INVESTIGATION
HOW LONG CAN USED CAR PRICES CONTINUE TO RISE?
Dealers tell James Batchelor about their amazement regarding the current strength of used car prices.
D
ealers across the UK are shocked by the current strength of used car prices – and they don’t predict they’ll drop an inch in the coming months. Speaking to Car Dealer, a range of dealers big and small, from franchised to car supermarkets, all expressed amazement at the current state of the used car market. As Car Dealer recently revealed, used car prices are at unprecedented levels, with values rising by thousands in the space of just a month. Dealers are also being told to push up retail prices as stock shortages are on the rise, particularly with new cars and vans. One boss of a major UK dealer group has told Car Dealer he expects prices to remain high into early 2022 and said his firm was changing tack to beat online used car dealers’ high valuations for customers’ used cars. ‘The surge in used car and van sales has, I think, taken the industry by surprise, and this has created a general shortage of stock and therefore a significant rise in prices,’ said Stuart Foulds, chairman and chief executive of the world’s largest Ford dealer, TrustFord. ‘Added to this, the semiconductor issue affecting new cars and vans means new car and CV supply is extremely tight and this will continue through Q3 and maybe Q4 too – our new order bank is at an all-time high. ‘This being the case, I think used prices will continue to rise, and in these unprecedented times my view is that this will be the case for the balance of the year and into early 2022.’ Foulds said TrustFord was reviewing its used car prices on a daily basis and adjusting them, and had seen price movements of upwards of 10 per cent. The TrustFord boss also said his team was reviewing pricing of new vehicles ‘day by day as supply becomes tighter’.
Rocky road for online disruptors
Foulds added he predicted online used car retailers such as Cazoo and Cinch would soon be affected by the used car market in the same way traditional dealers are. ‘The “disruptors” in the market will start to struggle to source stock as dealers themselves hold on to stock rather than trade or send to auction,’ he said. ‘And the same applies to the big used car supermarkets too – these guys don’t sell new cars or vans and so the opportunity to take a part-exchange at the first stage simply isn’t there. ‘Added to that, the international travel restrictions means the rental companies aren’t replacing their fleets to the same levels as pre-pandemic, and so ex-rental cars and vans are in short supply too. 16 | CarDealerMag.co.uk
Car prices in May versus April include: Average prices City cars SUVs Convertibles MPVs
Up 6.2% Up 7.5% Up 6.7% Up 6.5% Up 5.7%
‘Dealers are getting carried away’ The current used car bubble will burst but dealers might get stung, believes Umesh Samani, owner of Specialist Cars in Stoke. Samani, who’s also chairman of the Independent Motor Dealers Association, said: ‘It’s just sheer madness how the values have increased recently. As an example, a BMW X3 valuation on May 21 went up by £2,450! ‘I believe the trade is getting carried away in a frenzied bidding war to get stock. We’re all short of “quality stock” to retail, but I don’t believe the retail customers are prepared to pay over the odds to get these cars, only meaning many dealers are working on smaller margins. ‘The bubble has to burst, it’s just when? And many could potentially get caught out with expensive stock!’
