October 2022 – Data from Dealer Auction’s monthly Retail Margin Monitor has revealed that profit margins remain strong, despite the increase in trade prices.
Dealers are experiencing a good return on preowned SUVs, making up 70% of the top 10 in September 2022. The Land Rover Discovery Sport appears as number one, with an average retail margin of £3,800, closely followed by Land Rover’s Range Rover Evoque with £3,490.
The list reveals a range of new table entries in September, including Vauxhall’s Zafira Tourer (£3,130) in the third spot and Hyundai’s TUCSON (£3,110) in fourth – reflecting the importance of being proactive in diversifying your stocklist in order to find additional profit opportunities.
At a brand level, the premium marques offer the highest margin potential, accounting for 60% of September’s top 10. Land Rover was the biggest earner, offering retailers an average profit of £3,750.
Dealer Auction’s Marketplace Director Kieran TeeBoon commented: “The challenges that come with the cost-of-living crisis are sadly unavoidable. But there are many tools available to help dealers and using data can support in making quick decisions when replenishing stock.”
There is still considerable profit to be made on the right vehicle. Being reactive to changes in consumer demand and being able to source and get stock on the forecourt quickly, will be key to maintaining profitability.
The National Association of Motor Auctions (NAMA) recently shared that dealers should not ‘expect a sizable boost in inventory as a result of a number plate change month’.2
TeeBoon concludes: “With the constraints of weak supply and inconsistent consumer demands, the profit earned per vehicle has never been more important than it is in today’s market. Dealers must extract every penny they can from every asset they have, so more and more emphasis is being placed on the performance of their remarketing channels.”
Richard Walker, Data & Insights Director at Auto Trader, commented: “The robustness of retail margins is yet another sign that the industry is in a healthy position, despite external factors. We continue to see where there’s stock there are sales with the over 5-year category seeing double digit increase in sales in Q3 2022 compared to Q3 2019.
“Additionally, the volume of advert views on our marketplace remains comfortably above pre-pandemic levels, whilst average daily users have increased to 1.34 million. What’s more, used cars are currently selling two days faster than 2019 levels.
“It’s this solid level of demand, coupled with the ongoing challenges in supply, that is continuing to fuel used car price growth; average retail prices are up 11.2% on last year, meaning that prices are around £2,000 higher than what we would have expected to see today. Although there are potential headwinds, we don’t see any indication of used car retail prices falling anytime soon, which means margin potential should remain secure for some time to come.
“In such a fast-moving market, it’s vital that retailers follow the data, promptly react to changes and regularly review their pricing strategies to ensure maximum profit.”
About Dealer Auction
Dealer Auction is the UK’s smartest and busiest automotive digital wholesale marketplace. We give buyers and sellers more choice, better insight and greater margin. Dealer Auction is an independent company, created through a joint venture between Cox Automotive and Auto Trader. For more information, visit www.dealerauction.co.uk.
Launched in January 2022, Dealer Auction’s Retail Margin Monitor tracks the highest margins seen on used vehicles with a significant number of units sold under the £25,000 retail mark, sold on the platform’s open network the previous month. The September 2022 edition analyses data from 1 to 30 September 2022.
Sources:
1 https://cardealermagazine.co.uk/publish/shock-rise-in-used-car-prices-in-september/271995
