Franchised car dealers are scrapping long-standing policies that ensure that the right kind of goods are bought and sold within certain buying conditions. Up until recently car dealers have actually shied away from older models as there is not enough demand for them and have bought in models no older than 3 years old in some cases.
It is anticipated that there will be 2 million fewer used cars aged between 1 and 5 years than in 2008. This is a dramatic change that is coming in fast and predicted for 2011.
Used car dealers have actually been advised to start looking at older models and that these newer sources could be their only chance of survival. It would appear that franchised dealers are the most vulnerable to the shortage because of strict standards set by the brands. There has of course been a shift with manufacturers taking heed and broadening their standards however there is so much more that needs to be done.
A way for car dealers to be able to move forward is by introducing a two-tier system whereby standards can be relaxed for older motors to ensure preparation costs don’t escalate and that using non-OEM parts and setting lower workshop rates for older motors could help.
There is of course a positive to trading older models and that is that the very nature of 3-5 year old cars is that each one is very individual in terms of colour, mileage and specification. The retail stock on the older models would in fact be less-price sensitive and the profit margins should therefore be better protected.
Even though these measures have been advised there is no guarantee that the industry will see a dramatic rise but the prices may start to edge upwards once again.