Dealer groups introduce used car buying bans to protect cashflow reports SVA

• Buying bans help dealers manage a challenging used market
• Dealers keep retail used car prices high ready for an upturn in the January market
• SVA MD predicts dealers will return to buying used cars in bigger numbers in December

Some dealer groups are being restricted by the number of used vehicles they are buying at auction after buying bans have been introduced to protect cashflow according to Shoreham Vehicle Auctions (SVA).

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.

Based on forecourt stocking interest rates rising in 2023 and with used prices falling sharply in the wholesale market dealer groups have introduced major buying restrictions or total bans.

These 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’ MD.

“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.

But it’s not all doom and gloom according to Wright as dealers are expecting the market 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.