High levels of confidence in the used car sector has prompted independent dealers to increase their stock levels in order to compete strongly in the post-Christmas market, according to David Mercer, managing director of NextGear Capital.
“We’re seeing stock levels going up after the September plate-change as the part-exchanges work their way through the auctions. Typically dealers will buy this side of Christmas and build up their stock especially as prices are softening a little,” he said.
According to Mercer independent dealers are currently turning stock their stock around seven times a year.
“Time on stock is coming down which is a positive signs. The average stock turn for an independent dealer is probably just under seven units a year which is good going.”
Mercer also said independent dealers are now increasingly likely to offer PCP packages on used cars in a move to compete against offerings from franchised retailers on new cars.
“The smart independents are working with used PCP providers to help them market their cars. The average new car now goes out to a consumer on a PCP, that’s the default choice, and that puts downward pressure on used car prices. But if dealers can put customers into a used finance PCP package then they’re in a stronger position to compete. I think we’ll see used PCP grow in this country on the back of that,” he said.
NextGear Capital, which is part of Cox Automotive, the owner of Manheim and Motors, has provided over £80m of new stock funding for dealers since it launched in the UK in May 2014. This summer it expanded its business with the launch of its services to franchised and independent dealers in Ireland.
“We were already in Northern Ireland and the opportunity to get into Ireland was based on the early success we had in the UK; we could see that Ireland was under served. We did some market research, put a plan together and launched in September.”