USED MARKET INSIGHTS REPORT
THE EVOLVING USED CAR MARKET 2020
WELCOME FROM MARTIN POTTER, MD – CUSTOMER
October 2020 used market commentary After a strong market in Q3, demand remained solid during October which delivered further price growth, particularly in the late and low and fleet sectors. Late and Low supply has been scarce as volume from rental companies, dealer demonstrators and pre-regs have dried up. This helped contribute to higher prices. Meanwhile, supply in the fleet sector continued to ease in October, but prices rose again. October’s star was the Young Part Exchange sector which rose by 10.1% (£711) to £7,682, fuelled by high demand and low stock levels. Sub £8,500 part exchanges in the wholesale market have been in huge demand from franchised and independent dealers alike to meet the consumer demand for £10,000-£12,000 used cars. Overall, the October market didn’t slow down as much as we had anticipated although the last two days of the month and the first few days of November started to show signs of Q4 returning to a new normal.
Martin Potter MD – Customer
2
LATE AND LOW MARKET PROFILE (12-24 months) £16,383
£16,484
MILEAGE
AGE
23,000
23
£15,589
22,500
22.5 £15,261
£15,248
22,000
£15,158
21,500
£15,129
£14,738 £14,457
21,000
£14,243
20,500
£13,947
22 21.5
£14,344
21
£14,026
20.5
20,000 19,500 £13,116
£13,200
£13,347
20
19,000
19.5
18,500
19
18,000
18.5
17,500
SUMMARY • Average prices rose by £101 in October to £16,484 compared with Q3. • Stock remains in very short supply. • Demand is strong due to new cars being in short supply as dealer pre-reg and demonstrator volumes dry up. • Rental companies offloaded their sub-24-month old used cars between June and September causing further shortages of stock reaching the market in October. • Overall prices rose by 8% (£1,223) between Q2 and October.
18
17,000 17.5 16,500 17
16,000
16.5
15,500
16
15,000 Q1 2017
Q2 2017 Q3 2017 Q4 2017
Q1 2018
Q2 2018 Q3 2018
AVERAGE PRICE
Q4 2018
Q1 2019 Q2 2019
AVERAGE MILEAGE
Q3 2019 Q4 2019
Q1 2020 Q2 2020 Q3 2020 Oct 2020
AVERAGE AGE
3
FLEET MARKET PROFILE (24-60 months) MILEAGE
AGE
57,000
43.0
56,000
42.9 42.8
55,000 £11,757
54,000
£11,653
53,000
42.4
51,000
£10,938
42.3 42.2
50,000
42.1
49,000
42.0
48,000 £10,086
47,000
£9,960
41.9
£10,009
£9,973 £9,799
46,000 45,000 £9,173
41.6
41.4
£9,036
£8,916
42,000
41.5
£9,233
£9,198
£9,111
41.8 41.7
£9,521
£9,396
43,000
41.3 41.2
41,000
41.1
40,000
41.0
39,000
40.9 40.8
38,000 Q1 2017
Q2 2017 Q3 2017
Q4 2017
Q1 2018
Q2 2018
AVERAGE PRICE
4
42.6 42.5
52,000
44,000
42.7
Q3 2018
Q4 2018
Q1 2019
Q2 2019
AVERAGE MILEAGE
Q3 2019 Q4 2019
AVERAGE AGE
Q1 2020 Q2 2020 Q3 2020 Oct 2020
SUMMARY • Average prices rose yet again in October by £104 (0.9%) to £11,757. • Prices have risen by 17.8% (£1,784) since Q1 when fleet prices were already considered very high at £9,973. • Even when you consider a 9,000 average mile drop since Q1 the average October price is extraordinary. • November auction results have already suggested these prices are starting to soften on the back of the second lockdown as consumer confidence and demand weakens. • These changes are further proof of the Q4 used market moving back to a new normal.
OVERALL MARKET FUEL TYPES £
SUMMARY
15,000 14,000
• A smaller number of AFVs were sold in October. Average prices of £14,660 reached a new record as dealer cherry picked the best available stock.
13,000 12,000 11,000
• A number of AFVs failed to sell due to prices being expensive compared with equivalent petrol and diesel models.
10,000 9,000
• Diesel and petrol prices both fell in October but at £9,650 and £6,176 they reached the third highest prices since launching the report in 2017.
