Franchised dealers focus on used car sales

Franchised dealers are focusing hard on the used car market amid fears of continued falling revenues from new car sales.

As a result the volume of used cars being bought by dealers in recent weeks has risen dramatically, EurotaxGlass’s, publisher of Glass’s Guide, said today.

Dealer stocks of used cars were low following a clear out in the last quarter of 2008.

“The level of trade buying is unprecedented for this time of year, exceeding all expectations given the broader economic conditions,” said Adrian Rushmore, managing editor at EurotaxGlass’s.

“It is becoming clear that most franchised dealers are expecting a very large shortfall in income from new car sales during 2009, and the response of many is to plan a concerted assault on the used car market.”

Rushmore said competition for quality used cars has intensified, even for the larger, less fuel-efficient models.

“There has been lots of competition for the best cars, and the auctions have found their inventories dwindling,” adds Rushmore.

“Even problem cars, such as executive models and large 4x4s that struggled to find buyers in December, have been attracting bids.

“This is because the need to restock is great, and because many of the large gas guzzlers now appear very good value for money.”

Because of rising demand, there has been a halt to falling values, said Rushmore who warned however that the current situation is a respite and not a recovery.

“We started the year with used car prices some 20 per cent lower than 12 months ago.

“Since then prices for most volume-brand used cars have either held firm, or as with some ex-rental cars, risen by the low hundreds of pounds.

“Dealers have accepted – albeit reluctantly – that they need to pay the extra to secure the right cars.”

Rushmore urged caution however. “It is quite likely that what we have been experiencing over recent weeks is a respite and not a recovery.”