- December 12, 2018
- Posted by: Kari Jones
- Category: Automotive Industry, Tips For Dealers
With demand for used cars higher than it’s been in years, retailers are having to turn to alternative methods and adapt their acquisition strategies to compensate.
Remarketing expert, Manheim has recently conducted a dealer sentiment survey, in which used car dealers have expressed their views about the current trends.
In response to difficulties in acquiring quality stock in the current market, Manheim found that 59% of the retailers they surveyed have adapted their buying strategies, with more than half agreeing with the statement “demand is currently outstripping supply in the used car market”.
Many said that they were having to resort to additional or alternative sources, with one in five turning to classifieds and one in ten revealing that they had bought lower grade stock.
We have seen significant development in the used car market recently, but respondents of Manheim’s dealer sentiment survey argue that there would be even more growth if more stock was coming through into the used sector.
Customer Insight and Strategy Director at Cox Automotive, Philip Nothard, commented: “That dealers have maintained this growth despite stock availability challenges and increased competition in the lanes is testament to their resilience and ability to flex their business models to compensate.”
It is certainly true that dealers have had to make compromises to maximise on used car demand, whether it is fast-tracking vehicle preparation to speed up stock turn, travelling further than normal to obtain quality stock or settling for lower margins for high-grade vehicles to remain competitive.
Another compromise that I have recently discussed as a possible response to the shortage of quality used cars is outsourcing vehicle preparation. With more dealers turning to lower grade stock than usual, a lack of resources for refurbishment is likely to arise as an issue, but outsourcing could be a viable solution.
Nothard predicts that things will calm down in Q1 of 2019, stating: “As we look towards Q1 and the prospect of a return to normality for the new car sector and a release of used stock into the wholesale market as fleets, manufacturers and leasing firms restart their buying cycles following the WLTP-induced lull, I think we can be confident dealers are ready and able to take full advantage of every opportunity.”
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