DEALER buying activity has increased dramatically, as an upturn in consumer demand causes used stocks to run low.
The happy news comes despite signs of a continued slowdown in consumer spending – and is good for used car dealers nationwide.
EurotaxGlass’s reports that a shift in dealer strategy is behind this. With income from new cars predicted to fall in 2009, many are looking to the used market to compensate.
But fewer part exchanges, and concerted efforts by dealers to clear used stocks last year, mean used car reserves are at historically low levels.
This means competition in auction halls is increasing – both for good quality used cars, but also the big gas guzzlers which received such a battering last year!
Prices have thus stopped falling. Indeed, they’re on the up! ‘Dealers have accepted – albeit reluctantly – that they need to pay the extra to secure the right cars,’ said EurotaxGlass’s editor, Adrian Rushmore.
‘Auctions have found their inventories dwindling. Even those ‘problem’ cars, such as executive models and large 4x4s that struggled to find buyers in December, have been attracting bids.
‘The need to restock is great, and many of the large gas guzzlers now appear very good value for money.’
Even dodgy colours and cars in need of refurbishment are being fought over. ‘Although small and affordable cars to retail under £5,000 are still very much in favour, car dealers have been viewing everything else in a much more positive light.’
The only cloud is that the upturn may be short-lived. ‘The challenges faced by the car market in 2008 have not gone away,’ said Rushmore.
‘We are still in a price-driven market, and retail customers are likely to balk if higher trade prices are translated into higher forecourt prices.
‘The current trade buying frenzy will fizzle out within weeks. The chances that dealers will over-extend themselves as they did a year ago is unlikely, simply because the pain that was inflicted then would be too much to bear again.’
