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Car Dealer Live & podcasts
INDUSTRY VIEWS
NEWS AND THOUGHTS FROM SOME OF OUR CAR DEALER LIVE GUESTS
Derren Martin
Cap HPI
CAP HPI
It’s felt as if we’ve been catching our breath
Director of valuations Derren Martin said: ‘We’ll quickly forget about what happened last year because this year is going to be just as interesting.
‘The price rises that happened last year have been well documented – up by nearly 30 per cent on average and some cars were up by 50 to 60 per cent.
‘We’ve come into January off the back of a few difficult months compared to the rest of the year, and the first few days were disappointing for dealers – the activity wasn’t necessarily there.
‘There was a little concern that this would be a continued trend, but we’ve definitely seen it improve as the month has gone on.’
Overall, said Martin, January was a ‘reasonable’ month for dealers.
‘It hasn’t been on fire, but thankfully Omicron wasn’t as bad as people had expected, and dealers have been able to replenish stocks to a degree.’ He continued: ‘We put up some values and put some down.
‘Cars like the Audi Q5, BMW X1, Vauxhall Grandland X and Nissan Qashqai have been under pressure and have come down, while the Vauxhall Mokka, Volkswagen T-Cross and Touareg have gone up – it is very mixed.’
Martin also revealed that older cars were performing better than their newer counterparts.
Ten-year-old cars were up by nearly three per cent, or £100, while cars at the lower end of the price scale – £6,000 to £12,000 – were also in higher demand than cars costing more than £20,000. ‘January is probably more interesting than when everything was going up last year, because it feels like we’re catching our breath and seeing where the market is going to go this year.’
PODCAST
Driven by
ZEUS CAPITAL
Used car prices are going to come under pressure
Head of research Mike Allen discussed what we’re seeing in 2022 already and what the year ahead could hold.
He said: ‘2021 was a great year for all dealers I speak to. Whether they’re a plc or private groups, they’ve all had a great time.
‘Will 2022 be a little bit harder? The consumers have more pressure on them with energy costs, and used car prices will come under a bit of pressure.
‘However, all of these guys bounced out of Covid, and by making these profits a lot of them converted it into cash, so they’ve got great balance sheets and they’re generating a lot of cash at the moment.’
Talking about the news that Constellation had bought a 20 per cent stake in Lookers, Allen commented that this ‘shrewd’ deal had got it the shares at a good price from shareholder Tony Bramall.
‘I think it’s a very shrewd investment. The price paid for the stake looks very cheap at nine times P/E (price-earnings) by our calculations,’ he said.
‘It’s quite clever in terms of making that kind of stake.’
He added: ‘Those shareholders wanted the business to go into good hands, and Constellation knows the market very, very well.
‘I think these guys wouldn’t just sell out to anybody.’
Watch our Car Dealer Live broadcasts as they go out or catch up on any that you’ve missed at:
cardealermagazine.co.uk/live
AUTO TRADER
Manufacturer sites aren’t great on retail – yet
Speaking on the Car Dealer Podcast, chief operations officer Catherine Faiers said dealers should consider how fast manufacturers can implement changes that would see them selling used cars.
‘I think it’s a sign of the way some manufacturers are moving.
‘Obviously, a lot has been said about the move to agency. There are about 10 different versions of agency from what we can see and understand from different manufacturers.
‘The reality is that if manufacturers are looking to sell cars more directly to consumers and look to build – and we shouldn’t underestimate quite how hard this will be – the capability to price the cars, they need to support consumers to buy them and all sorts of roles that typically manufacturers in the UK don’t have the ability to do. If you’re building those capabilities, then why wouldn’t you start putting your used cars in if you’ve invested in putting that in place?’ While she warned it was something we’ll likely see from more car brands, she added that it wasn’t currently their strong suit and would take big operational changes. ‘If I was a retailer, I would take some reassurance from the fact that when you look at consumer visits to manufacturer websites, they’re tiny. Consumers don’t think of going direct to manufacturers to buy cars today. We get 30 times more visits to Auto Trader than all of the manufacturers operating in the UK combined.’ She added: ‘They typically build good brochure websites where you can experience the car...but they tend not to be great retail experiences.’
AUTOGUARD GROUP
Agency model is way better for the consumer
Ali May-Khalil, group commercial director, spoke on the podcast when more news had come out about manufacturers switching dealers to agency sales.
He commented: ‘I think it’s probably a good thing. I know a lot of people get bent out of shape about it but I think it probably is.
‘I think for the consumer it’s way better. There’s nothing worse than lying on a sun lounger next to someone on holiday and them telling you they paid £500 less than you. It’s the same with cars.
‘I think when they standardise the pricing then dealers can focus on the experience and the consumer experience is enhanced, the pressure is off the dealer to retain margin, and leads coming into the business are managed better.
He joined our podcast the week Lotus announced it had completed an agency sales restructure with all 13 of its UK dealerships.
‘You’re only ever going to sell a vehicle like that with an agency model, let’s be honest, because then you take away the need of the retailer to stress about the deal or the price,’ he explained.
‘When you think about a car like a Lotus it’s not like you’re thinking about it – you buy a Lotus or you don’t buy a Lotus. With an agency model on that sort of vehicle, it allows the retailer to focus primarily on the experience. Not margin, not selling it, just saying this is the Emira, giving the customer a fabulous experience.’
