Smaller used car dealerships retailing older and more affordable cars are becoming an endangered species, according to Glass’s Information Services, which says they have been driven out of business by tighter legislation, higher ground rents and the increasing affordability of younger cars.
Go deeper with GlobalData
Discover B2B Marketing That Performs
Combine business intelligence and editorial excellence to reach engaged professionals across 36 leading media platforms.
Most of the stock they would have actively sought from dealers is instead being sold at auction.
The research confirms recent increased rates of depreciation across many vehicle segments, and the Centre for Economics and Business Research reports that the price of a new car relative to average earnings has fallen by 30% since 1998. All this means customers who once visited dealers knowing they could only afford a six-year old car now find they can go to a dealer offering younger stock, and also capitalise on the benefits of low-rate finance packages.
Glass’s reports that the two to four-year old age range is now the busiest sector of the used car market and the average age of the UK car is reducing, from 6.9 years at the end of last December to 6.8 in June of this year. The number of cars over 10 years old has dropped by over a quarter of a million over the same period.
“Many have argued that the demise of the ‘Arthur Daley’ [a once-popular fictional television car trader] dealership was a good thing for the image of the industry,” said a spokesman.
“What they failed to consider, however, was that these traders form an important part of the supply chain in taking from the franchised dealerships the trade-ins they couldn’t or wouldn’t retail. Their absence leaves main dealerships with large numbers of unwanted cars and nowhere to take them.”
The onus is now on the auction houses to replace these independent dealers and sell lower-price vehicles.
“This goes some way to explaining the growing proportion of private buyers at auctions – some general sales seem more like a family day out, with toddlers and pushchairs all lined up beneath the rostrum,” the spokesman added.
“Motoring magazines [are also] raising the profile of auction halls as the place to go for cheap wheels.”
