09/02/2012
Category: Motor trade insurance
Car dealers may need to adjust their motor trade insurance policies, as the price they are having to pay for stock continues to rise.
According to vehicle pricing experts CAP, dealer margins are being threatened by a reduction in stock availability, which is pushing the value of used cars higher.
This supply reduction is expected to continue in the coming months as the difficult economic climate continues, CAP notes.
All this stems from the "catastrophic" reduction in new car registrations during the downturn of 2009, meaning that there is a dearth of three-year-old vehicles reaching the re-sale market.
However, that does not mean that dealers cannot make sales, as CAP’s pricing guide Black Book reveals that successful dealers are those that are able to price as “keenly” as possible.
Rising overheads with make this a particularly difficult proposition in 2012, however.
Black Book editor Mark Bulmer comments: "After a spike in volume some major disposal sources are dramatically reducing their sale entry numbers and tell us they will continue to do so in February. Consequently, we expect to see significantly less volume as this month wears on."
Mr Bulmer goes on to add that dealers will now have to consider buying stock whenever they can get it, rather than doing so to order. Such a strategy may lead to peaks and troughs in the value of vehicles on forecourts, promoting adjustments to motor trade insurance cover.
"One independent told us he is down on last year’s retail sales but is still actively sourcing cars to create a buffer for the expected drying up of volume," he added.
"Although not unheard of, it has also been noticeable that dealers within the same group are frequently bidding against each other to avoid being left short of forecourt offerings."
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