Is it just in my area, the current market or because of the time of year?
I took a trip around the secondhand car lots yesterday within roughly a 10 mile range of home only to find two no longer in business and the majority of others with very little stock to sell. Most retorted that it was because of high secondhand prices and the traditional January hike, but at my local car auction house (WOMA), there were 170 lots on sale last Thursday, including several on behalf of the same local motor traders I spoke to.
What's going on? Has has anyone else noticed anything similar?
bazomis
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Consumer protection laws are starting to bite small dealers unfairly. Dodgy punters buying cheap cars under £5k have discovered they can use them for 3 months or so, then find some small fault like a minor oil leak and then reject the car using the small claims track of the county court for a full cash refund. Case law is supposed to allow the dealer three opportunities to fix faults, but has not been fought on the new laws, and the time and cost of fighting a punter who has no assets through small claims isn't worth it. Dealers need to get together, fight one of these gits through the full county court and get a judgement in their favour. It would actually be better if dealers failed in the county court and the case went to appeal and they then won because that decision would be binding on all lower courts, including small claims.
HJ
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So does that then imply they would rather sell their stock 'as seen' and without warranty or comeback at an auction (presumably at lower profit margins) than from their business premises with the consumer protection that then affords buyers?
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As it takes months to get a case through the small claims court, especially if it's defended, then it takes a fairly determined person to see it through. Are there enough of those around to push significant numbers of dealers out of business?
What does often happen is that people don't bother to defend small claims cases so the litigator wins by default.
Edited by Bill Payer on 31/01/2010 at 14:13
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There's a motor trader around here (one of those still in business unfortunately) with more than 30 county court judgements to his name. He doesn't defend them but by all accounts he does deserve them!
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I'm really not convinced by this. Not even a little bit.
The onus is on the private buyer to take legal action against the dealer if the dealer fails to follow the legal requirements. On what basis is a dealer going to take action against a private buyer?
The idea that people are rejecting cheap cars after months of use for trivial faults and the courts are backing this is a bit silly isnt it?
I think scrapage is far more likely to be having an impact, but I'd be delighted to hear first hand accounts of this horde of private scammers.
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Seems like a lot of bother to get three months of free motoring.
And courts keep an eye on litigants, so anyone doing this several times over would find they have some questions to answer.
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Scrappage has also helped to kill of the smaller traders, there is a major lack of sub £2k cars out there.
this is also having a knock on affect on the smaller repairers / factors, as a lack of cheap / older cars means less parts and repairs needed, this and the fact newer cars are almost impossible to diagnose and repair at a reasonable cost, means there are still major changes due to happen in the motor trade.
IMO to run a car son, you will need very deep pockets.
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Cars at auction are selling for good money which means small profits for car traders your best bet would be a auction buy don't worry about the warranty most traders warranty are not worth the paper there written on and you can buy your own cover.
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Consumer protection should apply to all goods. If dealers actually properly inspected and understood what they were selling then they wouldn't be rightly taken to task over selling poor quality cars. Most dealers test drive a car and don't even bother to check it over properly when you p/x one. Why not??? How do they know they are not buying and then trying to sell an unroadworthy vehicle?? It beggars belief really.
I don't see why second hand car dealers should be allowed to avoid responsibility. Hopefully they'll buck their ideas up and be more careful about inspecting the stock they purchase rather than pitching up at an auction and buying anything cheap, giving it a quick clean then expecting a punter to pay £2k more than they paid for it.
I'm not sure price should reflect whether you have rights or not. It should be on age and mileage and outward condition so that if you bought a pristine looking car that is a few years old you'd have more rights than a much older one that was 'scruffy'.
A modern car bought from a dealer for a reasonable price shouldn't be leaking any fluids. Rightly the punter should get their money back or have the leak fixed fully and guaranteed for a reasonable time and for consequential damage.
Dealers are often hoisted on their own petard as the always claim a car is so fantastic and once you've paid the money all of a sudden it becomes 'what do you expect for a car that age/price/mileage' .
Maybe it is time for full disclosure so that any trader has to disclose any faults on a car and any punter p/x ing a car has to disclose any known faults as well as allow a full inspection of said car. Ditto what they bought. This way both sides know what they're getting.
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I wonder how many genuine traders use this forum and where some of the 'insights' come from? Maybe opinions gleaned from a mate of a mate who knows someone in the trade?
