Dealers compete with supermarkets to source higher mileage stock

Franchised dealers are increasingly competing head to head with car supermarkets sourcing quality older vehicles with higher mileages, according to Cars Direct, an on-line vehicle remarketing company.

“We are currently seeing an extraordinary change in the market,” said Cars Direct national sales and marketing manager Carol Stevens.

“There is a severe and increasing shortage of vehicles available for resale. Many of the major leasing companies are extending their current contracts and companies are retaining vehicles for longer periods.

Stevens said consumers are tending to go for quality used vehicles rather than buying new.

“We are now seeing traditional main dealers having to look further afield, specifically at quality older vehicles with higher mileages which is adding to the competition with car supermarkets, to purchase this type of vehicle,” she said.

Stevens said more buyers are turning to online auctions to buy and sell cars and prices have risen in some cases to supermarket levels.

“So far in 2009 we have witnessed an increasing number of buyers turning to alternative routes to market, such as online auctions, for both the sale and purchase of vehicles.

“Industry price guides have not kept up with this change in the market, and we are now witnessing prices that in some instances compete with retail prices achieved at car supermarkets, with some dealers realising as much if not more for their cars when sold at auction.

“We are seeing a substantial upturn in residuals, resulting in used vehicle prices well in excess of clean Cap,” she said.