Used car values drop despite sector proving robust through pandemic
The used car market remains active but falling demand in January led to a 1.4% drop in used car values. Thanks to the third Coronavirus lockdown, the decline amounts to an average £150 per vehicle.
Sales down 30% – 50% on “pandemic-free” Januarys
Generally speaking, in a normal, pandemic-free January, used car values tend to remain steady while demand increases post-Christmas break. But this year, retailers have reported sales levels to be around 50 to 70% of those in January 2020.
Most dealers’ December stock remains on their forecourts, and there’s no real need to make orders in huge numbers. And with so many buyers still on furlough, and no real indication of when this latest lockdown will end, it’s unlikely the situation will change any time soon.
Derren Martin, head of valuations at Cap HPI, said: “Live trending evidence shows the used car market is certainly open for business, but at a reduced level to normal times. With click & collect and click & deliver still permitted, consumers are still purchasing, albeit to a lesser degree than previous years because of the Government’s advice.”
Which used vehicles struggled the most in January?
Multi-purpose vehicles have seen the biggest decline in sales (by 2.2%) as more drivers switch to SUVs. For example, the Ford Galaxy, Seat Alhambra and Vauxhall Zafira have all dropped in value by upwards of 4% since October.
Sales of electric and hybrid vehicles aren’t matching up to Government ideals either. Supply levels might have increased, but consumers are as yet unwilling to pay a premium and continue to opt for cheaper used petrol and diesel alternatives.
On the plus side, the used sports car market has seen a revival as more consumers have turned to 10+ year-old options to relieve their lockdown blues!
Not all bad news for the used car industry
While the numbers don’t sound wonderful, January’s data indicates huge improvement on figures from the first lockdown. April 2020 saw a dramatic drop in sales, with the new car market falling by some 97.3% as showrooms were forced to close. The used car market plunged by 48.9% in 2020’s Q2 too.
But the automotive market’s recovery after socially-distanced delivery was worked out is pretty impressive really. For example, used car transactions grew by 4.4% in Q3, with 2,168,599 vehicles changing hands despite the pandemic.
A flexible and resilient industry
On the whole, the automotive industry demonstrated great flexibility and resilience last year, and saw retailers prove themselves agile as they quickly became more virtually viable. Online transactions increased and “to the doorstep” delivery proved central to the market’s sustenance.
Value fluidity remains across all segments of the market and the used car sector in particular has proven robust, and certainly up to the enormous Covid challenge. But while lockdown goes on, unpredictable supply and demand dynamics will continue.
What do you think will happen after Lockdown 3 ends? Are you waiting for greater clarity before making any changes to your fleet? Drop a comment below and tell us where you’re at.