Dealers are being urged to not ‘be picky’ on stock as the market struggles with overwhelming demand for used cars.
The pressure comes from Cox Automotive which says ‘it no longer pays to be picky about all stock’ due to the ongoing semiconductor crisis affecting new car supply, and surging used car demand driving up auction prices.
The firm’s latest monthly tracker report for August shows a supply and demand imbalance continued to drive up all wholesale key indicators.
Cox reports Cap clean performance achieved 100 per cent and first-time conversions were the highest ever recorded at 87 per cent.
Compared to August 2020, average age and mileage is well ahead, up by 18 per cent and 13 per cent, respectively, although they have eased marginally since last month (July 2021: -0.87 per cent and -0.01 per cent).
Cox Automotive said the only wholesale key performance indicator down on the same time last year is that of the average sold price, which stands at 0.4 per cent lower in 2020.
However, August 2020’s figure was unusual as the month became a period of pent-up recovery after retailers re-opened showrooms from June 1 after the first nationwide lockdown.
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In addition, this year, dealers have enjoyed a longer trading time with physical sites able to remain open.
Therefore, says Cox, the increase has been driven primarily by stock shortages and issues facing new vehicle supply for both consumers and de-fleets.
With these market dynamics, now is the time for dealers to compromise when it comes to sourcing stock.
Philip Nothard, insight and strategy director at Cox Automotive, said this rift between supply and demand means that highly sought-after vehicles are not only becoming harder to source, but more expensive to purchase, with considerably higher mileage and age than what would be considered the norm.
‘We are operating in a market starved of stock,’ he said. ‘While wholesalers are doing their utmost to keep supply flowing, the general profile of available vehicles is typically older and higher mileage than most would desire.
‘However, this is no time to be picky, and it is important that dealers compromise in order to obtain stock.
‘Previously, condition and ready-to-retail have been the key drivers for price performance; our data shows that most vehicles at all grades are finding homes to fill spaces on forecourts and websites throughout the past few months. Stock is moving fast, and there’s no time to wait around.’
Cox Automotive did say, however, that the coupe cabriolet sector is starting to soften, ‘albeit on the back of significant rises throughout the pandemic period’.