Group 1 CEO Hesterberg says UK used car market is ‘surprisingly good’

Group 1 president and CEO Earl Hesterberg said the UK used car market was strong and marred only by the high percentage of nearly new cars being registered.

He told analysts last week it was a difficult balance to get right but he needed to support carmakers and keep vehicles pumping through the system.

Analysis of the new car market in September showed the pressure that dealers are under to keep stock moving and meet targets.

“The true used car market in the UK is still surprisingly good. The problem for all of us, I think, all of the auto retailers in the UK is a very high percentage of our used vehicle sales are not true used cars.

“They are very nearly new cars. And that’s where the challenges are. And one of the metrics we use is what percent of our inventory are truly used cars, meaning more than a year old and with some mileage on it and so forth. And we continue to do quite well with those cars,” he said.

“We just need to continue to adjust our operation to have those cars represent a higher percentage of our inventory.

“That’s the way we’re approaching it. But we also need to support our OEMs and help them keep moving their new vehicles. So it’s a pretty difficult balance right now.”

Hesterberg said that market conditions in the UK remained “very challenging” mostly due to uncertainty surrounding Brexit.

“The total new vehicle industry was down roughly 1% for the quarter. The true customer demand is likely down even more than that, as some OEMs are aggressively pushing self-registrations to support higher new vehicle sales numbers.

“And dealerships were also pushing sales before the new emissions legislation called RDE went into effect 1 September,” he said.

(Source: Seeking Alpha Transcript)