A buyers market
With our restrictions still in place and lock down continuing, the new way of living is creating many behavioral changes, certainly in terms of purchasing. Online sales are booming and large corporates like Amazon are raking it in, switching to online is the way things are going. Even the acquisitions of Miss Selfridge, Top Shop, Top man by ASOS has left the physical retail outlets behind.
The motor trade has had to try to catch up and move swiftly into unknown territory with a revised selling platform and structure. This was tested last year in the first Lockdown with new temporary measures, until it was thought that normality would resume. Most large franchise groups have click and collect policies implemented but the staff have to adapt to a new way of communication and selling. For us humans the change cycle is generally a relatively slow process, it takes months to work seamlessly with a new procedure. Learning to use online platforms and video calls to enable qualification and rapport building with a potential customer will take time.
The industry is accustom to selling an appointment with the aim to bringing people into the showroom. Test driving a car is, and has always been, the best way to showcase your product. Bums on seats sell cars. This ability to discuss the likes and dislikes, answer questions and handle objections on a test drive is no longer possible, for now. Online selling of automobiles is not a new thing. Tesla has been working this way for years, with considerable success. They don’t have a dealer network so with direct online sales giving them instant control of their process and product showcase, buyers accept it’s the only way to purchase a new one. The statistics demonstrate that this is a perfect fit for the current online trend. Tesla sales show a 30% increase over the quarter 4 period last year, albeit some of this is due to an accelerated move to electrification that’s rapidly gathering pace.
What does this mean for the buying public? For the moment, it is good news. With many of us battening down the hatches, the amount of potential buyers in the market has vastly reduced. Looking at the SMMT sales figures in January compared to last year, retail car registrations are down by nearly 40%. From inside the industry this is evident on a daily basis. The need to sell the metal is all too apparent and ultimately it is creating a better deal for the customer. Used car stocks on the most part are not turning in the way they need to so there are more cars aging on the forecourt. Most retailers operate a target stock turn number and age profile. Dealers work on a simple basis of screen price vs stock age. The price is dropped over time or the unit could be relocated to another site to be re-aged. All this is great news for the buyer. Market values of certain cars have fallen recently due to the reduction of auction traffic and the lack of names on the sales board, thus needing to get them off the books. Some retailers have realigned their entire stock to the falling market, even pricing them below to try to tempt potential buyers.
If you have the need, desire and requirement then this is a good time to get a decent deal. There will be enhanced offers on new cars, targets still need hitting for March registrations and used cars need a new home before they have squatter’s rights. It’s currently a buyer’s market, however this increasing desperation to get rid of stock and pursue anything with a pulse won’t last. The lock down restrictions will eventually get lifted. When this happens It’s likely the industry will experience a similar mini boom mirroring what happened last year, starting when the showrooms opened again on 1st June. Within a month of reopening, market values for used cars went up and dealers had the balance back in their favor. With stocks cleared and values held, a few retailers actually increased some of their screen prices. Who knows when we will eventually have the ability to travel and socialize? But, If you are in the market, know what you want, have some time to search (whilst remembering that you have two weeks to change your mind due to distance sale rules) then now is the time to buy.
