::Barloworld ::The used cars dealer’s balancing act
The used cars dealer sells a necessity – transport. And at a considerable saving over buying a new car, too. He should be exceedingly successful in his business. Of course, like all successful businesses, soon everybody wants to do it and now there is a used cars dealer on every street corner. To add insult to injury, there are too many used cars around, thanks in part to the vast numbers banks have to repossess.
Only the best survive in a time when credit is a much sought-after commodity and here the used cars dealer has a disadvantage. Many motor manufacturers can sell you a new car on very favourable terms. Their own finance houses have the clout and the tailored products (backed up with a lot of money) to offer attractive interest rates. The typical independent used cars dealer, however, has to make use of the banks and large finance institutions and are mostly bound by the ruling interest rate.
He is also at a disadvantage in not being able to sell only the popular cars that sell easily. People command high prices for parting with their reliable chart-toppers and a dealer cannot afford to pay too much, because he cannot really sell the car for anything more than current Retail value.
The “lemon” brands are those who do not have a lot going for them in a particular market. They might have market-related pricing, but they do not sell well, they have a doubtful reputation, they are expensive to maintain and they have just not endeared themselves to the general buying public. A used cars dealer sometimes do not have a choice in buying these cars. The ever-present trade-in is often the obstacle that hinders a sale and if he wants to sell a car to the client, he has to take the client’s trade-in off his hands. Pay too little and the client walks away. Pay too much and the dealer cannot get rid of the car unless he sits with it in his stock for too long or sell it at a loss. In both cases, it will cost him money.
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