Some 85% of dealers view the time taken to complete reconditioning work is the biggest delay to getting a vehicle on sale, according to 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. As a result, 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, said: “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.”
The survey also found that it takes an average of 3-4 days to list a newly-sourced vehicle for 42% of dealers, 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.”
Separate research from cap hpi 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” said Nothard. “It goes without saying that a reliable reconditioning partner is a must for dealers that don’t have in-house reconditioning facilities.
“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.”