Vehicle Remarketing Association (VRA) have recently reported big price increases for the used car market, this is likely to continue and could increase further, very welcome news to the motor trade industry.
VRA chair Philip Nothard said: “We are in a kind of ‘perfect storm’ where stock is in very short supply, demand is high, and buyers are ready to spend freely. This is having all kinds of effects across the market.” He continued, “It is not simply that prices are rising but that stock turnaround is very fast and there are also signs that dealers are finding that they can increase margins.”
“However, many dealers are having so much trouble getting hold of stock that they are retailing almost everything they take in part exchange. Those who specialise in 2-6-year-old stock, for example, might be happy to now sell a 10-year-old car.”
Year on year used car data from Indicata, shows UK market sales up by well over 220% for May 2021, a huge increase, and big difference to March, April, and May 2020 when car sales plummeted due to the global pandemic. With the recent semiconductor shortage halting new vehicle production, used cars are coming back to the market in a big way, with many prices predicted to remain high for the rest of 2021.
According to Cap HPI data, motor trade wholesalers have been selling cars for more than 110% of forecasted figures, with some manufacturers selling closer to 120% of forecast. Cap HPI also assisted by pricing auction car competitively, this pushed used prices up further due to the increase in consumer competition, therefore, they also sold way ahead of predicted forecasts.
Indicata sales director, Jon Mitchell, said, “In May, we witnessed one of the biggest price rises in a single month that we have ever seen, and the market looks set to continue at this level. This has not impacted sales growth and the result is a shortage of used stock across the industry. This will continue throughout 2021 fuelled by the fall in manufacturer new car production.”
Used vehicle dealers will be snapping up their new motor trade insurance policy to take advantage of the current booming UK used car market.
Used Vehicle Price Increases Include:
- Mazda 6 up over 8%
- BMW X3 up over 6%
- Ford Fiesta up by over 8%
- Audi A3 up by 7%
- Vauxhall Zafira up by over 10%
- Volkswagen Tiguan Petrol up by 10%
So, why the increase in demand? It has been suggested that with coronavirus restrictions loosening – some people remain cautious about jumping back on public transport, meaning more cars are required to start travelling again. Also, consumers who worked throughout the pandemic now have money to spend, although not all luxuries are easy to purchase right now, like holidays for example.
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Jeremy Yea, Senior Valuations Editor at cap hpi, said: “As a result of the retail market being unusually strong since mid-April, we have witnessed strong pricing being achieved within the wholesale market due to dealers having to restock in order to meet the high demand.”
Whilst there has been a strong demand for all used vehicle types, new motor trade showrooms have also seen a surge for extravagant vehicles, like Convertibles and even Camper Vans, everyone across the motor trade industry will be hoping, long may it continue!