Record new car sales and growing consumer confidence are causing dealers to borrow more in order to provide a wider range of stock, according to wholesale finance provider Sword Apak.
James Powell, sales director at Sword Apak, said: "Across our wholesale stock funding partners, there is clearly a dealer desire to increase stock levels. In the used car sector, dealer demand has been more than matched by market supply – the result is that values have dipped slightly. Dealers armed with funding are in a strong position to get the stock they want."
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The company warned that despite economic pressures to improve stock turn and reduce stocking days for vehicles, the average time vehicles spent on forecourts remained 55 days.
Powell said: "Stock funding is a significant overhead for all dealers and as a depreciating asset it is one that all dealers need to work continuously to control."
Looking ahead, Sword Apak forecasted that dealers would seek to increase stocking in line with pre-credit crunch norms in Q3, albeit with some adjustments in the stock mix.
It said that it thought trade buyers would be more selective in the period in light of increasing volumes on offer, and that trade buyers were set to focus upon areas that research shows consumers are seeking: reliability, price, running costs, fuel efficiency and safety.
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By GlobalDataPowel said: "Consumers may be more confident, but the lessons of the recession are that their decision making is being driven by rational thinking."
