INVESTIGATION
What is happening to used car prices right now? We asked 10 experts to help us make sense of the current market
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by James Baggott @CarDealerEd
eports suggest the used car market is currently buzzing, with consumers flocking to car dealers and the motor trade running seriously low on stock. Car dealer forecourts are increasingly emptying, with some big dealer groups reducing their used car stock by thousands of models. Used car prices are rising too, as demand outstrips supply and prices at auctions go ‘crazy’, with hundreds of bidders registering for sales that would only have attracted a handful before the pandemic. While new car sales remain sluggish, used cars are bolstering dealer profits, with some of the big groups reporting a record month in June. But can it continue? And what exactly is happening with the used car market right now? To find out, we asked a panel of experts from across the used car motor trade, from auction houses to pricing experts, to give us an idea of what’s really going on.
In this exclusive report on the used car market, here’s what our experts had to say.
Good news for residual values in months ahead
Dealers should put some used car prices up
New buyers set to offer reassuring pipeline of sales
Unprecedented rise when values usually drop
Glass’s chief editor Jayson Whittington he volume of used cars selling through auction channels ramped up in June, although overall numbers are lower than normally expected. Logistical issues, together with fewer part-exchanges coming from dealer groups because of the poor new car market, is to blame, rather than a lack of demand. Activity was strong, helped by the reopening of retail sites in England. Demand is likely to outweigh supply over the next three months, which should be good news for residual values.
Autorola director Jon Mitchell ur sister company Indicata estimates that dealers are short of 125,000 used cars currently compared with before lockdown. If dealers are unable to buy the volume of stock to fill their forecourt, it’s about making sure they buy the best cars they can afford that are most saleable. By analysing local pricing and demand, they should also be increasing retail prices on some forecourt stock that is in high demand. Prices should be reviewed daily in such a hot market.
Auto Trader commercial director Ian Plummer n June, used prices recorded their largest monthly growth since January 2019. Along with the low supply of vehicles, it reflects the huge surge in demand in the market. On July 5, 38 per cent of circa 6,000 people on our marketplace said they intended to buy within three months – up from 35 per cent a month prior. What’s more, 42 per cent said they were either buying for the first time or looking for an extra car. These new buyers coming into the market look set to offer a reassuring pipeline of sales over the coming months.
Cap HPI head of valuations Derren Martin he average movement of five-year-old cars was 1.2 per cent up during June, while 10-year-old cars rose by an unprecedented average of 5.7 per cent at a time when values invariably drop. Again, these have stabilised in July. Convertibles and cabriolets continue to be sought after, particularly for models over three years old, helped by the sunny weather and short-term increase in some people’s disposable income. Lack of new car activity led to a shortfall in part-exchanges, so less stock for the franchise dealers.
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06 | CarDealerMag.co.uk
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