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 HAVING to sell older cars creates “specific problems” for dealers – with vehicle history, preparation and breakdowns heading the list, research in August’s Startline Used Car Tracker shows.

The research shows that 58% say stock shortages and high values mean they are selling older cars than three years ago. This ranges from 52% of dealers retailing stock that is around one year older than previously, to 34% retailing 1-2 years older, to 14% retailing more than two years older.

As a result, 32% say that vehicle history has become more important, 24% that more preparation is needed for sale, 13% that breakdowns or warranty claims are more commonand 11% that customers require more convincing to buy.

Paul Burgess, Chief Executive at Startline Motor Finance, said: “We can see from our own lending profiles that the average used car purchase is getting older and this is something that is affecting everyone from franchise dealer groups to small independents.

“The situation means that dealers are experiencing issues. Some of these are around the need to reassure customers that an older vehicle remains a good buy – concentrating on presenting a well prepared vehicle with a sound service history. However, more active problems are arising, such as high levels of breakdowns and even more cars being returned.

“There is a positive to be drawn from this. The pandemic showed how dealers are incredibly good at adapting to market conditions and the same is happening again here. The used car sector has adjusted its approach in the light of stock shortages and continues to overwhelmingly offer vehicles that satisfy the needs of customers despite stock shortages.”

August’s Startline Tracker also provides a comprehensive picture of how dealers currently view the used car market, with some slight improvements in how they perceive its prospects after marked falls in recent months.  There was a 4.0 percentage point increase to 12% in those who say they are more optimistic than in July, while there has been a corresponding 3.0 percentage point fall to 32% in those who are more pessimistic.

Reasons cited by those who are optimistic include that stock supply is strengthening – mentioned by 100% of respondents – and that motor finance availability is improving – up by 17% percentage points on July to 67%. Those who are pessimistic say that market and prices are weakening – with a 22.0 percentage point increase to 45% – and that stock supply is poorer – up 11.0 percentage points to 45%.

Burgess said: “It’s been pretty clear from the Tracker in recent months that different dealers are seeing quite different trading conditions. For example, some really believe that stock supply is improving but others really don’t. However, we believe the market is at a point where it has gone through a period of slight readjustment and is now relatively stable and buoyant.

“How things develop over the next few months is difficult to say. The cost of living crisis is likely to get worse but stock supply is unlikely to change substantially, so we believe some kind of equilibrium that will see the market maintaining similar conditions to those we are seeing at present is most likely in the medium term.”

Another interesting finding from the Tracker concerns factors which dealers perceive as future challenges to their business. A notable change is in the potential impact of future ICE values with a 10% month-on-month percentage point rise to 38% since July.

Overall, the top answers to this question were stock availability, mentioned by 77% of dealers, followed by finance availability at 42%, increasing compliance requirements at 34% and the changeover to electric vehicles at 32%.

Burgess said: “It seems likely that as more EVs pass through forecourts, dealers will start thinking seriously about the future of ICE values. Our view is that we are a long way away from any point when this could be seen as a genuine concern but it probably becoming more apparent that the EV revolution is very real and that the ICE market will slowly disappear over time.”

The Startline Used Car Tracker is compiled for Startline Motor Finance by APD Global Research, well-known in the motor industry for their business intelligence reporting and customer experience programs. This month, 300 consumers and 50 dealers were questioned.

Founded nine years ago, Startline is a flexible motor finance specialist and employs 170 people at its Glasgow headquarters. It works with around half of the UK’s top 50 franchise dealers by turnover as well as 70% of the top 50 independent car retailers, and currently accounts for more than 2% of the UK used car motor finance sector by volume.

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