Thursday, April 02, 2015
Used car profits come under pressure in March
Dealer profits on used cars came under pressure in March, according to new research
Margins were dented despite the surge in activity prompted by a new plate, said CAP Automotive.
In March 41% of dealers reported that margins were tighter than the month before.
Cap said profits were under pressure because the condition of vehicles has deteriorated as volumes increased and dealers were hit by higher preparation and refurbishment costs.
Despite higher volumes in the market just 23% of dealers described the choice of cars available as “better”.
This signals further profit erosion in the coming weeks as those cars will also need refurbishing for retail, just as consumer demand is expected to reduce after Easter.
The latest inter-dealer survey also reveals that online consumer interest increased during March more than physical visits to showrooms.
Philip Nothard, retail specialist at CAP Automotive, said: “Dealers may, on the surface, be enjoying a very successful time but the number of sales isn’t the whole story.
“The squeeze on margins is a constant complaint and the problem is fuelled by a general deterioration in the quality of the majority of cars now available in the market, which forces them to invest much of their potential profit in refurbishment,” he said.
DATED: 02.04.15
FEED: MT
