Older part-exchange market on a ‘knife edge’, warns SVA

Dealers are being urged to test drive part exchange vehicles due to the increasing age of vehicles being traded in by customers, according to Shoreham Vehicle Auctions (SVA).

Alex Wright, SVA’s managing director has issued this warning following dealer part exchanges getting much older and becoming more expensive to get ‘forecourt ready’ if the car is in a poor mechanical condition.

Consumers are also targeting dealers to buy their used car after approaching other outlets, such as car buying services, where their offer price has already been downgraded based on mechanical problems discovered during a test drive.

“The older part exchange sector is on a knife edge between dealers buying the right car at the right price or overpaying for a car in poor mechanical condition and losing money,” he said.

“I have never seen the part exchange market as divided. The only peace of mind is to test drive a customer’s car before offering to buy it.

“Ignore the test drive and risk a repair bill that could equal the value of the car as vehicle servicing, parts and even paint repair costs continue to rise,” he added.

Wright suggests dealers should start by checking the car’s service history and covering enough miles on the test drive to check whether warning lights go out or stay lit up.

Then if the used car does have visible mechanical problems, the work must be priced up thoroughly based on parts availability, parts prices and repair lead times.

“If a dealer wants to buy the customer’s car after carrying out their own checks, they can offer a realistic price based on its actual mechanical condition.

"There are healthy margins to be made at the older end of the part exchange sector, but dealers should show a level of caution, before parting with their money,” said Wright.