realise its profit for up to 6 months.

We are already seeing the effect of lack of supply on the market with cars like the VW Tigaun, a soft 4wd, which was almost unheard of a year ago. Lack of supply and a surge in popularity of four wheel drives which any one can drive coupled with a fashionable badge has seen the residual value go through the roof.

With many more model set to achieve the same kind of status your first deal may really turn out to be the best deal – and we’re not talking about the dealer but rather the customer.