Reconditioning is biggest barrier to getting vehicles on sale fast, say dealers
85% of dealers reported that time taken to complete reconditioning work is the biggest delaying factor in getting a vehicle on sale, according to the results of Manheim’s latest dealer sentiment survey.
The results come at a time when high demand for stock is leading to strong competition in the wholesale market, and some dealers are choosing to upgrade lower condition vehicles rather than pay top-price for ready-to-retail stock.
Philip Nothard, Customer Insight and Strategy Director for Manheim, explained: “We know that margins are under pressure, with almost half (48%) of the dealers we surveyed reporting a year-on-year margin decline.”
“These pressures, coupled with a competitive wholesale market, mean that retailers are managing costs extremely carefully. One strategy is to buy lower grade vehicles, or keep hold of part-exchange stock and recondition it before putting it on sale.”
In response to the survey, 42% of dealers said that it takes an average of 3-4 days to list a newly-sourced vehicle, while just under a quarter reported an average of 5-6 days.
Nothard continued: “Reconditioning can reduce the initial outlay for a dealer, but there are hidden costs in the potential impact on time to sell.”
Nothard called attention to research from cap hpi, which suggests that a standard used family hatchback like a Ford Focus can depreciate by an average of £7 per day, a hidden cost of £28 per car if it takes an average of four days to list a vehicle.
“It’s worth being aware of this hidden cost because there are ways to mitigate it” says Nothard.
“It goes without saying that a reliable reconditioning partner is a must for dealers that don’t have in-house reconditioning facilities.”
“I’d also suggest a focus on appraisal training for sales staff. An accurate appraisal allows dealers to make an informed decision on what to do with a part-exchange car, and may mean it can be booked in for reconditioning work earlier.”
“Finally, it’s worth considering whether or not a vehicle can be listed for sale with an image before any reconditioning work is carried out. Even a simple image of the car will generate significantly more consumer interest; Auto Trader data shows that vehicle adverts with placeholder images perform 62% worse than those with real images.”
Nothard concludes: “The key to margin gain for dealers is to be fully aware of the impact that longer preparation times can have, so they can take steps to reduce the impact on ROI wherever possible.”