Fleet News

High volume 'not the answer

CAR manufacturers continue to equate higher production volumes with greater profit - but experience proves the theory is wrong, according to former Porsche Cars GB and BMW GB managing director Kevin Gaskell at the Fleet News Europe Conference, in Brussels.

Massive changes were reshaping the used car market, where more than 30 million vehicles change hands each year, but an increasingly critical factor was the number of cars reaching second-hand lots less than 12 months after being registered.

'When you look at the reason why, it's relatively straightforward. More volume does not equal more profit and, if you look at almost any manufacturer, this is not the case. It's a straightforward rule of supply and demand - if you push more and more cars into the market, you have to drop the price to sell them,' said Gaskell, chief executive of EurotaxGlass's Group.

'It's a ridiculous situation that every manufacturer, every year, speaks about more and more new car sales but we know that the discounts and incentives being offered at the front end are enormous. It becomes a drug, but the problem is that if you get an overdose, it kills the patient.

'Over the past month, we have been watching major manufacturers creating enormous problems for themselves - and for the market - in chasing sales. It's clear the Big Three are getting diminishing returns. It has been happening for years and there are no signs of it slowing down.

'Overall, we're seeing a long-term reduction in used car values, but it is not consistent. The disparities between different countries mean there are opportunities but care is needed because the data available changes all the time. However, people who have access to key information and use it are able to move used cars across borders.'

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