NextGear Capital Research Reveals Trends in Used Vehicle Funding

• Just 4% of dealers used a product specific funding route for used vehicles.
• 41% of dealers use personal funds to run their business.
• Independent dealers in the NE and East Midlands sold the most vehicles - 228 in a year.
• 55% of used vehicle dealers said they stock between 20-49 vehicles.

Research commissioned by wholesale Stocking Plan provider, NextGear Capital UK Ltd, has revealed that 96% of used vehicle dealers were using funding for their business that wasn't fit for purpose.

Harris Interactive interviewed 400 used vehicle dealers about various elements of their businesses, including the type of funding used to purchase stock.

20% of dealers reported that they use overdrafts, 35% some form of cash flow funding and 41% use personal funds to run their business.

Just 4% used product specific funding routes to purchase used vehicles at a time when many dealers are looking to expand their business to take advantage of a buoyant market. 

The research also showed that 51% of respondents purchase used stock at auction, 39% rely on part exchanges and 35% purchase stock privately. The majority rely on selling before they can restock, which can mean a quiet few days after a busy selling week as they need to quickly source new stock.

On average, 45% of the respondents surveyed claimed to sell more than 200 vehicles. Deaelrs from the North East and East Midlands region sold the most vehicles, an average of 228 in a year, followed by Scotland and Northern Ireland selling 199 a year and Midlands and mid Wales dealers 197 a year. South East and South London dealers sold the fewest in a year - 160, predominantly because their sites are slightly smaller.

When it came to stocking levels, 55% said they stocked between 20-49 used cars, 12% between 50-99 cars and 23% between 10-19 used cars. Dealers with a turn over less than £250k on average stock 24 used cars and dealers turning over more than £1m have 32 cars in stock at any one time.

The research gave NextGear Captial a major insight into the UK used market prior to launching its wholesale Stocking Plan in May this year and confirmed its suspicion that the wholesale funding industry was ready for modernisation.

"As a newcomer to the UK market it was important for us to get a handle on the approaches to stock funding. We were genuinely surprised at the limited options available to dealers," explained David Mercer, Managing Director or NextGear Capital UK Ltd. 

"By giving dealers the ability to fund 100% of the price of their vehicle purchases via our auction partner network and providing the option to fund their current stock through our Plan, we have captured the industry's imagination. This has helped us underwrite more than £40m of used vehicles in less than 6 months which we are extremely proud of." he added.