THE overall theme for dealers contained in the Automotive Insights Report (AIR) for 2023 is to avoid trying to time a dropping market. It is like trying to catch a falling knife.

The Insights report shows average retained values are dropping, although not in free fall, dealers need to implement some changes:

1. Avoid over-trading: take the valuation of trade-ins away from the new car department and give the remit to the used car department.
2. Increase stock turns: dealers need to be buying and selling trades in the same environment. Stock needs to be refreshed every month if values are dropping 1.5 to 2 per cent monthly.
3. Floor plan, the eroder of grosses. We are seeing dealers facing non-captive floor plan charges between 7.5-8.5 per cent. This can see $200+ of gross gone every month.

Aidan Cousin

Comments on Automotive Insights Report:

1. It is interesting to see falling sales and listings in December, as historically dealers would want to be low on inventory going into the new year. On January 1 every car had a birthday and just got a year older.
2. No surprises that the top 10 models sold are reflective of the last 5-10 years of models sold in Australia
3. Dealer velocity: Top 10 fastest moving stock. All these models are targeted to younger audiences and are from the cheaper segments of the market on average.
4. Dealer market days supply 2-4 years – top 10 lowest – all models cheaper, reliable and appealing to a wider market – with nine models from Japanese/Korean brands and MG with one vehicle model
5. Retained value SUV: Jimny tops the list at 135.2 per cent. No coincidence as this reflects Suzuki stopping orders of the 2-door variant in 2023.SUV’s don’t take into account aftermarket spend, with
   a) SUV’s performing better than passenger as these would more likely have accessories put on.
   b) SUV’s increase in popularity in the lead up to Xmas for holidays and camping.
6. Retained value passenger 5-7 years old: The return of the Mitsubishi Mirage. Surprise No.1 entrant.
7. Retained value passenger 5-7 years old: Good to see the Ford Falcon back into a top 10 list.

An example of a well performing and an average performing dealer and the impact stock turns have in managing inventory is below:

Read more: 

Used cars taking longer to sell – AIR

By Aidan Cousin