Look out for Lulu down at the auctions

With September well underway a strange pattern is emerging in the trade. Although, as we have reported, there is no pent up demand for new cars, the fact that there really is now a distinct lack of quality used cars in the network means there’s a distinct overheating of prices on the wholesale market. As a consequence this is once again rendering the guides totally inaccurate.

Our insiders, who regularly visit the auctions, are telling us that not only is there very low volumes being entered but when a ‘lulu‘ goes through she has that many suitors that she makes hundreds over her reserve; good for the vendor but very bad for the buyer.

It remains to be seen how much of this uplift will be able to be transferred to retail buyers.

Of course the fact that new car forward orders are well down year on year means a dearth of quality part-exchanges in the market. As a result all that’s left is high mileage ex-fleet fodder which can only be sold on price because of the lack of any kind or unique selling proposition.

There is a hopeful expectation that as the manufacturers chase numbers through September there will be some attractive enough offers to generate some late month part-exchanges which, in turn, could mean that dealers may have a chance of stocking their forecourts.

In the meantime dealers face the very real threat of rising prices without the retail demand and that profits are likely to be under pressure because of a lack of buyers in the general market.

The irony is that, usually, if there is high demand with low volumes at least the business is profitable but with lukewarm demand and low volumes coupled with the necessity to keep stock turning, only the very best operators who keep close to the market will be in a position to sell cars and achieve budgets.

Take a reasonable profit margin and at the same time make it an attractive enough proposition to ensure showroom footfall continues at a reasonable level.

Be on the lookout for the mid month sales and let’s just hope there are enough cars to put in!