A CAR dealer has claimed that his business is being hammered after some “rapid” changes in the industry – and they aren’t the only ones.
Lee, who runs Car UK in Cheshire, took to YouTube to share the plight of traders over the past couple of months.
Lee told viewers that prices have been in freefall, putting huge pressure on dealerships’ profit margins.
He cited price cuts from some major brands as part of the reason behind this, mentioning the impact Tesla’s reductions had on the resale EV market.
The Elon Musk-helmed company slashed the cost of some of their most popular models by up to £2,000 in October.
US giant Ford swiftly followed suit, hacking £7,000 off of their flagship EV, the Mustang Mach-E.
These are just two examples of manufacturers trying to drum up demand in the face of slumping EV sales.
And despite the strongest October for new car sales since 2019, with numbers returning to pre-pandemic levels according to Autocar, these cuts have been mirrored in the non-EV sector.
All this contributed to a rapid and significant devaluing of second-hand cars.
Resale dealers were forced to lower their prices to remain competitive and maintain the incentive for customers to buy pre-loved motors as opposed to the suddenly cheaper new alternatives.
Data from Cap HPI found that October saw prices of used cars fall by an average of 4.2%, the largest drop since 2011, as reported by Car Dealer Magazine.
Illustrating this, Lee used the example of his wife’s Range Rover, which he bought for just under its trade price of £7,400 18 months ago.
He claimed that when he valued the car this week, this had fallen to £2,850.
The distraught dealer added: “Things have been pretty grim for some dealers.
“People are going online and looking at cars…they’re just not committing or ringing up in the numbers that they were.
“That to me shows clearly that people are being really cautious about their next purchase and don’t want to be caught out in a price drop.”
He even shared anecdotes from other dealers who had sold a grand total of zero cars throughout October.
However, Lee is one of the lucky ones thanks to the type of business he runs.
He explained that “budget” dealers, which he defined as those selling motors for £3,000 or under, have been mostly unaffected.
This is largely because such cheap cars are either quite old or extremely readily available and so price cuts to newer models don’t really touch them.
As such, motors on the market for between £3,000 and £4,000 are still “flying out the door”.
In fact, they are even going up in price, according to Lee, as retailers who previously dealt exclusively in higher-end vehicles are now competing in the low-price market.
He also saw reasons for hope, as he expects sales to pick back up in the new year and for things to “stabilise”.
It comes after one EV driver claimed that the value of his car dropped by thousands overnight, leaving him feeling “physically sick”.
Meanwhile, motorists were given a significant boost as The Sun exclusively revealed that Chancellor Jeremy Hunt will not announce a rise in fuel duty in the next Budget.
