F&I Management & Training

Car dealers are being forced to make loss-leading sales in an attempt to move slow-selling stock through their showrooms.

Simon Empson, managing director of dealer intermediary website Broadspeed.com, said dealers were offering heavily discounted cars through his site.

"I can't name the make or manufacturer, but I've had £20,000 knocked off one car this week," he claimed.

"I've had more than a few under half-price cars as well.
"The majority of cars selling are carrying deeper discounts than they were 12 months ago. Those without discounts just aren't going."

He said Mercedes models were the most heavily discounted from the prestige sector while Vauxhall dealers were offering the biggest cuts among volume brands.

Empson said this situation complicated matters for brands such as Toyota and Honda, which were steering a comparatively steady course through the economic storm.

"I've had Toyota and Honda dealers asking, ‘Why aren't my cars selling on Broadspeed.com?' It's because they're just not offering the competitive prices that some brands are out of desperation," he said.

According to Empson, Broadspeed was attracting three types of buyers.

They include former executives who have lost their jobs and are looking to replace their company car, usually by downgrading; those changing their vehicles due to changes to tax disc costs coming up in March and those he calls "deep-sea fishermen", who are out for a bargain in a buyers' market.

Most other customers had withdrawn from the market, he said.

Empson said many dealers had complained of being pressured by manufacturers who refused to be flexible about sales targets, despite the economic downturn and warned some could be forced out of business.

"In my view there are going to be a lot of dealer failures because manufacturers aren't being flexible," he said.

"They're asking dealers to meet boom-time levels and it's certainly not boom-time at the moment."

Sue Robinson, director of the RMI National Franchised Dealers Association, said: "While we are aware some manufacturers have re-negotiated sales targets with their dealer networks in view of the more difficult trading conditions, dealers still face financial pressure from all angles, including manufacturers, due to the fragility of the current economic climate."

DATED: 23.10.08

FEED: MT