There have always been difficult customers and punters who want something for nothing. I have not heard of people getting a refund on the basis of an minor oil leak though. Thats a new one to me. We stand by our cars if they have a major fault within 6 months. We recently did a full gearbox rebuild on a 4x4 we sold five months ago - it was cruching into third and the customer wasnt happy. It was Korean so the job wasnt cheap, but we are in a small town and one unhappy customer will soon cost you more than the repair cost.
Had plenty of moans about minor probs, cassette play not ejecting properly, spare tyre worn etc etc., but we usually reach a compromise.
We have been at this location since 1989 and have built up a good customer base, mainly repairs but also small volume sales of 4-8 year old cars. Scrappage has lifted demand at the bottom end. So what if auction prices are higher, we just price the car higher.
I am more than happy for some of our jonny come lately competitors to go out of business with SCC judgements against them. I have seen plenty come and go over the past 21 years.
Repair business has been doing well through the recession. The main dealers are our recruiting seargants with their £100 hour labour and inability to diagnose and upselling. For example we recently had a customer been for a service to BMW dealer 15 miles away. Told wear in rear suspension and quoted £600 for repair. Bought to us for second opinion. Poked and pried and could find no wear. Walked customer through it. He went off happy as Larry. Do you think hell be our customer in future, or go back to the dealer!!
Edited by Dynamic Dave on 02/02/2010 at 19:27
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Most dealers test drive a car and don't even bother to check it overproperly when you p/x one. Why not??? How do they know they are not buying and then trying to sell an unroadworthy vehicle?? It beggars belief really.
Because they are just going to send them to auction so as long as the fault is not apparent in an auction ring then they do not care.
I see some people suggesting buying at auction as the "solution". Fine, but if you really knew what happened at some auctions and how they really work most would run a mile. BCA & Manheim might put nice adverts in the Sunday Times these days and clean the floors occassionally but the reality is it just the same as 30 years ago.
Do not think that major lease companies and major franchised groups do not punt cars with very major faults through auctions (there are one or two who are careful not to but you need to know which ones) because they do. The smaller dealers and people like myself get rid of their px rubbish at auctions. I put 4 cars through last week - two I wouldn't drive for any money, one had a blown headgasket and wouldn't do 5 miles and one might have been OK or maybe not as I never tested it. Seemed OK though. I was actually there and the 3 knackered ones were all private buyers who clearly intended to drive them home that day.
You will never, ever, get clear and defined consumer law on worn out devices and this is what used cars are. They are by definition a bit crap compared to new ones costing a fraction of the price in many cases. Because there are so many variables ever single case is completely different.
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I've often wondered if you get "bidding against the wall" at car auctions, just like in the antique/furniture auction trade. Perhaps you could put me right on this pd?
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I've often wondered if you get "bidding against the wall" at car auctions just like in the antique/furniture auction trade. Perhaps you could put me right on this pd?
What is "bidding against the wall"?
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...when the auctioneer takes bids from a non-existent bidder to increase the price or help meet any reserve.
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One or two around me seem to have ended business with a whimper. One quite large one went overnight. I don't know the reason for that and several small outfits have very little stock to sell.
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Yea, I think if just trading cars then life is a bit tough. One or two of the larger boys near us have had big problems too. Too much gone into fancy premises and not enough into the basics.
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I refuse to believe the reason by HJ above as to why small traders are going out of business. I'm sure this goes on to a small extent though. The more obvious reasons are the massive recession that has killed thousands of small businesses, the government scrapage scheme impacting as customers go for new rather than used, and the big players accepting lower margins to get the trade, which smaller dealers can't match. I really can't see every local trader having someone buying a car then taking it back 3 months later for a refund & this putting them out of business
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Most buyers are perfectly normal reasonable people in my experience. They do not expect to buy a car which cost £25k new for £5k and get perfection but they, rightly, expect it to do the basics of start and go. Most will accept that a used car simply isn't as good as a new one (and, sorry folks, but it isn't).
To be frank you can usually spot the people who are going to be trouble before they buy the car - some just have an attitude - so I usually try and discourage them from buying. You have to trust your instincts and if I don't like a buyer I am not keen to sell to them.
A lot of independents are stuck in the middle with the overheads of main dealers (you should see the rates bill on a large town centre car sales site!) but can't charge the same prices. The trick in my view is keep your overheads as low as you possibly can and treat people reasonably. That way you can undercut main dealers on price and beat them on one to one personal service.
January 2010 has been an excellent month for me, best for 3 years, so the buyers are out there.
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Just had three experiences.
