8:07 am, September 24, 2024
The mispricing of stock is currently costing dealers close to half-a-billion-pounds a year, according to new data from Indicata UK.
The automotive research company has been crunching real-time data in the motor trade order to get a clear picture of developing market trends.
The study found that common mistakes are currently causing retailers to miss out on huge revenue opportunities, running to nine figures.
Firstly, dealers are pricing their best cars too cheaply and selling them too quickly. Secondly, a trend is developing which is seeing businesses hold on to poor-quality stock for too long without lowering the price.
In order to come to a clear conclusion, experts at Indicata analysed more than 50,000 used cars that were either on sale or had been sold by around 300 different dealers over the past 12 months.
The process uncovered a loss of £400m caused by dealers selling their most popular used cars too quickly at sub-30 days and at 100% market price – rather than charging a premium.
Meanwhile, a further £15m was lost by retailers hanging onto their older cars for more than 60 days without lowering their prices in a bid to shift them from the forecourt.
Following on from the findings, Dean Merritt, head of sales at Indicata joined us for a special chat on Car Dealer Live.
Describing what he found in the figures, he told Car Dealer: ‘Potentially dealers were turning good cars far too quickly, spinning them too quickly.
‘Potentially stock turns in the 20s or even 30s, and their least desirable cars, they were turning with a stock turn of one or two.
‘It was universal. You have big dealer groups doing this, but you also have small one man bands doing this as well.
‘It’s not completely restricted to big or even medium sized dealer groups. Even OEMs, are doing very, very similar things.’
Merritt says that in order for dealers to get better at correctly pricing cars, they need to consider desirability as well as days-in-stock time.
He added: ‘I feel that a lot of dealers historically have priced the vehicles purely down to days in stock and only looked at days in stock.
‘Whilst I think that days in stock is still a very, very important performance metric, I also feel that a dealer now – even more so after covid – needs to look at the desirability of a car when pricing.’
You can watch the full chat at the top of this story or on the Car Dealer YouTube channel.
