Auction houses are seeing more older used cars up for sale than in previous years, according to Glass’s Guide.

The company said that cars aged 10.6 years or more represented 14% of all auction sales this year compared to only 9.8% last year. Those aged between 9.6 and 10.5 years accounted for 8% this year and 6% last.

Adrian Rushmore, Glass’s Guide managing editor commented: “Furthermore, for every month this year, there have been a larger proportion of sales in these age groups than for the equivalent month last year. Said dealers are retaining more younger cars to retail than previously so the mix of vehicles going to auction has aged. Customers are also keeping their cars for longer, resulting in a higher proportion of older part-exchanges, which are often unsuitable for retail.”

Glass’s said that ex-fleet cars aged between 2.6 and 3.5 years accounted for 19.5% of the total in August 2011, but had reduced to only 15% a year later. This was because fleet sales were at their lowest in early 2009 and these cars are now coming to market. These cars are in demand and more of them are being sold direct to dealerships.

We say:

The current used car shortage has had an impact on both dealerships and auctions, with prices reflecting the availability of premium quality vehicles. Dealers cannot sell empty spaces and so more and more are looking to increase profits by offering those vehicles that fall outside of their desired stock profile or franchise marque. But many others are missing out on a tremendous opportunity. These older vehicles would normally go to auction for another dealer to buy and turn into profit, so why not retail them, along with a good warranty and recovery package instead?

We are experiencing an unprecedented demand for warranties to protect the vehicles that are often are too expensive to cover or in the cases of franchises, fall outside of their manufacturers’ approved programme. Despite the money no longer being in the metal, there really does seem to be an emerging trend for increasing F&I volume across the industry as these products can counteract the small margin made on vehicle sales. Using warranty as an example, dealers can reap countless profit-making opportunities including at the point of sale, repair work, servicing to keep the warranty valid and renewal.

One dealer principal of a large group recently told us that at his weekly sales meeting, the staff had been asked how they could help the dealership to make money, given that the car sales operation was only just covering their overheads. After much head scratching, the suggestion was put forwards that every profit-making area and potential revenue stream of the business should be explored in detail, and no stone was to be left unturned. This has resulted in a complete change of business plan. Whereas once this group (like many businesses) relied soley on vehicle sales to boost profit, now the focus is on providing products that offer vehicle buyers genuine peace of mind – and long-term profit for the dealership.

We can also design a warranty to reflect the age and mileage of the stock being offered with great upsell opportunities (such as receiving up to 50% cover free of charge when the customer upgrades to a longer term) to create more profit for your business.

Finally, with customers keeping hold of their vehicles for longer, dealers could actually now be looking at an additional five to seven years of revenue per customer but this can only happen if the customer has the product in the first place. Even if your customers leave without the protection they’ll need, our aftersales team are on hand to canvass them and even book them in for a service, MOT or vehicle healthcheck at the same time. We then take a small commission payment from each sale.

To find out how the WMS Group can work for you, request your FREE dealership pack and profit consultation by clicking here, and learn why over 3,500 dealerships have chosen us to supply their warranty, GAP and protection products.

Source: Motortrader.com