Recent figures have shown that the value of unsold stock at car dealerships up and down the UK is at a record high. Chartered accountant group UHY Hacker Young’s research revealed that in the last 12 months the value of unsold stock in showrooms and forecourts around the country has risen by 16%. This means that dealers in the UK are sitting on £27 billion worth of unsold cars in total, compared to 23.6 billion last year.
The record value of unsold stock now equals 17.7% of the sector’s total annual turnover, compared to 16.9% last year. When analysing their results, Hacker Young theorized this increase was due to pressure from manufacturers driving dealerships to tie up more capital in stock.
Paul Daly, a partner from the Hacker Young Manchester office, said: “Car makers continue to push more and more vehicles on to dealers’ books, but that can’t go on indefinitely. It’s unsustainable for unsold stock to keep rising so quickly.
“Manufacturers have traditionally used the UK market to absorb excess production from other European markets, as we tend to replace our cars more frequently than consumers in other countries do.”
Paul went on to say that pressure is increasing for car dealers as manufacturers continue to demand bigger and better premises. He continues: “Many now need to resort to significant off-site storage facilities to hold off-site access stocks.”
Dealers are also becoming more reliant on the temporary boost in cash flow associated with taking on new vehicles. Some manufacturers provide dealers with invoices, allowing them to claim back VAT on these purchases, despite not having yet sold the vehicle. Dealers then pay the manufacturer once the vehicle has been sold.
“It’s a short-term relief that can cause huge problems when levels of unsold stock begin to fall again,” continues Paul. “Particularly as historically these falls in stock levels tend to occur at a point in the economic cycle when dealer financial performance is under pressure generally.”
These rising levels of unsold stock are a worry for UK car dealers. Dealerships around the country need to be more efficient when selling stock.
What can dealers do to ensure they sell their stock efficiently?
1.Get your cars seen
It may sound obvious, but if potential buyers aren’t being exposed to your cars, they won’t get sold. You may be used to advertising locally, but ensure you’re using every opportunity available to get your stock out there.
Advertising in leading classified car websites is a great idea. The majority of your audience who are searching for cars will end up on national classified sites such as AutoTrader, Gumtree or PistonHeads. There are also some popular, more localised sites in certain areas of the country (such as Friday-Ad in the South East) that are worth a look.
2. First impressions are everything
Photos are the first thing potential buyers see when looking at your stock online. Make sure your dealership invests in a decent camera and ensure that each car has at least 10 decent photos, showcasing all different features and angles.
Just think, if you looked at a car online and it had just two photos, would you buy it? Within the actual dealership, make sure the cars are displayed nicely too, little changes can make a big difference!
3. Ensure you have a decent salesperson representing your dealership
Finding the right salesperson is crucial as they’ll be dealing face-to-face with your customers. Having professional staff who know your vehicles inside out is fundamental.
It’s also important they get the balance right, a good salesperson is patient and not too pushy, whilst also being confident in the product.
4. Do you have a strong website?
Remember your website is your online ‘shop window’. Would you have a bad display in your showroom? Online, it’s no different. Again it’s all about the first impression.
A strong website needs to be easy to navigate, user-friendly and mobile responsive, as 70% of online browsers search for cars on their mobiles. Your website also needs to be easy to find, so make sure you consider a web provider with a strong online marketing background.
5. Search Engine Optimisation is key
Search Engine Optimisation (SEO) is a way of ensuring potential customers find your website through search engines, particularly Google. In general, Google favours sites which are responsive and easy to navigate, which will be awarded by being displayed higher in the ranking system.
Good website providers will have SEO experts on hand to ensure your website meets these standards.
6. Make the most of online reviews
Something which is often forgotten is customer reviews, however, having good customer reviews can be an extremely powerful tool. Buying a car is a big decision, so being reassured by others can be the final push a potential customer may need to make a purchase.
Online reviews on Google can also have a real benefit to your dealership’s ability to rank in search results pages, which can help drive more potential customers to your website!
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