Older cars a lifeline
August 12th, 2010 by Richard Aucock
STOCK shortages mean franchised dealers must scrap long-standing procurement policies says Glass’s.
Until now, franchised dealers have typically shied away from cars older than 3 years.
Higher-mileage motors have also been a no-no.
Those days are gone now though, says Glass’s. Car dealers can’t afford to be so picky, as a dramatic reduction in used car supply is anticipated.
By 2011 there will be 2 million fewer used cars aged between 1 and 5 years than in 2008!
This is why Glass’s advises car dealers to start nurturing sources for first refusal on such motors NOW: competition for them is set to grow quickly in the comping months.
Glass’s managing editor Adrian Rushmore admits franchised dealers are particularly vulnerable to this shortage, due to strict standards set by brands. ‘We acknowledge that some manufacturers have relaxed and broadened these standards, but more still needs to be done.’
One way round this, he said, could be a two-tier system. Standards could be relaxed for older motors to ensure preparation costs didn’t escalate. Using non-OEM parts and setting lower workshop rates for older motors could also help.
Older car profit opp
There is an upside to trading older cars, added Rushmore. ‘The very nature of three to five year old cars is that each one is more likely to be very individual in terms of mileage, specification and colour.
‘As a result, this retail stock is less price-sensitive and profit margins should, therefore, be better protected.’
Prices themselves are not going to shoot up though. The market won’t become frenzied like it did last year.
‘There will still be the normal highs and lows and, whilst prices will edge upwards when viewed on an annual basis, there will be no repeat of the unprecedented rises we saw last year.’