Used sector dealers more optimistic than those in new

Dealers in the used car sector feel more optimistic than those selling new as they are more shielded from the Brexit effect in what is an uncertain market.

Cox Automotive recorded a double-digit increase in part-exchange volumes through its physical and digital wholesale channels in March. Its Manheim operation saw the number of part-exchange vehicles rise by 10% month-on-month in March and the average part-ex price was up 1.7% to £4,150. Dealer-Auction.com, Cox Automotive’ s trade-to-trade auction platform, also reported increased volume (up 8%) and the average transaction value rose slightly to £5,088.

NextGear Capital, its stock funding business, also reported an increase in average vehicle values, up 5% month-on-month to £7,958 while average holding days fell slightly, by 3 to 60.

Philip Nothard, Customer Insight and Strategy Director, said:

“March was a month of two halves in the wholesale market. We saw strong prices and demand in the first two weeks, particularly for the ready-to-retail stock, but the market was more challenging in the latter part of the month, possibly as a reaction to political uncertainty over Brexit.”

At the moment more businesses are hanging onto their cars while the issues surrounding company car tax and the effect of WLTP are still to be resolved and the government to announces its plans. As a result, the profile of the wholesale market is shifting with an increasingly older, higher mileage cars going through the channels.

Partly because of this the values of both petrol and diesel values have been pushed down but in sharp contrast, and another sign of the shift in the market, the average price of Alternative Fuel Vehicles (AFVs) hybrids and electric cars, increased by 2.3%.

Used stock turning faster than a year ago

And in a telling comment on the starts of the two sectors, Cox’s Modix survey into dealer sentiment found that 60% of new car retailers believed consumer demand was down in the key plate change March market against a year ago (the SMMT recorded a drop of 3.4% in registrations) but there was a much more upbeat feel among the used car sector and almost two-thirds of dealers said that stock is being turned faster now than last year.

Phil – formerly a dealer principal at a D.C.Cook Renault franchise – said:

“March’s new car registration figures made for disappointing reading, with the market down 3.4%. It seems clear that political uncertainty in the key plate change month had a big part to play, but private registrations have held relatively steady YTD, down just 1% year-on-year.”

“In the used market we’ve heard reports of a fall in demand in March, but dealer sentiment around days in stock suggests that this area of the market is still performing strongly.”

For more information about how Click Dealer can help independent dealerships to increase efficiency and profitability, get in touch today via 01782 478220, marketing@clickdealer.co.uk or through our contact page.