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Confidence slips as business conditions toughen for independent used car dealers

Home / News / Confidence slips as business conditions toughen for independent used car dealers

At a glance …

• Independents say business is tougher this year
• They are less confident about the future than last year
• Their stock levels are still too low
• The choice of trade cars is now improving
• Falling values will help profitability

A TOUGHER business climate than 12 months ago is being reported this year by independent used car dealers, according to CAP Automotive.

Confidence about immediate future performance is also slipping, in comparison with the more buoyant mood of independents this time last year.

The trend is revealed by a panel of more than 100 independents questioned by CAP each month in research for Black Book Live, the real-time guide to used car trade values.

A year ago 87% of dealers described the business climate as ‘stable’, ‘good’ or ‘very good’ but a year later this figure has slipped to 74%.

Confidence has also begun to reduce slightly. A year ago 95% of independents expected business to remain stable, improve ‘a little’ or improve ‘significantly’ over the following quarter – but that figure is now 87.5%.

As CAP reported last month, stock levels are also continuing to cause headaches for independent used car dealers. Only 22% are happy with the number of cars on their forecourt compared with 70% who describe their stocks as too low. At this time last year 61% were unhappy with their stock levels.

However, the quality and range of choice of vehicles available in the trade has improved, according to CAP’s panel of dealers. A year ago 66% said they were finding it difficult to source the right cars for their customers but that figure has now fallen to 32%.

Mike Hind, of CAP, said: “Independent dealers are clearly still enjoying success but the climate today is definitely seen as tougher than a year ago.

“The best news in this dealer survey is that independents are finding it easier to source the right cars. That’s a far cry from a year ago, when franchise dealers were struggling so hard to sell new cars that they were competing much harder with the independents to acquire good quality used cars in the open market. The additional competition for stock was causing real pain for independents.

“But even the re-focusing by franchise dealers on new car business is posing problems for some independents.

“Making the finance options on new car deals more affordable than anyone at CAP can remember has enabled franchise dealers to win a lot of new car business away from those independents who specialise in late used cars.

“However, the softening of trade values reported by Black Book Live, after a long period of stable – and even rising – values will at least help ease the pressure on profitability and enable independents to offer their own stronger deals.”

ends

Notes to Editors

Each month CAP questions a 'Dealer Insight Panel' of more than 100 independent used car dealers. The results give a unique insight into the dyanamics of the 'true' used car retail and trade marketplaces. This information assists CAP in its day to day research and is published on the CAP website at cap.co.uk for the benefit of customers who wish to conduct peer comparisons with their own business performance.

For further information contact Mike Hind, Communications Manager, CAP on 0113 222 2044 / 07710 152030