19 hours ago
More and more car dealers are switching to selling motorhomes as a result of shrinking margins.
That is according to one expert, who says traditional car dealers are now ‘constantly’ making the switch as it becomes even harder to make money selling used cars.
The comments were made by CMS Auctions boss Shane Malpass, who joined us on the latest episode of the Car Dealer Podcast.
Malpass’s own business, set up in 2007, makes money by buying motorhomes all across the country and selling its stock via BCA sales.
Despite not having a retail arm of its own, the firm now takes around 80 enquiries a day from people looking to sell their motorhomes.
The units themselves have an average cost to CMS of around £32,000 and they offer margins to dealers that car retailers could only dream of.
Speaking about people making the switch to selling motorhomes, Malpass told hosts Jon Reay and James Baggott: ‘Coming from the car industry and going into motorhomes, over the years, it’s definitely a trend that I’ve seen.
‘There are car dealers that see the margins that are available in motorhomes. You do sell a lot less, but the margins are much higher.
‘There are constantly car dealers coming into the game, and there are more and more, especially as the car world does get a little bit harder, it’s just a different option.
‘We’ve got a lot of dealers that I know of that did start in cars, went to motorhomes and never looked back.
‘In terms of the assessment, they’re completely different.
‘Whereas you guys [car dealers] will look mainly at what the engine problems are and the running problems, that is last on the list when it comes to motorhomes generally.
‘It’s all about the “home” side of it. You think about it as buying a house. It’s almost like a mini survey that you do to make sure that everything’s as it should be.
‘That’s where the problems can occur, but they tend to be quite easily rectifiable.’
Motorhomes offer higher margins due to the increased likelihood of things going wrong and the potential hit that could have on dealers’ profits.
However, Malpass says that some vehicles are offering a £10,000 profit margin as a minimum.
He added: ‘This is the thing that I’ve noticed with car dealers: Obviously, the margins are a lot less and when they first come into motorhomes generally, they probably have lower margins than what most of the other motorhome dealers will. Then they’ll soon learn after time that there’s a bit more.
‘If we’re talking about something that’s £12,000 retail, you’re going want probably at least £4,000 in that.
‘Something that’s £20,000 to £25,000, you’re probably wanting around £7,000 and then when you get up to £40 and 50,000 you want £8,000 to £10,000 as a minimum.’
The Car Dealer Podcast, sponsored by Carwow, sees an industry guest join our hosts to discuss the motor trade’s biggest headlines of every week.
A full list of the stories discussed on this week’s episode can be found here.
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The post Why sky high margins in motorhomes after leading more and more car dealers to switch appeared first on Car Dealer Magazine.
