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Where have all the used cars gone? And is it time to reassess the opportunity that used cars presents?

Where have all the used cars gone? And is it time to reassess the opportunity that used cars presents? August 15, 2014 by Paul Evans

A quick look at the European vehicle parc for 2009-1013 compared with that for
2004-2008 reveals that there are roughly 5 million fewer cars up to 5 years old available
for sale through all  outlets.

But industry data just released shows that new passenger car registrations in the European Union and European Free Trade Association trading block rose for the tenth consecutive month to 1.23 million vehicles in June - from 1.18 million in the same month last year, according to data from the Association of European Carmakers (ACEA).

And in the UK specifically, even though it seems we are only just out of a recession, the number of sales of new cars has risen for 29 consecutive months, surging 10% in the past year alone. Predicted registrations for 2014 is now 2.4 million

So where have all the used cars gone?

As we all know, those cars taken in as trade-in that are older than 3 years old, and in some cases not even as old as that, are kept in the family, sold privately, go to auction or are passed on to the non-franchised trade.

Indeed, it’s our view that all across Europe franchised dealers are feeling the pain caused by a lack of used car stock, just at a time when more are recognising the value  of a healthy used car operation.

So, are franchised dealers missing an opportunity? And if so, why?

Franchised dealers have tended to focus on used cars up to 3 years old, possibly fearful of the reconditioning costs for older cars.
But, conversely, our own research shows that there is in fact a market out there for used cars where quality and peace of mind are prioritised over the age of the car, and those benefits are most associated with franchised dealers who are perceived to operate under the strong control of their manufacturer.

Lexus and Infiniti are two brands who clearly see the opportunity, having instituted powerful ‘Approved Used’ programmes designed to deliver a superb ‘older’ used car which has passed through a stringent quality procedure.
Often, the warranties offered are comparable to those offered with new cars so the buyer gets a great car at a good price with, most importantly, peace of mind.

Of course, breaking out of the constraints of retailing only newer used cars requires the retailer to have procedures and good practices in place to ensure that these cars will ultimately realise a profit.

Having worked with a number of leading marques in developing and instituting successful ‘Approved Used’ programmes, PEP Automotive has a toolkit which will help dealers to benefit from the serious profits which are there to be enjoyed. We can show you examples of successful programmes we have implemented and which are now in operation across Europe.

There’s no time like the present to act either.
Even on the back of positive UK new car sales figures The Society of Motor Manufacturers and Traders, the industry trade has cautioned that this is likely to be the last leap of a wave of new car sales in the UK, rather than a renewed tidal surge.

“Overall demand is beginning to stabilise,” says Mike Hawes, the SMMT chief executive.

We should also not forget that in most European markets,the recovery is from a very low base and that change cycles tend to be much wider.

Time to reassess the opportunity presented by used car sales? We think so.










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