Local demand affecting car dealer profitability

More than a third of cars on the forecourts of UK car dealerships are not of interest to local customers, according to new research.

Auto Trader’s i-Control unit – which analyses car demand, supply and speed of sale – found that 35 per cent of vehicles were not in demand in their specific location. This in turn is damaging dealerships’ profitability as they have cars they either cannot sell or have to sell at a lower profit margin.

Being meticulous in planning which vehicles you should trade in is extremely important, but so too is taking the same level of care when acquiring a motor trade insurance policy. It is not merely a question of finding the cheapest quote possible, it is essential that a firm gets the best possible cover for its business and all the vehicles it chooses to have on its forecourt.

The i-Control tool rates vehicles between one and five to show their desirability within a particular region. Its most recent data found that cars with a desirability rating of between four and five would sell twice as fast as those with a rating of between one and two. They also sold for far better profit margins.

Importantly, the research showed that over 80,000 vehicles had a rating of less than 2.5 but this increased to over 3.6 when moved to a different area. This illustrates the importance of assessing consumer trends within a locality when deciding on which cars to sell.