Car dealers in the UK are sitting on a record £27.3bn worth of inventory, as the levels of unsold stock grow.
The value of unsold cars is up 16 per cent on last year, according to accountancy group UHY Hacker Young. This means unsold stock is now equivalent to 17.7 per cent of the sector's turnover, up from 16.9 per cent a year ago.
“Car makers continue to push more and more vehicles on to dealers’ books, but that can’t go on indefinitely," said Paul Daly, partner at UHY Hacker Young. "It’s unsustainable for unsold stock to keep rising so quickly.”
According to the firm, dealers are struggling to hit manufacturers' challenging sales targets as the number of new car purchases slides. Big-ticket items have been hit hard by weaker consumer sentiment, with car sales sliding for the fourth month in a row in July this year.
Daly added: “Manufacturers have traditionally used the UK market to absorb excess production from other European markets, as we tend to replace our cars more frequently than consumers in other countries do. We may soon start to bump up against the limits of that tactic.”
“Pressures on dealers are higher than ever before, with manufacturers demanding bigger and better premises, and many now need to resort to significant off site storage facilities to hold the excess stocks.”