Swings and roundabouts

The strength in new car sales reflected in May’s figures from the SMMT show that although there may very well be doom and despondency around the used car activity there are still – despite the gloomy forecasts at the start of the year – shots of good news in the car business.

Of course as we approach the end of q2 traditionally the 3rd quarter gets that much harder, and with an already declining customer footfall the marketing departments will have to come up with some innovative ways of enticing customers into showrooms in the coming months.

Ironically despite the long jubilee break and maybe because of the terrible weather many dealers we are in contact with have reported strong sales in the first week of June and although one swallow doesn’t make a summer it’s certainly encouraging against the backdrop of all the gloom.

The interesting aspect of car retailing is our ability to be able to adapt to the ebb and flow of the market.

For example for a while now it has been very much a buyers’ market, with people choosing to keep going with their current car, downgrade to something cheaper or keep their money in their pockets and it has been up to dealers and manufacturers to provide the incentives to entice buyers into parting with their cash. To a certain extent the new car volumes reflect this although margins on new and used cars have been hit hard but as a result aftersales profitability has risen. So even though profits may be under pressure by having different income streams within a dealership you can get several bites of the cherry.

Of course, on the other hand, there have been times when with less stock around and high demand profits have to a certain extent been protected and customers have had to take it on the chin if they have their heart set on a certain car, particularly if there is a new model launch which creates a lot of desire, like the furore over the Evoque which you could neither get quickly nor get a penny off.

The sensible thing if you think about it is if you feel generally secure and have the disposable cash or budget for a new car purchase there will probably in general never be a better time to buy. There is hardly a manufacturer out there at present who is not offering some kind of tempting offer, and those prepared to do a bit of haggling could get a large discount and other add-ons such as free insurance, 0% finance, free servicing and so on. If you wait however until the “good times” come back there will be no need for dealers or their manufacturer masters to provide offers and discounts because demand will dictate how they operate.

Whilst volumes are crucial to dealers turning their stock and re-investing in cleaner fresher stock buyers will continue to benefit and profit margins will continue to be under threat.

So car buyers what are you waiting for?