Used Car Prices Go Off the Scale
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INCHCAPE UK / P16 Chief executive James Brearley on downsized group’s future FINANCIAL IMPACT / P29 How new FCA regulations are affecting dealers’ finances www.am-online.com July 2021 £8.00 FIAT 500E / P40 Fiat’s iconic small car powers into the electric age GOOD FAIR PRICE PRICE GREAT HIGH PRICE PRICE 2021 PRICE USED CAR PRICES GO OFF THE SCALE INCREASES ARE ‘UNPRECEDENTED’ SAY VALUES EXPERTS /P6 Advertisement Feature Funding the return to growth. With the used car market heating up, Liam Quegan, managing director of NextGear Capital, refl ects on dealers’ return to growth after the latest lockdown and explains why funding is relevant to all dealers, not just independents. After a challenging 12 months, many and staff vehicles over and above dealers are returning to growth. their new and used stock. In the main, They are in an optimistic mood and these are funded via a combination of emerging from the latest lockdown wholesale captive funding arranged with fi re in their bellies. through the manufacturer and the dealer’s own capital. This is great, but it’s not plain sailing vehicle-by-vehicle basis without into a happier, healthier, and more There’s several reasons as to why a drawing down on their own capital. prosperous second half of the year. dealer may look to establish a separate Production woes are restricting the funding line, but primarily it’s because It’s for this reason we created new car market, while demand for the typical structure of a captive Stocking Plus. Whereas our core quality used stock is fi ercer than as funding arrangement can leave a Stocking Plan product enables dealers ever and CAP performance is dealer with less working capital than to build their used vehicle inventory from demanding confi dent bids and offers. is ideally needed to have the right any trade source and with no reciprocal The good news is retail prices are blend of vehicles on their books at any expectations, Stocking Plus allows them keeping pace, so there’s still profi t to given time. Most manufacturer derived to also invest in demonstrators, courtesy be found but dealers do need to be on stocking plans prioritise funding for and staff cars. The primary difference is their A-game though to buy well and sell new vehicles fi rst, then demonstrator, it refl ects that these vehicles will be used quickly. That includes having the basics courtesy and staff vehicles, with used prior to sale so the terms refl ect this. in place, not least access to funding that vehicles last. Each category will have gives them the freedom and confi dence a minimum expected investment level, A strong used car offer will be key to to bid or buy when the right vehicle meaning the capital required to have a many franchised dealers’ success this comes along. competitive used vehicle offer can year. We’re here to help ensure you’re often be lacking. ready to address the challenge and Wholesale funding products are often take full advantage of the opportunity. thought of as being more suited to the “A strong used car offer needs of independent than franchised will be key to many Join us today, simply apply online dealers, but more and more franchises at nextgearcapital.co.uk/apply-now are awaking to the benefi ts they can franchised dealers’ or call 0343 50 60 600 bring to their business. success this year.” Distinct challenges a franchised will With many dealers currently 343045 080621 have versus an independent include a expanding their used car offer, a requirement to run a prescribed secondary funding source enables volume of demonstrator, courtesy them to make this investment on a EDITOR’S LETTER s this AM magazine went to press we were just days from hearing prime minister Boris Johnson update the country on the final stage of his ‘roadmap to freedom’ from COVID-19 restrictions. It’s a crucial stage designed to involve the removal of social contact limits and the opening of large events, and is seen by many as a signal we can get back to living our lives as we wish to. Latest reports suggest ministers are concerned the more transmissible Delta variant will scupper the plans for a June 21 ‘freedom day’. If there is a delay, don’t despair - we’ve all shown A we can cope with so much so far, and your businesses have adapted remarkably. I don’t know about you, but I can put up with mask wearing and no handshakes for a few weeks more if we’ll finally come to know that it’s safe to drop these new habits for good. When it comes, I don’t want businesses to feel they’d better keep the plastic screens and social distancing posters in a cupboard just in case. I don’t want staff to think there