The pressure on car dealers to sell new and used cars has never been greater than as car prices plummet in the new and used car sector, according to the dealer principal at John Oxley Motors in New South Wales.
Dealer Principal at Port Macquarie-based John Oxley Motors, Shane McGuigan, spoke to Autotalk on how he sees the car sales industry at the moment.
“The market is a bit unusual at the moment, with used cars hard to find and the way new car manufacturers are putting pressure on dealers to get cars sold. The pressure has always been big, but I’ve noticed of late is has been a lot more heightened,” says McGuigan.
For McGuigan the car market will stay steady similar to what was seen last year. “It’s a case of wait and see who are going to be the winners and losers in each segment, people are tending to buy SUV’s a lot more than four-door sedans, which has been the case for a while, and will continue to be like that for a while longer,” he says.
With prices for new and used cars being the lowest they have ever been in decades it’s no wonder many car dealers are being put under increased pressure by OEM’s to sell more and more cars.
Commsec figures estimate it now takes someone earning the national average wage 25.9 weeks to buy a large family car compared to 31.3 weeks three years ago and 37 weeks a decade ago. Yet new-car prices could fall even further towards the end of the year if the exchange rate improves.
The oversupply of new cars is great for buyers but not good news for car sellers. As McGuigan says, “If you end up getting carried away with programs, cars and stock, the next thing you know you have an overstocked car-yard without knowing what happened.”
“Similarly, if it quietens down just a couple of percentages, you are going to see a hell of a lot of cars in stockyards without anywhere to go, added to the fact that manufacturers need to get the cars cheaper and get the public to know that.
“Manufacturers are doing their best to convince dealers to take them and the only way to do that is to make them cheaper. This makes it harder and harder to make a business model, especially from the new car business. It’s a very pressurised system where in some cases you are not able to pay your bills with what’s left over,” he says.
McGuigan also points out that cost reduction will become crucial going forward, and will have to remain low, which in itself will have an effect on dealership size and dealers’ ability to get back up and going when the next rush comes.
For McGuigan, June was a big month as it always is, but July and August are going to be quiet. He remains confident that it will pick up in October and November, and then down again in December and January.
“If you can keep your month by month consistent then you’re a genius,” he says.
He notes that there are too many variables in the market, such as, OEM programs, the number of stock coming off boats, and the general public’s sentiment on the economy.
McGuigan’s advice is to be always aware of your stock and your resources and to have the ability to manage your manufacturers and keep them happy.
“But it’s also important that you have cars that are competitive in the current market,” he says.
“For example, a couple of cars which you can buy, two weeks prior to another competitor can mean a difference of thousands of dollars, so you need to be quick to react against the market and have a keen eye on what stock you are buying and selling whether it is new or used.”
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