1. Buying my XC90, one independent trader told me he was selling XC90s like hot cakes, prices were rising and Volvo auctions (who were the source of much of his stock) has seen staggering price rises. (My though was - well you would say that wouldn't you); but....
2. Met the driver from Volvo Grantham in Uttoxter to swap the Outback for the XC90. He volunteered that he had delivered five XC90s in the last week.
3. Have a tenant who was doing mobile car servicing before starting up as a fixed location independent garage. Has done very little servicing this last year, but plenty of larger jobs and mechanical 'repairs'. His biggest advertisement in his words were the hourly charges of the main dealers.
He seems pretty knowledgeable I may get him to the cambelt on the XC90. He also has a an elderly semi- retired chap - time served mechanic - who does a lot of these more complicated strip down jobs as he is more careful about getting it right first time.
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With apologies to HJ it was a natural progression from Horse Dealer to Motor Trader and we have all heard tales of those.
ndbw
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As posted elsewhere but hidden for some reason a long standing local business packed up over Christmas. Noticed that their retail stock suddenly went in late December and attempts to book the 'lingo in for service were met with unanswered phones. An inquiry at my other tame garage elicicited the response thsat they'd closed down on Xmas eve.
Their main job was truck servicing and van sales /service but they also serviced cars under the Unipart brand and were a Citroen authorised repairer. Excellent service and while not the cheapest thay were good value. SWMBO & I having used them for some time, they were one of two local garages with whom I had a "valued customer" relationship.
I suspect that being an LDV franchise, together with a turndown in servicing for independent truckers probably did for them. Other changes that saw the town's Citroen dealer franchise move from "miles round the ring road" to nearby would not have helped either.
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My local indy repair and servicing garage has never been busier they tell me. Apparently, significantly more of their customers are currently keeping hold of their cars and getting them fixed rather than trading them on when they have a problem.
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Nothing any Backroomer has contributed here alters my position. If dealers can get together and get an appeal court judgement that rather than reject a used car outright for a full cash refund the buyer MUST give the dealer three opportunities to repair it and only if they fail he can reject it we will all know where we are. That was case law. It should still be. More at:
www.honestjohn.co.uk/faq/faq.htm?id=43
HJ
Edited by Honestjohn on 31/01/2010 at 20:02
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HJ
I'd agree absolutely that a good "authority" case on rejection would be a good thing. However authority requires the facts to be broadly the same. I suspect that the jelly like consistency of both buyer and trade participant behaviour would rapidly lead a coach and horses through all but he most simple authority.
Like others I also seriously doubt that "three month freeloading" is a large scale problem. I'm not saying it's never happened but I think bank loan trouble and reduced volumes in the showroom/workshop are responsible for most dealer failures.
As a former officer in the County Court I can say with some certainty that, in the eighties. the staff would quickly recognise a serial litigant. If his activites suggested a pattern of "dodgy" behaviour a manager would put a note to the judge with the papers. Whether, with Small Claims on Line and the centralisation of work in back office centres, this would still happen I do not know.
Edited by Bromptonaut on 31/01/2010 at 20:33
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Quite a few of the smaller used motor traders around my area appear to have just ceased trading so that they can sell their used car site to a property developer.
The next time you drive past yet another small block of flats has appeared where cars were formerly sold. It's happening time and time again.
I would guess there's more money to be made these days in selling their sites in this way than selling used cars, particularly with the level of consumer protection which, rightly or wrongly, is now available to customers.
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Quite a few of the smaller used motor traders around my area appear to have just ceased trading so that they can sell their used car site to a property developer.
Yes, this has been happening on a massive scale.
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Nothing any Backroomer has contributed here alters my position. If dealers can get together and get an appeal court judgement that rather than reject a used car outright for a full cash refund the buyer MUST give the dealer three opportunities to repair it and only if they fail he can reject it we will all know where we are.
OK, but why, as a trader, would I get involved in this. Its a solution to a problem that I (and most independent traders) dont have. I dont understand what the angle is here unless some predjudice against the existing law?
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For very cheap cars [sub £1k], people will rather buy from private owners as small traders will struggle to make a profit if a buyer comes back with sale of goods act.
For higher priced car, main dealers are willing to price match (though I bought my car 3 years back, main dealer matched price when a show them a small garage selling similar car at a lesser price).
So, why would someone need to buy from small garages - especially if they think small trader might go out of business soon?
