Distress busting initiative anyone?

There is a definite feeling in the franchised motor trade that forced or pre-registered cars are beginning to have an adverse effect on trading conditions.

When this recession (or whatever they are calling it these days) first hit the motor trade one of the biggest lessons learned was that forcing registrations due to incentives by manufacturers to boost market share caused many dealers to go out of business and cost the industry millions of pounds in losses.

Worryingly, according to many dealers we speak to, it appears that this practice is on the rise again, and it’s not just pre-reg or pack cars which are causing the problem. Assisted deposits and low rate deals are not only leading to distress selling but are leaving high volumes of 1 year old ex-daily rental stock which dealers cannot sell at a profit because the price disparity, once all things are considered, just doesn’t offer a sufficient saving for customers to buy against new.

Ironically when asked for predictions for the 2012 market the very few voices that predicted growth were mainly from car makers which flew in the face of the people at the coal face, and although car dealers are a stoically upbeat bunch even in the face of the most testing conditions, no one could see anything other than the hope of sustainability, the keeping down of heads and working hard doing the right things and ride out the storm however long it takes.

The practice of trying to force a market where the demand just isn’t there is likely to lead to unsold cars sitting at ports and on unused airstrips as before and as we have just slipped back into recession and the coalition acquiring the look of a battered boxer on the ropes coming back in for one last round. unless people wake up and smell the coffee franchised car dealers and indeed anyone dealing in late plate cars with an asking price of £12k or more are likely to be in for a very tough time indeed.

As we are constantly saying people are tightening their belts and car owners are delaying servicing and maintenance to the last minute and the biggest pricing sector between £4k and £10k is where the majority of car buyers are setting their budgets, small and economical are the buzz words and where the demand is, whereas a look across many forecourts tell us that the age profile for many inventories is far newer and at a higher price point.

Car dealers, who have found success in the late plate sector due to lower reconditioning costs and quicker turnover, will need to have a re-think and try and stock older cars or at least try and have a more balanced age and price profile because there is no point stocking cars which people can’t afford to buy.

If the car makers insist on not learning lessons of the past and continue bribing dealers with big discounts on new cars then ‘distress’ all around is the likely outcome.