Recession as excuse

One of the benefits of recession is that it gives everyone an excuse. Rather than face up to the fact that they’ve been selling over-priced tat, businesses can instead plead that they are victims of the downturn.
So it goes with car retailers. The SMMT reports that new car registrations fell 21.2% in the year to December, prompting the CBI to call for tax-payers to prop up the industry.
What the CBI doesn’t point to, however, is figures from National Statistics. These show that the price of new cars, relative to second-hand ones, has soared in recent years; the ONS try to adjust for quality changes.
In the last three years, used car prices have fallen 17%, whilst new car prices have risen 4.6%.
Is it any wonder, then, that new car sales are falling when the prices of their close substitutes has come down so much?
New car dealers might be in a desperate shape. But they’re not so desperate, it seems, that they’ll cut prices.

Comments

[kinglear]

Yes quite so, and now we have the recession trick of demonstrators, which get £XXXX knocked off - except that it isn't REALLY off, its a notional figure, and they make their money on the finance anyway.

[marksany]

Chris, are those new prices list prices or what was actually paid?

Reducing prices in the second hand market shows that the replacement of cars is reducing, because modern cars are so much more durable than they used to be. This must hit new car sales in price and volume too.

[chris]

They'd be list prices - statisticians don't haggle.
But is it really the case that informal discounts are bigger now than in previous years? Most businesses try to attract custom by cutting list prices. Why do car dealers do the opposite?

[Matthew]

"because modern cars are so much more durable than they used to be"

Wouldn't that mean used car prices would rise?

It's not an untrue point though that cars are lasting longer. Also the market is pretty saturated, so there's little non-replacement buying these days except for first-time buyers. I think US car sales on a per capita base are at 60 year lows.

[Matthew]

"because modern cars are so much more durable than they used to be"

Wouldn't that mean used car prices would rise?

It's not an untrue point though that cars are lasting longer. Also the market is pretty saturated, so there's little non-replacement buying these days except for first-time buyers. I think US car sales on a per capita base are at 60 year lows.

[Robbie]

The graph shows a steeper than trend drop the ratio of second hand prices to new prices over the past few months. It's not implausible to explain this using the recession, second hand car market being flooded with bankers Beamers and Mercs? Well maybe not but i'd guess that at the margain there will people selling their vehicles to make ends meet.

Of course this is doesn't explain the general trend...

[Meh]

Car dealers keep list prices high because not everyone is prepared to haggle.

Anecdotally, haggle discounts are much larger than last year. They might soon even be enough for me to consider buying...

[jameshigham]

That last sentence is the bottom line.

[Diogenes]

"Most businesses try to attract custom by cutting list prices. Why do car dealers do the opposite?"

Is this how DFS operates? Every week you see a TV advert for some sale where DFS is knocking off thousands of pounds from its list prices.

Also, look at kitchen businesses like Magnet - you can sometimes get a bigger discount by purchasing a kitchen towards the end of an accounting period than when they are advertising a special sale, if the store manager has not achieved that period's target.

[Delgado Busines Software]

So true!

When business is down people should focus even harder on promotion. Advertising online (http://blog.delgadosoftware.com/category/Website-Promotion.aspx) is one option if other advertisining means are too costly. Improving speed of production is also something people can do to make it through tough times and good business software (http://blog.delgadosoftware.com/category/Business-Software.aspx) can help with this.

People shouldn't "give up hope" when things are down. There is always something that can be done to improve one's lot.

[Josh]

Thank you for your nice blog.

[Bvo]

Although not all business are truly using the recession as an excuse; it's obvious as the example you mentioned above there are some companies who are using the recession as an excuse. But i think the recession can actually give you an excellent opportunity, as a business leader, to make your business successful - to prove your business leadership skills, to prove your business management skills and to prove that you are a great business leader.

[Van Sales]

I visited this blog first time and found it very interesting and informative.. Keep up the good work thanks..

[replica Tag Heuer]

And a lot of it reflects a switch from bank deposits to securities; foreigners “other investments” in the UK, http://www.watchgy.com/ mostly bank deposits, fell by £143.2bn in Q1. And of course there’s no guarantee such buying will continue.
http://www.watchgy.com/tag-heuer-c-24.html
http://www.watchgy.com/rolex-submariner-c-8.html

[Term Papers]

Car dealers keep list prices high because not everyone is prepared to haggle.

[Education Agent]

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