Motor traders are becoming concerned over the plans by manufacturers to produce more new vehicles in the upcoming months. Even though by the end of last year there was an increase in the amount of new cars registered, demand is still not as high as it was before the recession, and if even more cars come into the market it will mean that franchise dealers will soon have to cut their prices. In March there will also be a registration plate change, which means that many dealers will be trying to get rid of their old stock as quickly as possible, and probably lose out on money doing so.
CAP’s retail and consumer specialist Phillip Nothard said: “Whichever way you look at it, motorists will emerge the winners in this year’s challenging market. Franchise dealers will almost inevitably have to use serious incentives to keep up with new car targets. Car supermarkets will have more nearly new cars to stock and because they operate on a low margin, high volume, basis this will mean even more competitive deals on offer.”
“If more people are tempted into the market to replace their car, independents will welcome the increased availability of part-exchange type stock in the marketplace. The probable weakening of trade prices due to higher supply will also give them more room for manoeuvre on the deals they offer to consumers. This is going to be a tough year for manufacturers and their dealer networks but their pain looks set to be the motorist’s gain.”
Even though the year ahead looks like a difficult one for motor traders, they should keep in mind that even if they make a short-term loss due to selling their vehicles at cheaper prices, long-term is means that the motor trade industry will benefit due to the increase in customers looking for deals. It is important for motor traders to invest in motor trade insurance to protect their stock, especially if they are planning on getting new vehicles after March.
