Even a tragedy has a silver lining

  11 April 2011

I probably shouldn’t admit this but I can remember when there was real excitement generated by the plate-change: midnight parties at dealerships, customers eager to be the first in the street with a new car. In contrast, it seems to me that the introduction of the 11-plate has been a damp squib.

Of course it was never going to be same when they introduced two plate changes a year; but surely it is important that we, the auto retail industry, recreates some of the excitement that comes with buying a car – any car, old or new. If the customers lose their enthusiasm for the product, then we really are on a slippery slope towards cars as a commodity and internet-sales through Tesco.

It seems to me that part of the problem this March was that the outcome was clear from day one. Even back at the end of February we were being told targets would be met and bonuses achieved by ‘whatever means it takes’.

So, now we’re back in a situation where forecourts are stuffed with pre-registrations and wholesalers are warning of over-supply. We haven’t learned much over the last five year, have we? As one retailer quipped: ‘the most popular vehicle on the road in the last week of March was the car transporter’.

The implications for the industry could be serious, particularly for dealerships which are already over-stretched on their credit lines and don’t have a strategy for disposing of the stock quickly enough.

As Mike Jones, chairman of ASE comments in his excellent analysis in this week’s Auto Retail Bulletin: “We expect the successful retailers to manage this process well and to profitably retail out of any vehicles they have decided to register. For the poorer performers, these vehicles are likely to sit within used vehicle stock for a while, taking up a significant part of the stock funding lines.”

By chance there may be a ‘get out of jail free card’ here and, tragically, it comes as a result of the Japan earthquake and subsequent tsunami.

Global car production is being affected, not just in Japan but also in Europe and the US; as a result, new cars are likely to be in short supply for several months to come. But there will still be demand and canny retailers should be able to walk customers away from long wait lists towards the ‘oven-ready’ nearly-new stock.

Of course, we continue to offer our heartfelt sympathy to the people of Japan for their loss and I don’t want to make light of the situation. But auto retailers are legendary for their ability to trade their way out of a corner – so here’s a great chance to prove it once again.

Have a good week, both in and out of the showroom. If you have a story for us, or just want to gossip, email rupert@auto-retail.com

Rupert Saunders

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