Dealers ‘Struggle’ To Make Money On Used Cars As Prices Soar
Many dealerships are “struggling” to make money from their used car operations in today’s market where demand exceeds supply and prices continue to rise, reports Shoreham Vehicle Auctions (SVA).
He said dealers are struggling to keep their used car inventory levels above 50% of their normal levels as they battle to buy shares at auction due to rising levels. competition.
“Everyone thinks it’s only because the second-hand market is buoyant that all used car dealers are making good profits every month.
“This is not the case with many dealers I speak with who are struggling to buy replacement inventory and sell enough cars to cover their overhead costs in today’s market,” said Alex Wright, managing director of SVA.
“The dealers who make the money are the brave ones who pay the highest prices, guarantee good quality stocks and then sell them at prices higher than the valuation guides used,” he added.
Shoreham sees many used cars 12 months and under selling for around the same price as new ones in the retail market, especially in the premium SUV sector, as impatient shoppers shrug off their feet. are turning to used cars due to the supply of new cars compromised by global semiconductor shortages.
‘Used car buyers for large franchise groups and auto supermarkets are allowed to pay up to £ 1,000 above CAP Clean at auction for used cars to ensure safe stocks .
“Many dealerships do not have the cash or the wholesale funding budget to compete with this purchasing power and that is why many forecourts now seem empty and businesses are struggling to make money,” Wright said.
Wright reminds dealers to make sure stock cars are priced to compete with rival dealers for a healthy profit per unit.
“It is not in the mindset of many dealers to increase the prices of used cars because the price of unsold inventory is usually reduced after 60 or 90 days. In this volatile market, prices should be reviewed daily and increased as necessary to ensure cars are sold at current market value, ”Wright said.