It is not surprising the industry has been focusing primarily on new car sales over the past couple of months. The combination of a new registration plate format, 10 months of continuous sales growth and low interest rates had raised expectations of record new car sales in both September and for the year as a whole.
More recently the general downturn in economic confidence cast a shadow over those expectations. The full effect will not be known until final SMMT figures are released in the next few days but, to a certain extent, new car sales are protected from the worst.
Popular models are available only to order and customers are encouraged to forward buy. In fact, thanks to heavy sales in early September, stock levels are low and order banks remain strong through into October as well.
The market is less certain about used car sales. The last few days of this month and through October will be critical times for used car business – and maximising profit. In only a few weeks it will be winter those customers who remain in the market will desert the forecourts to do their Christmas shopping.
It is sometimes easy to forget the scale of the used car market and its importance to the whole retail motor industry. BCA Europe's latest Used car market report confirms there are around three used car sales for every new car transaction. The total market is valued at £27.3bn. Franchised and independent retailers take the lion's share of the market, particularly at the more valuable, newer car end. Despite the fluctuations of the market, used car sales – and associated finance products – continue to be vital to the overall profitability of a dealership.
Since early September, huge numbers of used cars will have entered the market for the first time. Some will have already found buyers, some may have been traded on and some may still be sitting in a compound, awaiting attention.
It is important that each one is treated individually and its profit potential assessed rapidly and realistically. Finance packages have an important role to play in ensuring maximum ongoing profit is generated by the transaction.
It may seem natural to bundle finance with a new car and offer it on a monthly payment basis but used car buyers need finance too and many will be looking for a simple, affordable solution to their motoring needs. Unless it is properly presented at the point of sale, and with the same enthusiasm and product knowledge that goes with the sale of the car, they may be tempted to walk down the high street to the bank.
Black Horse has a full and flexible portfolio of finance products to help franchised and independent dealers realise maximum potential from the market. It also an experienced team who want to help dealer sales staff get the most from the finance transaction. This might mean formal training, in-house coaching or simply making sure the finance transaction is processed smoothly and efficiently.
Motor retailers have always been masters at seizing the opportunity. Record new car sales present a massive used car opportunity that should not be missed. Call us now to find out how you can maximise this opportunity.
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