The used car roundup: all the headlines you need to know
Want the latest insight into the used car market, but feel there’s too much information out there to digest at once? We’ve done the hard work for you and compiled a roundup of all the key headlines in the wholesale and retail markets that you should know. We’ve also linked all our sources so you can take a deeper dive into each topic if you want.
1. The wholesale market remains stable, but buyers are being selective
In what has been a rollercoaster year for all in the automotive industry, one constant has been buyer demand at the auctions. Indeed, since last summer Cox Automotive has reported steady demand that has continued to outstrip supply, driving competition and therefore prices.
In January, while demand still outstripped supply in the wholesale market, buyers were more selective about the vehicles they purchased and held back from increasing stock levels.
Cox Automotive’s Market Tracker shows that wholesale activity saw an increase in the average mileage (64,496, +3.47% YoY) and age (89.5 months, +5.05% YoY), but average wholesale sold prices fell slightly year-on-year to £6,134 (-2.01% YoY).
Philip Nothard, Cox Automotive UK’s Customer Insight & Strategy Director, said: “Many dealers acquired stock in Q4 of 2020 to be well placed for a fast start in 2021, although unfortunately some of this stock is now aging. What’s clear is stocking the right car in terms of price point, model and good specification are key for the current trading conditions.”
In Manheim’s monthly market blog The Gavel, Andy Conde, General Manager of Group Auctioneers, agrees: “Many of our large buyers took the cautious approach in January and have put their foot on the brake when it comes to buying volumes, but others have really taken advantage of the falling CAP values.”
2. New and used car sales have been hit by the lockdown
The more cautious approach at auction is a direct result of current retail activity. A third lockdown came at a time when dealers were looking ahead optimistically to 2021 and stocking up accordingly, but now, days in stock and overage vehicles are increasing due to current retail conditions.
The SMMT reported a -39.5% fall in new car registrations in January—the worst start to a year since 1970. While click-and-collect procedures helped prevent an even greater fall, and digital retail capabilities are improving all the time, it appears many consumers still prefer the physical retail experience and have chosen to hold off their purchase.
All this comes off the back of the SMMT’s report of a 14.9% decline in the UK used car market in 2020. While the used market has generally been more resilient than the new market, a weak Q4 topped off a turbulent year in which coronavirus curbs heavily impacted dealers’ sales capabilities
3. Consumer confidence remains high
While sales are down due to the lockdown, buyer activity has in fact been high, indicating that there could be pent-up demand in the market.
In their monthly Market Intelligence report, Auto Trader saw a 4.2% increase in visits on their site in January compared to the same period last year. The activity has followed a similar pattern to November’s lockdown and remains much higher than what was seen during the first lockdown in March.
In another sign that consumer demand hasn’t gone away, Auto Trader also saw its highest-ever total number of new car views in January, and its third-highest number of new car leads sent to retailers.
Similarly, Parkers have reported that more than a third of buyers remain undeterred by COVID-19 lockdown and plan to buy a new car as soon as possible. In a survey of the site’s users, 36% of in-market buyers were forging ahead with their purchasing plans as 57% stated an intention to buy “as soon as the restrictions are lifted”.
Parkers editor, Keith Adams, said: “It’s encouraging to see that so many buyers are embracing the concept of online buying, even when there are tight social restrictions in place. In 2021, more than a third of car buyers have decided that being in lockdown won’t affect their intention to buy at all, suggesting that they’re happy to research, spec, and ultimately order a car online.”
4. Dealers should be braced for pent-up-demand, stock shortages, and rising prices
While consumer activity online remains high during the lockdown, dealers are being urged to brace for a return of stock shortages caused by pent-up demand. Rupert Pontin, Cazana’s Director of Insight, believes that there will be a rush to showrooms as lockdown eases: “Buying online is getting better but there are still people who will want to go and buy a car, see the car, drive it and enjoy the retailer experience, which is still very important to some people and will come back.”
Pontin explained this could in-turn result in stock shortages just like in the two previous lockdowns, as dealers compete for the high-quality stock that’s available and drive up prices.