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Competition for stock drove margin pressures in November

Competition for stock drove margin pressures in November
November was a challenging month for the automotive retail sector according to data released today by Cox Automotive. 
Just over half of dealers reported that consumer demand was down YoY, but hot competition in the wholesale market has kept prices relatively high for used stock.

A note of optimism comes in the form of increasing fleet volumes, up YoY for the second month in a row.

Manheim revealed that 87% of vehicles sold first-time in November as demand for used cars remained strong across the month.

Competition for used stock, coupled with a fall in average age and mileage saw the average sold price at Manheim increase by 5.9% MoM and 4.1% YoY.

Dealer-Auction.com, the trade-to-trade online auction platform, also recorded an increase in average price, up 10% to £5,028, and a 1% rise against guide values. Similarly, NextGear Capital, Cox Automotive’s stock funding business, reported a slight MoM increase in average cost per unit to £7,721.

Philip Nothard, Customer Insight and Strategy Director for Cox Automotive said: “Stock has been in strong demand over the last few months and prices have remained high as a result.”

“October saw the highest volume seen all year at Manheim, but the number of vehicles in the wholesale market tends to reduce as we come to the end of the year. Usually we’d expect demand to slow down in line with supply, but this year competition for good quality vehicles has remained fierce throughout November.”

When it comes to stock mix, Manheim’s data did reveal some good news for dealers looking to source quality stock, with fleet volumes up 6.7% YoY.

Nothard continued: “The introduction of WLTP created a lot of challenges for the fleet market as tax uncertainty and supply challenges led drivers to stay in their existing vehicle.”

“As these pressures fade away, we’re starting to see fleet volumes return to the wholesale market, and hopefully this will help to ease the supply pressures we’ve seen over recent months.”

Despite an overall price increase, average values for diesel vehicles were down YoY in November. This is due to the reduction in newer diesel models entering the wholesale market, and a trend that’s likely to continue over the months ahead.

AFVs continued to see increased average values, but please note that the relatively low number of vehicles mean that high percentage swings are likely, and the figures are more heavily influenced by changes in stock mix.

*Article Source https://www.manheim.co.uk/news