Remarketing
Every which way
The used car market has been starved of stock for a long time, but there is more to it than a lack of ex-fleet product. Jack Carfrae asks who wants more second-hand cars and why.
A
nyone remotely connected to the automotive industry must have been living under a rock if they failed to notice that new car supply had been on the low side. Three-and-a-bit years after the pandemic’s onset, that issue has started to improve, albeit on a manufacturer-by- manufacturer basis.
It does not take a mathematician to spot that the used car market’s typical three-year/60,000-mile ex-fleet fodder will unlikely be in abundance for a while – and it was not exactly populous before Covid. According to Startline Motor Finance’s May Used Car Tracker, supply was the number one concern for 84% of respondents – the highest level since the monthly survey’s inception, but the recent production slowdown is not the only reason for stunted supply. The used car parc is being nibbled from all angles, rental and leasing companies, and manufacturers – on top of the usual franchised and independent
28 | June 2023 |
www.businesscar.co.uk
dealers. Each wants a piece, and each takes a bite out of the relatively few available vehicles.
Auction companies have told us, off the record, that household-name rental firms have been acquiring used vehicles at auction for use on their fleets for some time. This was a direct response to the lack of new cars and vans, as manufacturers poured what little they had into the more lucrative retail market. Fleets – also less profitable per unit – were lumped in with rental.
“There was this significant shift towards the private customer, because you were paying full retail [price], if not more, for a new car,” says Philip Nothard, insight and strategy director at Cox Automotive, “[rental firms] said, ‘I still need product because I’ve got ageing profiles [and] I’ve got heavy SMR costs,’ so they went into the used vehicle market. In 2021 and 2022, rental buyers, particularly, were competitors to dealers in the used car marketplace.”
“The used car parc is being nibbled from all angles, rental and leasing companies, and manufacturers.”
He admits that some rental companies have eased off from buying used cars, as manufacturers have crept back to big fleet buyers, but others are said to have sneered at the OEMs’ retreat to the corporate market.
“Some of the operators that were cut off are saying, ‘oh, you want me now, then, do you?” adds Nothard, “well, I don’t really need you, because I’ve now found an area in the [used] market and I can manage my fleet differently’.” Then there is manufacturers’ increasing moves from traditional franchised dealer models to agency, which involves the OEM keeping vehicles on its balance sheet and controlling the price, instead of transferring them to the dealer as they do under the franchise model. The dealer is paid a fixed fee by the manufacturer to sell each car and cannot set its own price. The idea is that the manufacturer has greater say over sales and pricing is more consistent, in line with wider online buying trends, but it is a financial risk
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