We have collated our top 10 tips for dealers trying to manage the turbulent and unpredictable used car market

1) DON’T SKIMP ON VEHICLE APPRAISAL

More dealers are focusing their efforts on lower priced cars as more customers reduce their budgets. However, lower priced cars, by their very nature, are often older cars, and vehicle appraisal assumes greater importance. Now is the time to ensure that appraisals are carried out religiously, and meticulously. As we know, dealing with customer issues post sale could make serious inroads into margins once rectification costs have been incurred.

2) BE WARY OF HIGH PRICED TRADE CARS

As many will have noticed, wholesale prices on most cars have increased significantly. Be aware that higher prices will not necessarily translate into a successful retail sale at an acceptable profit margin. Before making a financial commitment on a trade car identify what the typical asking prices are for similar cars on the various web sites. Better still, take a look at Glass-Net - it provides the facility to perform an immediate automated search simply by entering a few model details.

3) ONLY MAKE SHORT TERM STOCK COMMITMENTS

Many cars that have been purchased at very high prices are likely to be the over age problems this summer. So don’t commit to more stock than you need for your predicted short term sales forecasts.

4) DON’T IGNORE CARS THAT NEED WORK

Don’t dismiss cars that need a lot of refurbishment if the buying price still allows for the cost of remedial work and at least one ‘book drop’. This point has more relevance when ‘book drops’ are few and far between.

5) BE MINDFUL OF WHAT REPRESENTS GOOD VALUE

Market prices for small and supermini cars have been fairly recession proof - so far! However, many 3 year old superminis are priced within £300 to £400 of popular compact MPVs like Picasso, Scenic and Zafira.
Some family sized cars like Vectra and Mondeo are worth less than lower medium cars like Astra and Focus. From time to time it is useful to reacquaint ourselves with what is value for money!

6) THERE IS A GOOD ARGUMENT FOR PETROL CARS

As we know, diesel cars are attracting the attention of an ever increasing number of used car customers. But how many of them realise that when they buy a 3 year old family car they are paying a premium of around £1,000 for the privilege. This decision makes sense for high mileage users because they will recoup their investment over time with better fuel consumption. However, if usage is more likely to be 8,000 to 10,000 miles per year, a similarly specified petrol model would make a better choice. Educate customers to make more informed choices.

7) POINT OF SALE FINANCE IS A GREAT SOURCE OF PROFIT

In recent years customers have been more inclined to arrange finance from the high street lenders before setting foot in a dealership. These loans are not so forthcoming but dealers are better placed to capture some of this business.

8) LATE USED CARS COMING INTO THEIR OWN

Manufacturers’ ex-management, and ex-rental cars are beginning to look better value for money now that ex-demonstrators and pre-registered cars are fewer in number. Manufacturers are now being forced to increase list prices because of the unfavourable exchange rates. This all means that 1 and 2 year old cars look better value against discounted new than has been the case for many years.

9) ‘VALUE SEEKERS’ ARE ALWAYS IN THE MARKET

Trade prices have almost recovered to the levels of a year ago, so it is now not quite so easy to highlight the value for money aspect of used cars. However, dealers can still reasonably demonstrate to customers that the Guide retail value for a specific 3 year old car in 2008 was £x and now the same 3 year old car is only £y. This is because every used car goes through a product life cycle in the same way that a new one does. The affect of this is that the value of a specific used car erodes with time, and then recovers with the introduction of its used car successor.

10) LOWER VED IS A POSITIVE MESSAGE

The radical reform of Vehicle Excise Duty planned from this April has been delayed, but some customers may not be aware of this. VED increases for the most polluting cars have been capped at £5 when the planned rise was up to £230. Even in 2010 the increase will be limited to £30.

If you have some top tips please share them with us – we would like to expand this to a top 20 tips.