07 October 2013

New car registrations in September topped the psychological 400,000 barrier, up 12.1% and retail sales were up 17.9%. It’s the best performance since March 2008.

Are you surprised? Probably not.

Some retail group bosses we spoke to early in the month were suggesting the market was “running out of steam”; but even they were realistic enough to acknowledge that pressure from carmakers would ensure targets were hit.

This industry has a habit of meeting volume expectations – even if there are not always actual customers around to enjoy a handover.

Perhaps that’s the reason why, despite apparent booming new car sales to private customers, the market remains short of good used car stock. According to BCA, both ex-fleet and retail part-exchange values hit record levels in September and there was a significant upturn in conversion rates as demand exceeded supply.

It would be nice to think that the market could correct itself. The final quarter should see more availability – not just from September trade-ins but also from daily rental defleets and other short-term business.

But there is plenty of evidence that, in the feeding frenzy to gorge on new car volume bonuses, many franchised retailers have been neglecting their used car operations. According to ASE, in the first six months of the year, used to new ratios were down to 0.9:1 and used car stockturn had risen to 61 days.

That’s not good, and needs to be addressed.

Ian Allen, writing in a recent issue of Auto Retail Manager, said: “Independent used car retailers have seen an increase in market share and the main reason for this, I would suggest, is that they have concentrated on their core business and not had their eye taken off the ball by new car sales.”

As we move into Q4, with the distraction of the September plate change over, perhaps it’s time to do something about that.

Rupert Saunders

Tags: BCA, Retailing, Rupert Saunders, used cars