9:01 am, April 18, 2023
More than a third of used car dealers say this year is turning out better than they expected – despite lingering problems with stock availability.
That’s according to new research from motor finance company Startline.
Its Used Car Tracker for this month revealed that 35 per cent of the 60 dealers quizzed reckon 2023 is shaping up to be ‘something of a pleasant surprise’.
A fifth of them said they felt more optimistic about the used car sector than they did last month.
Fifteen per cent are maintaining profitability, 12 per cent believe stock availability is improving, 10 per cent say the economy is showing signs of recovery and nine per cent reckon that consumer confidence is getting higher.
However, 62 per cent say stock availability is still a problem, 32 per cent say staying profitable is hard, 27 per cent believe consumer confidence is still low, the same proportion was more pessimistic than it was last month, and 10 per cent think the economy is still in the doldrums.
Startline Motor Finance CEO Paul Burgess said: ‘It’s probably a measure of how low expectations have been across both the used car sector and the wider economy that a significant minority of dealers are saying that this year has, so far, been something of a pleasant surprise.
‘Certainly, while conditions are not as bad as some experts predicted, they still remain tough.
‘Our view is that the economy is doing a little better than expected but that the personal finances of many people continue to worsen.
‘Inflation remains very high, especially for some everyday goods, and wages aren’t keeping pace.
‘There are some credible predictions that the situation will improve in this respect towards the end of the year, but really we are still awaiting the moment when things stop getting worse.’
He added: ‘In light of this situation, the used car sector remains remarkably resilient but there is no question that most dealers are having to work hard to make money and continually find new ways of maximising the potential of their business against a difficult backdrop.’
Stock availability was named as the biggest challenge for the future retailing of used cars, mentioned by 70 per cent of dealers, followed by the changeover to electric vehicles at 55 per cent – up from 46 per cent in March – and increasing compliance requirements at 45 per cent (30 per cent last month).
‘Stock shortages are proving something of a double-edged sword – getting hold of retailable vehicles is a constant battle for dealers but poor supply is also keeping values high,’ said Burgess.
‘Also, the impact of the recent dramatic fall in EV values has clearly raised some fears about the process of electrification.
‘Worries over compliance are probably the result of Consumer Duty, which has very quickly become a subject of concern for many car retailers, with FCA deadlines rapidly approaching in April and July.’
Startline’s Used Car Tracker is compiled every month by APD Global Research, which quizzes dealers about the prospects of the market, the challenges facing them and their online offering.
