Risk assessment
Since the 2016 referendum, new car sales have been very strong. Many people predicted doom and gloom, but all the evidence suggests there’s actually a ‘feelgood’ factor surrounding new metal.
One thing that’s likely to put a damper on this boom is the constant price rises which have been placed on dealers. One Citroën buyer told me he was onto his fifth price increase in eight months and this was eating into his margins.
This threat of increases has been inducing people to sign on the spot in order to avoid any future price rises. However, at some point, there’s going to be a crunch as the pound is relentlessly devalued and those with cash to spare will have already spent it.
At the opposite end of the scale, used car prices aren’t great because the market is flooded with returned lease cars and swappers from people deciding to buy before a price rise. Dealers are now being cautious when taking in a part-ex as their financial safety net is being gnawed away at both ends of the deal.
This double whammy was highlighted at the Skoda Kodiaq launch event that took place in early February.
Unbelievably, retail cars that were built to order (ie, the majority of them) would be arriving in time for the September plate change, but retail prices are far from fixed. How then do you value a part-ex when predicted residuals for the swapper are anything but predictable? And who’d want to appraise and value a swapper that they wouldn’t be taking in for another seven months?
There is nothing quite like the retail motor trade for taking risks against minimal margins.
‘At some point, there’s going to be a crunch as the pound is devalued’