Dealer interest in used is on the up

Cox Automotive reveals dealer interest in used is on the up, as market for new continues decline

Cox Automotive has today announced that dealer sentiment around the used vehicle market is on a high as the industry heads in to the second quarter of the year.

In contrast to the latest SMMT figures, which revealed new car sales are in rapid decline, data from Cox Automotive showed used car sales are at a high as dealers turn to nearly-new and older vehicles to attract consumers.

According to data from Manheim, its online and physical auction's business, the first quarter of 2018 saw a 9.4% year-on-year increase in prices for cars selling through the lanes (both physically and online), a clear sign of the increased demand placed on ready to retail, prime stock.

Philip Nothard, Head of External Relations at Cox Automotive, said: "Data from Q1 shows conclusively that the new and used markets are splitting. The used side of the industry is dominant and we expect this to continue through the first half of the year, as the new market continues to decline.

"The challenges of the new car market were never so obvious than in March when we saw a steady increase in interest rates, alongside the gradual rise in RRP by many manufacturers, lead to a dip in consumer interest in new. In addition, in prior years, we have seen 0% finance offers dominate the market, whereas today they are few and far between."

"In contrast, demand for used, especially on smaller, low mileage (sub-60k) vehicles under four years of age, has been particularly strong."

Consumers are now more focused on price and condition, and although relevant, fuel type is no longer the key factor
- Philip Nothard, Head of External Relations

Cox Automotive's car search platform Motors.co.uk, has seen smaller, lower-value vehicles, such as the Ford Focus and Ford Fiesta, selling at a faster rate than larger, prestige vehicles - matching the uncertainty of the economic environment around fuel prices.

Nothard commented: "While the used market is strong overall, the increased consumer interest in these ready-to-retail vehicles comes at the expense of larger models - a trend we believe will continue into Q2. Higher mileage vehicles are becoming harder to sell, so we urge dealers to carefully adjust stock volumes to match demand. Ensuring MOTs, V5's and service histories are all up to date will help achieve maximum returns."

The data also revealed that the used market is not replicating the steep move away from diesel as experienced elsewhere.

Nothard continues: "In stark contrast to the new market, we're noticing that fuel type is losing its importance in the buyer decision making process. Consumers are now more focused on price and condition, and although relevant, fuel type is no longer the key factor. Dealers are recognising this, and so it's no surprise that diesels remain the most prominent fuel type on forecourts (54% of stock compared to petrol at 45% according to Motors.co.uk)."

Looking ahead to Q2, Nothard predicts a period of quiet confidence. In its dealer sentiment survey Cox Automotive found that 56% of dealers were 'optimistic about economic conditions' as Q1 of 2018 closed.

Nothard added: "Dealers are looking to be more efficient across the board in order to move through Q2 profitably. They ended the last quarter well, with many reducing both overage used and new consignment stock, through the strength in demand of the market and increasing pre-registration activity to achieve end of quarter targets. It's put the majority in a strong position for Q2 and as a market, there is good momentum as we move through to the middle of the year."

He concluded: "We expect the pressure on the new market to continue, and dealers should be focused strongly on ensuring the supply of used stock is fluid to replenish lost new car revenues and ensuring after sales service is of the highest quality."

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