Mike Pilkington, managing director of Paragon Automotive
Used car values fell 2.9% in November, the biggest fall since summer 2011. So, is this a seasonal blip or the first signs of a more significant trend?
Dealers will be expecting a bounce as demand picks up in the first quarter of 2015.
But it can be argued that the industry is in unchartered territory as the percentage of vehicles bought on PCP or lease deals continues to rise and heads toward 80% of all new vehicle sales.
This fundamentally changes the profile of stock at the end of life with large volumes coming back at two and three years old.
It presents dealers with the challenge of how to integrate these vehicles with new car sales.
If fleet managers don’t have the right strategy we may see used values under pressure, which in turn affects the finance deals that can be written on new sales.
This is a problem for the whole industry that requires some strategic thinking. The traditional route of shoving volume through auctions will simply not provide the flexibility that will be required.
A raft of innovative technologies are now available that will speed up the de-fleet and remarketing process to enable dealers to source and market stock from the inspection stage.
Imaging and data solutions now enable dealers to access the vehicles they need and put them in front of the buyer, long before the stock ever hits the forecourt.
As an industry we have never seen such large volumes of prime retail used stock about to hit the market. The typical two or three year old vehicle with 30,000 miles appeals to a different market than the typical 70,000 fleet vehicle. It will compete with new stock and clear strategies need to be put in place to optimise sales channels.
It is vital that manufacturers and their dealer networks work together to find new solutions to the problem that can effectively future proof the supply chain.
Everything from vehicle inspection to reconditioning, imaging and robust data management have a part to play and need to be considered as a whole package.
