For some car dealers it’s now sink or swim

As we mentioned recently (More problems for dealers as the down-trading trend gathers pace) with buyers starting to downsize in their droves economical cars are becoming ever more harder to source and are (naturally enough) rising in price.

The auctions are awash with “fleet fodder” as we call it in the trade i.e. high mileage, poor condition cars with low spec, which ironically are still selling but albeit at much reduced prices.

We have often talked about the fact that dealers need to adjust their stock profiles to trade successfully in a changing market. That advice is all the more relevant right now as a mixture of downsizing and a natural dearth of used cars of the normal age and mileage not coming back into the market due to the recession (or whatever the hell it is) turns everything upside down.

It doesn’t help either that manufacturer lead times are still far too long (that may be a mild understatement).

We are already seeing car rental companies, who would traditionally keep their cars on short term rents and then get them back on the wholesale market, now running some models for 18 months with much higher mileages. This, of course, hinders them when they subsequently come to trading with some franchised dealers who are nervous of buying older ex-rental stock for fear of higher preparation costs and quality issues.

If dealers do not adapt to these changing conditions and accept that they may have to stock older higher mileage cars buyers will increasingly look elsewhere for their next car, and some used car dealers will inevitably struggle as a result.