8,000 7,000 6,000 5,000 4,000 3,000
£13,616 £8,156 £3,961
£13,558 £8,811 £4,137
£13,073 £8,751 £4,325
£12,714 £8,818 £4,651
£13,736 £7,501 £4,206
£13,636 £7,511 £4,306
£14,012 £7,390 £4,213
£13,375 £8,046 £4,470
£13,332 £7,613 £4,910
£14,275 £9,999 £6,948
£14,027 £9,933 £6,506
£14,660 £9,650 £6,176
£3,644
£11,481 £8,169
Q2 2017
£11,365 £8,700 £4,005
Q1 2017
£12,577 £8,434 £4,091
0
£3,680
1,000
£10,602 £8,257
2,000
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
Q3 2020
Oct 2020
HYBRID/ELECTRIC
DIESEL
PETROL
5
DEALER MARKET PROFILE - YOUNG PART EXCHANGES (55-78 months)
MILEAGE
AGE 70
73,000 72,500
£7,708
72,000
£7,682 69.5
71,500 71,000 70,500
69.0
70,000
£6,971
69,500
68.5
69,000 68,500 68,000
£6,371
67,500
£6,390
£6,316
68.0
£6,153
67,000 66,500
£5,854
66,000
£5,940
£5,924
£5,718
65,500 65,000
67.5
£5,917 £5,670
£5,574
67.0
64,500 64,000 63,500 63,000
£5,309
66.5
£5,051 66.0
62,500 62,000 61,500
65.5
61,000 60,500 60,000 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Oct 2020
AVERAGE PRICE
6
AVERAGE MILEAGE
AVERAGE AGE
65.0
SUMMARY • The consumer sweet spot remains at used cars between £10-12,000 which has helped wholesale prices rise in October to £7,682. • Consequently, young part exchange stock been high demand with every dealer wanting to cater for consumer demand. • Stock levels in this sector also fell dramatically in October which contributed to the price rise.
VAN AND DOUBLE CAB PICK-UP MARKET PROFILES
PRICE £8,500
£12,000
£8,000
£11,500
SUMMARY
PRICE
VAN
£7,500
£7,351
DOUBLE CAB PICK UP
£11,000
£10,730 £10,657
£10,500
£7,000
£10,169 £10,000
£6,500
£6,204
£9,500
£9,233
£9,232
£5,949
£6,000
£9,757
£9,644
£8,678 £8,500
£4,923
£5,000
£4,500
£4,533
• A recent sale featuring 138 LCVs attracted 2,226 bids reinforcing the strength of demand. • Coloured vans are currently making stronger money than white vans. • Further growth in online shopping will fuel demand for used vans keeping prices strong well into 2021.
£9,000 £5,500
• October saw used vans and double-cab pick ups reach new record price levels as stock was very scarce.
£8,000
£4,612
£4,573 £4,323
£7,500
£4,000
£7,000
£3,500
£6,500 £6,000
£3,000 Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q2 2020
AVERAGE PRICE
Q3 2020 Oct 2020
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020 Q2 2020 Q3 2020 Oct 2020
AVERAGE PRICE
7
Q4 AND 2021 OUTLOOK
In early November the market started to soften with conversion rates and prices falling. This was further aggravated by the announcement of a further four weeks of lockdown. The extension of the furlough scheme to the end of March has provided some extra confidence for the motor trade but Brexit and Covid continues to provide uncertainty in the market. Franchised dealers have reinforced that they will be staying open for selling cars online and many have used the past few months to invest in their technology and processes to improve their online capabilities. Many will be replacing sold stock during lockdown, something which didn’t happen during the first lockdown, when only independents were in the market to buy stock. Used diesel prices are still holding up well and with 230,000 new cars being registered in 2021 (16.6%) it is not going to go away anytime soon. While, EV and hybrid prices rose in October they are still looking very expensive when compared with equivalent petrol and diesel models, so we expect prices to gradually come down over the coming months.
8
Q4 should see the market getting back to some sort of normality but predicting demand and prices at each sale will become more difficult. Reserves will have to be revisited sale by sale to keep in touch with the market and fleet vendors in particular will have to accept prices are falling of months of rising prices. Overall, we feel prices will remain healthy into 2021 as new car waiting times keep extending forcing ex-business and personal leasing contracts to be extended well into the year. Repossessions are also likely not to reach the market until Q2 which will keep used stock under control and prices steady.
Martin Potter MD – Customer
THANK YOU www.astonbarclay.net @astonauction