To gain an insight into the changing conditions in the car buying market place I got talking to a professional buyer who works for one of the ‘big boys ‘and asked for his take on the current trading conditions, how he is acquiring his stock and perhaps more importantly what is hot and what is not.
Firstly, as you have probably already worked out for yourself by now, he said that big engined, low spec petrol cars were virtually unsalable except if they were “dirt cheap”. What he also said however was that, in his opinion, because the used car market had been fairly stable for the last couple of years and cars had generally retained decent residuals, it had been fairly easy to buy just about anything and make a profit. He put this down to the shrinking new car market, some scrappage – which obviously did not generate the trade-ins – and the general reluctance by manufacturers and their franchised dealers to go down the road of pre-registering cars just to gain false market share. However as soon as the manufacturers stop hitting their targets they are very quick to jump back on that particular bandwagon and the dealers inevitably have to play ball. These factors and values having been overcooked for some time have led to a bit of “meltdown” as he called it.
Although it is not a disaster buyers are becoming far choosier both about price and model. There are still many models he said which are making a premium and are profitable for his dealers but pricing more run of the mill stock is proving a little harder. With the trade guides in disagreement on many models he is using his gut feeling and experience to buy the kind of stock that his dealers usually sell, but is keeping very close to the market to react to sudden changes.
For example the value of low spec 4wd cars have now reduced dramatically; models which 3 months ago were £20k plus are now, for the same cars, more like £15k.
Ironically big ticket prestige models are still selling well and are profitable, proof if it were needed that the well off always seem to remain bullet proof to recession.
The other trend he has noticed is that there are no trends, his dealers can be really busy at different times and think they have turned the corner and just as suddenly the tap is turned off and they won’t sell a carrot for 3 days, which of course makes planning his dealers monthly or even weekly stock requirements quiet difficult.
Perhaps the most telling aspect of the business at present, and one which we are sure will strike a cord with many of us, is that he says the businesses that have the best most committed people and who have proved successful over many years, have good processes and look after their customers guess what? They are still successful despite all the doom and gloom and that just goes to show that when the going gets tough the tough just keep their standards high and ensure that they are the ones who customers choose to buy their next car from.
Like in any successful business hard work and dedication to customers and building value in the products and environment they work in, will always bring deserved rewards. Our buyer said thankfully he represents more of this kind of business than the other and for that reason is convinced that come the end of the year his company will be in a strong position when it comes to achieving the budgets they have set.
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