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All auctions, large and small, "run up". It in integral part of the auction system. Auctioneers will "run" a car up as if two people are bidding until there is a real bid. If there are no real bids sometimes they give up and say "OK, let's start again" or will just pass a car through with no bids.
It is part of the skill of the auctioneer to judge when to run and and to what point using a combination of their knowledge and the reserve price. Obviously if they run too high they might lose a genuine bidder which the vendor would have preferred a provisional from.
Most reputable auction houses will not run up close to or over the reserve price (although the vendor may well have a bidder doing the same thing!).
In short, there is no such thing as a completely open auction in the car auction business, it is a method of negotiating a price within an almost pre-determined price range.
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Some feedback on this from asking around today...
One of the two small motor trader businesses that went bust apparently had massive debts and the pitch was therefore repossessed by the landlord.
The other was cleared to become a residential development site
...so many of you were spot on with your suggestions.
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Re: HJ's point.
It does beggar belief somewhat to imagine people going to all the hassle for 3 months
motoring in such numbers so as to have a material effect on independent/small motor traders' viability.
I can well imagine people willing to do indulge in all sorts of nefarious activity to gain a few bob, but surely just the bureaucracy with insurance and/or road tax refund, not to mention the small claims court procedures & calls to the trader etc. for (less than) 3 months driving would deter all but the most stupid? Whom, by defintion, wouldn't have the gumption & nous required. And the outcome's never guaranteed of course.
Perhaps the larger number than usual of smaller motor traders going kaput is more down the 'shape' of the recession. It may be that the lack of money for finance (and general lack of money..) coupled with the scrappage scheme after nearly 10 years of continuous growth has found a lot of motor trader business models wanting - more chaff, relatively, to the wheat.
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I think an obvious reason for car traders at the lower end of the spectrum going out of business is:
- the lack of available credit, many people in this country nowadays don't save for things, they'll get their goods on credit. Now that financial institutions are going back to some of the ways of the past i.e. instigating checks on people to see if they can afford it, there's a great chunk of people who were used to a free for all, but now cannot play.
- then there's general uncertainty re job security i.e. not a time for stretching your finances.
Presumably it's a reversal of the system we used to have whereby our older cars were worth very little compared to some other countries, because a lot of our population bought new(er) ones. Now some can't/won't afford to buy newer, the older ones are up in value.
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Yes, the credit point is a good one. Things are still tight in that respect.
Although we operate in a not particularly affluent area our business is still quite strong. Workshop is busy as ever. I known the main dealer have had to let a lot of staff go. Most of the smaller traders I know locally are still keeping their heads above water. Theres always a steady stream of busineses setting up and then failing a couple of years later. We had one ex-Merc tech set up a Merc/BMW specialist business in a former tyre retail site and he went bust just before Christmas after two years trading. Its a more difficult business to enter than some think but if your get a good customer base you can make a decent living. Trouble with simply retailing cars is there is not much customer loyalty whereas on repairs there is and when people swap cars they still come to you year after year. We still have some customers from when we set up in 1989!
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My view is that cars are getting so comlicated that many people feel they have to use a dealer or a large seller, such as the Motorpoint businesses.
The little seller looks rather lost now trying to flog a 'S' reg Escort for £1.6K ( I have seen it) , I do not regard it as a sad loss though, many were trading at the edge of reality, and the market forces always win. Secondhand prices in the UK were so high, now they are far more reasonable, so the little dealer cannot make such a fast quick buck, although they still try it on.
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Secondhand prices in the UK were so high now they are far more reasonable so the little dealer cannot make such a fast quick buck although they still try it on.
I can't agree. The last 12 months is the only time in my living memory used car prices have actually risen (about 20%). I'm selling used Astras now for the same as last year, if not a bit more, even with the new model.
For us main dealers the level of demand has not changed massively. Used car numbers are down, but new is up.
Speaking to small dealers though. Where do they go with their bread and butter £5k car? Pop to your main dealer with your scrap car and you're in a new one with 3 years warranty etc. for the same(ish) money.
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Most, not all, but most second-hand car dealers are nothing but sharks, selling sub-standard crap to a public that hasn't a clue. Most businesses, but not all, are full of couldn't give a stuff people who work 9-5 and just want an easy life. Witness: We are getting enquiries now (Building and associated works on a smallish level) and need costings from suppliers asap. Laugh, some of them seem to find it difficult to get motivated to provide prices within a reasonable time and then when they do they invariably get it wrong. They will reap what they sow I'm afraid.
MD
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