may be another lockdown coming in the winter. Let’s see a return of confidence across the UK. And, crucially for UK automotive, a willingness to spend. PS: We’re getting active and doing #Move4Ben throughout June to raise some funds for our fantastic industry charity, Ben. Donate to this great cause by sponsoring us at https://giving.ben.org.uk/pf/the-am-team OUR WRITING TEAM Tim Rose Tom Sharpe Editor News and features editor am-online.com JULY 2021 3 With results like these, why wouldn’t you try us out? “Thank you so much for the Free Trial. An immediate response to selling a couple of overage cars. A fast and easy way to make new contacts and to both buy and sell cars SURƬWDEO\.” Lee Scott, Mercedes-Benz South West Visit Cartotrade.com to register for a FREE trial, dealers right across the UK. Run by experts with over 20 years of online car industry experience CONTENTS 16 Inchcape UK UP FRONT INSIGHT SHOWROOM 06 News insight 16 Face to face: 25 5 minutes with... 50 Fiat 500e 08 News digest Inchcape UK Jack Allman 53 Longterm test: Following a string of Bumper’s chief commercial 10 Market intelligence headline-grabbing officer explains how his Cupra Formentor 15 Opinion disposals, Inchcape UK is company helps workshops E-Hybrid in ‘really good shape’, says keep customers happy by chief executive James spreading the cost of major Brearley repairs TALENT SPOTLIGHT: FINANCE 54 People on the move 32 New FCA regs 38 Has online finance 44 Pandemic 55 Eight questions to... and their impact finally come of age? drawbacks eStar Truck and Van ‘Good outcomes for More and more car buyers Measures to address everyone involved’ and ‘no are going online in a bid COVID-induced hardship managing director major impact’ are among to arrange their own deals have impacted finance Steve Bridge the dealership reactions on finance houses and dealers am-online.com JULY 2021 5 NEWS INSIGHT IT’S UNPRECEDENTED SOLD – NO END IN SIGHT SOLD SOLD SOLD AS USED CAR PRICES SOLD SOLD CONTINUE TO ROCKET SOLD In some cases, nearly-new prices are outstripping brand-new and SOLD dealers are urged to keep pace to ensure margins are not reduced SOLD SOLD aluation experts and trend that shows no signs of relenting. RULE BOOK ‘OUT OF THE WINDOW’ AM100 retailers Such is the pace of change that A used car buyer for a leading AM100 SOLD have conceded that some traders are baulking at car retail group told AM: “I’ve never V they do not know stocking costs, leaving car super- seen anything like this in my working when this year’s markets and franchised retailers to life. Holes are appearing in the fore- “unprecedented” used car price drive what volume can be found in courts and I’m giving every last rises will end. the market. penny to try to fill them. As stock shortages and buoyant One independent trader told AM: “I “I think it’s fair to say that none of retail demand combine to drive-up barely have anything on the website us expected a boom like we experi- know I shouldn’t dismiss any of our values, AM was told that nearly new right now. Cars are selling before enced last June, but the sustained products, but monthly values have car prices are starting to outstrip we’ve had chance to prep them. We customer demand we have seen gone completely out of the window their brand-new counterparts can’t stock the forecourt fast enough. since April and the shortage of stock right now. and some retailers are buying “I’m currently selling some of the has created a whole new challenge. “Cap Live has surpassed our under-priced vehicles from online cars I managed to source into fran- The usual rules have gone out of the monthly values. What we found last disruptors to stock their forecourts. chised retailers because they are window.” month was that we were having to And, while it seems only a forensic, paying so much for them and Cap HPI head of valuations Derren adjust values every couple of days, real-time analysis of values will Webuyanycar is an option too. I Martin conceded that the pace of rather than every week. The market prevent retailers being left out-of- guess they’re paying way over book price rises had placed huge pres- is moving that fast. pocket as retail values soar, it is a to stock cinch and Cazoo.” sure on its resources. He said: “I “It’s really, really difficult to call. I didn’t think the market would be this strong again this month (June), but CUMULATIVE BLACK BOOK LIVE % MOVEMENTS, 2015-2021 YTD Source: Cap HPI at the moment it looks as though we’ll be looking at another 4% rise.” Cap HPI reported a 6.7% rise in wholesale values in May – an average of £800 – but premium and sports cars were among models which had been subject to price rises in the thousands, Martin said.