It’s encouraging to see that franchised dealers continue to benefit from high demand for used cars, as revealed in the newly published national profitability composites from ASE, the specialist dealer accountancy and management firm.
In March dealers continued to see strong demand for used stock, despite buyer focus being on the new 18-registration plate.
The ASE analysis shows an increase in dealer stock, an inevitable result of more part-exchanges coming into the market, but also continued strength in used car performance with both margins and stock-turns remaining strong.
Dealer stock at the end of the month was looking high with ASE pointing out that profitable disposal over the course of Q2 will be uppermost in dealers’ minds.
The importance of sourcing the correct stock and maintaining the right levels was also highlighted by Pendragon in its recently published Q1 interims covering the three months to 31 March 2018.
As the UK’s second biggest dealer group, Pendragon has led the way with its strategic focus on building a strong used car business through its existing sites and the establishment of a national chain of multi-marque Evans Halshaw Car Stores, with an ambition to open 40 over the coming years.
The group’s interim statement pinpointed the importance of maintaining the right stock level to satisfy demand with the group citing a shortfall in used and nearly-new stock for the 1.5% drop in used car revenues. Something the group is addressing in Q2.
Chief executive Trevor Finn said: “We are increasing used inventory levels in quarter two with a view to capturing an increased volume of activity at an improved margin, as this stock will increase our proportion of newly acquired used stock.”
So, with used cars clearly playing a key role in boosting bottom lines in Q1, it is essential for dealers to be sourcing the right quantity and quality of stock in Q2 and beyond to satisfy market demand.
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