We are in a strange place as an industry. New car stock has slowed drastically thanks to the well documented supply chain issues, and as a result, used cars have become critical to the marketplace.

As franchise and independent retailers all compete for the same stock, the problem the industry currently faces is getting hold of quality used cars.  In fact, the number available has fallen over 10% year-on-year (YoY), which combined with the huge levels of consumer demand in the market, is driving average prices up over 25% YoY – more than three times the level recorded in October 2020.

Whilst wholesale prices have recorded an increase too, this current stock bubble does offer retailers a great opportunity to generate some strong profit margins. Although it’s hard to predict how long it will last, the bubble will burst at some stage, and so it’s important for retailers to maximise this opportunity now, before new cars start to come back into the market at pre-pandemic levels and price growth begins to ease.

REALtime Communications Director of Insights, John Law has been working closely with Auto Trader on some in-depth market analysis of vehicle stock pricing and the potential impact of getting your pricing strategy wrong at this key time. John commented:

“From the research we have carried our using our REALinsights reporting platform, we can see that the average retailer misprices approximately 60% of their vehicle stock when compared to the national average. We were amazed at this number being so high, but with the market fluctuating almost hour by hour keeping up with this pace is very difficult for retailers.”

When John and the team at Auto Trader added more layers of analysis to this data the potential results of lost margin for retailers were clear to see and presented a real opportunity for retailers to benefit from the current market conditions. John commented:

“When we did some further analysis into the 60% of mispriced stock in September, we found that the average vehicle was under-priced by between £300 and £350 per vehicle. For one retailer we reviewed, this meant that 120 vehicles were incorrectly priced, equal to £39,500 of potential additional revenue.”

Further to the analysis that was completed, the team spoke to a number of retailers to discuss the issue of why stock pricing was so difficult to get right. The main reason for the mispricing was time to respond to the current market. The market is changing hour on hour and retailers found it impossible to check all their stock and make adjustments before the market had changed again.

John continued: “Through our REALinsights solution and the integration into Auto Trader, we have created a live view of the marketplace This means that retailers can run a report that checks all of their vehicle stock against national price points, and our system then flags to the retailer the vehicles that need to be amended, suggesting the optimum price for them to sell. This drastically speeds up the response time as only vehicles that need to be changed are reviewed, helping the retailer make the change and sell the vehicle faster – we found that the changes helped to sell cars faster by up to 30 days in some cases, as well as achieving the optimum margin for the vehicle.”

Commenting on working with REALtime communication on the REALinsights product, Auto Trader’s Client Development Director, Paul Keatley said: “The market is moving at a remarkable pace. And whilst a retailers’ experience will always be invaluable, we consistently see that the very best performing businesses are those that complement their expertise with data. Today we’re recording significant changes to price, supply and demand on an almost daily basis and so it’s never been more important to utilise the most up to date insights to inform your pricing and forecourt strategy. Utilising the scale and depth of our data, REALinsights is a very powerful tool which will help retailers capitalise on the opportunities of today’s incredibly fast-moving market.”

We are expecting to continue to see a fluctuating marketing place over the coming months, running well into 2022 whilst the new car market supply chain begins to catch back up. We believe that with the correct tools’ retailers can meet that challenge ahead, maximising revenues and making the most of the market conditions.


About REALinsights

REALinsights is REALtime Communications product and is the most cost-effective data and analysis tool on the marketplace today. With over 80 out of the box reports and integration into Auto Trader, Keyloop, Enquiry Max, RTC and others, we bring all your business data into a single view.

The stock reporting is just a single aspect of the solution, and we invite retailers to take time to speak with us to find out more about how we can save you time and money through real actionable insight data.