Dealers imposing used car buying bans to protect cashflow, says SVA

Dealer groups are facing major buying restrictions or even total bans at auction in a bid to protect cashflow, according to Shoreham Vehicle Auctions.

Dealers have also been retailing fewer cars due to choosing to sell smaller numbers of retail stock at higher prices, despite wholesale prices falling in recent months.

A combination of forecourt stocking interest rates and used prices falling sharply in the wholesale market have all contributed to a fall in conversion rates at auction just as used car volumes are starting to rise.

“I have spoken to multiple dealers over the past couple of months and they have explained how they are changing their behaviour to combat rising interest rates and falling wholesale residual values,” explained Alex Wright, Shoreham Vehicle Auctions’ managing director.

“Some dealers haven’t bought used cars at auction for several weeks while others have been restricted to 4-5 per auction visit. Dealers are also retailing fewer used cars at higher prices which has also contributed to falling auction conversion rates,” he added.

Wright said dealers are expected to buy stock again in December to take advantage of lower wholesale prices and to bolster forecourts ready for a busy January.

“Dealer groups will be buying stock again in December. This will help improve auction conversion rates and the used market will take some strong momentum into 2024,” he added.

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