Victims of our own success?
30 June 2014
Im writing this before, and youre reading this after, one of the most important weekends in the auto retail calendar. Why? Because its the end of the first half of the year.
Seems to me, theres a lot of money riding on H1. Retailers Im talking to are genuinely concerned about the effect it could have on year-end results. Get it right and itll be bonus payment bonanza; get it wrong and youll sink under the weight of overpriced stock.
Heres the scenario: retail sales in Q1 were up by 18% and some manufacturers, not all, have set similar targets for Q2 even though it doesnt include the March plate change. Not sure what they were thinking, but thats the way it is. Meanwhile, retail demand is easing and customers are starting to save for their summer hols. Those same retailers say theyre definitely seeing a slow down on the forecourt; to hit the targets theyre going to have to buy the cars in for stock.
So far this year, pre-reg activity has been under control. Okay, the March month-end did spike but I havent met anybody who was worried about it. Another spike at the end of June could be more serious especially if the NSCs also want to oversell in September.
Time was when a nearly-new car was a summer bargain for the cash-strapped customer. Today, theyre more likely to be better off with a manufacturer-subsidised new car PCP.
So where does that leave the stand-in value of the pre-reg?
The irony here is that retailers are largely victims of their own success. The winners will be those with deep pockets, an understanding bank and rapid stock turn. Others may step-back from the brink and forego the target bonus.
Its a tough call and ultimately, no way to run a business.