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Demand for showroom condition used cars creating ‘grade one plus’ standard

Demand for showroom condition used cars creating ‘grade one plus’ standard

High demand from retailers for showroom condition stock was effectively creating a new ‘grade one plus’ standard, according to Meridian Vehicle Solutions.

The company says that vehicles that fell into that unofficial category were generally less than a year old and were effectively in as-new condition with almost no cosmetic faults.

Phil Jerome, managing director, explained: “The National Association of Motor Auctions’ grade one standard allows for a few minor issues such as small dents and minor missing trim items but we are in a situation where demand for used cars that can be immediately retailed is so high that there is a further level emerging above this.

“These are cars that can be placed on a dealer’s website and offered for sale immediately because they require almost no preparation. Of course, these cars also command the highest prices - often in excess of the highest level shown by industry pricing guides.”

Because of its medium term rental model, most vehicles that were remarketed by Meridian fell into this category, said Mr Jerome, being sold at less than a year old.

He continued: “We are in quite an unusual position because almost all of our disposals cover prestige or semi-prestige brands at the nearly-new end of the market, so we are seeing this trend emerge at first hand.

“All our cars are inspected on return and include a complete history including a schedule of any work carried out, so dealers know exactly what they are getting.

“Certainly, demand for vehicles of this kind is very high and we are not seeing any slippage in values as we head into 2019. In fact, while new car order times remain on the high side, we do not envisage any change in the market.”

Mr Jerome said that dealers buying that kind of vehicle often operated on a business model of turning around stock much more quickly than other used car retailers, something made possible by the minimum of preparation required.

He said: “These dealers ensure that money is not tied up in any particular vehicle for long and are often very professional when it comes to accessing additional revenue through finance and add-on products. Some even buy cars from us as sold orders.

“Because of this approach, they are able to pay for the best available cars but still generate a very good profit per unit.”