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
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
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.”