Over a third (34%) of dealers say they are stocking more economical cars as a result of the ongoing cost of living crisis. Around 33% are stocking cars that cost less to buy or lease while a further 20% are retailing smaller cars, according to February’s Startline Used Car Tracker.
However, only 7% say they are providing more information online about cars for sale, 5% are offering cars with better provenance or history and just 2% have enhanced their standard warranty.
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Paul Burgess, CEO at Startline Motor Finance, said: “The cost of living crisis has now been visible in the used car market for probably around a year and it is interesting to see the changes that it has brought about.
“To some extent, these findings are unsurprising. Consumers are justifiably concerned about the costs of buying cars and keeping them on the road, and large numbers of dealers are reacting to these needs by changing their stocking mix accordingly to offer cars that take account of these needs and preferences.
‘What is perhaps more noteworthy is that very few car retailers seem to have re-examined their wider proposition. Confidence is a huge part of buying a used car, especially when personal finances are under pressure, and actions such as putting more effort into online presentation and increasing standard warranties could have a real impact.”
When it comes to changing consumer behaviour, 17% of dealers say consumers are negotiating more over pricing, 11% spending more time over car buying decisions, and 7% of car buyers expect a higher part exchange offer.
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By GlobalDataPaul said: “This underlines ongoing consumer concern about the cost of buying a vehicle. Some are understandably looking to squeeze every possible advantage out of the deal before committing to purchasing.”
Elsewhere in the Startline Used Car Tracker, there are signs that stock supply is again becoming more of a concern for dealers. When asked about the biggest challenges facing their business, 75% cited the availability of used cars – up 10 percentage points on January. Also, there is growing worry over the industry’s changeover to electrification – up from 58% last month to 64% now.
Paul said: “For every comment or story that we hear about stock supply improving, there seems to be another saying it is worsening, and any noticeable improvement seems as distant as ever. Of course, this is leading to an ongoing ageing of the used car parc and dealers are faced with having to buy and retail ever older cars, which is a definite issue.
“Concerns about electrification are very present at the moment both in the media and in everyday conversations. It is difficult to say whether this is just a bump in the road as we move towards an EV-dominated future, or whether we are seeing something more serious in terms of dealers and consumers showing resistance to the new technology.”
There are also some indications that while dealer sentiment about the used car market is not becoming more positive, the mood seems to have at least largely stabilised. The percentage of dealers who said they are pessimistic has fallen from 42% to 37%, while those who are optimistic fell from 11% to 8%. Those whose mood is unchanged is up from 47% to 55%.
Paul said: “The industry is probably now in a position where it feels that it knows what to expect from 2023. The sector has become more competitive and turning a profit on a used car has become more difficult, but the market remains relatively strong despite the considerable headwinds it is facing.”
The Startline Used Car Tracker is compiled monthly for Startline Motor Finance by APD Global Research. This time, 306 consumers and 51 dealers were questioned.
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