“The outdated adage ‘what goes up should come down’ doesn’t appear to use to used vehicles, at the least not in the interim. The unprecedented enhance in common used automotive values that we’ve seen within the final 12 months reveals no signal of a serious reversal. Our expectation is that this new stage of pricing would be the norm for the approaching months.
“The shortages of inventory which have been the first driver of value enhance, seems to be set to proceed – significantly as we come as much as the third anniversary of the Covid outbreak and the extreme shrinking of the brand new automotive market. Put merely, for costs to fall, the provision of used vehicles wants to extend dramatically, and we count on that that is unlikely to occur.
“Nonetheless, low client confidence implies that these excessive costs don’t essentially imply the revenue ranges that many sellers benefited from post-lockdown. We all know from our Shopper Perception Panel analysis simply how a lot the more durable financial circumstances are suppressing demand, with one in 5 automotive purchases being delayed due to the price of residing disaster.
“This nonetheless interprets into a major quantity of used automotive transactions, as many buy selections are led by necessity to vary. Nonetheless, affordability challenges might imply that buyers wish to decrease priced vehicles and this creates an imbalance as these vehicles are costlier than they was once.
“Alternatives will live on, however sellers will should be good to client urge for food, sourcing the fitting forms of vehicles and advertising them shortly and successfully. Shoppers will likely be nervous, offering the chance for sellers to outperform the market by offering a supportive gross sales strategy sympathetic to the pressures that each family is feeling.”
Phill Jones, head of eBay Motors Group
“Set towards a backdrop of 2021’s distinctive used automotive market, the place demand drove residual values (RVs) to unprecedented ranges, the primary half of 2022 was quite downbeat. Dominated by a scarcity of retail demand, buying and selling within the wholesale market was comparatively poor, with sellers not needing to replenish inventory as ceaselessly.
“Initially, public sale hammer costs held up effectively, however in quarter two they got here below strain, leading to RVs struggling heavier depreciation than we have now seen for over 12 months. In quarter three, wholesale exercise started to enhance with hammer costs stabilising, and Glass’s values stabilised too, staying broadly stage in July and August earlier than falling just below 0.5% in September.
“Each poor demand and poor provide have been evident in current months, and this uncommon dynamic is predicted to proceed within the remaining quarter of 2022. There’s a threat that demand will fall additional because of the festive interval, with its monetary burden looming giant on the horizon, including to the strain that households are already contending with because of the mounting ‘value of residing disaster’ that has developed all through 2022.
“The outlook for quarter 4 shouldn’t be fairly as dangerous because it may have been, because of the UK’s new Prime Minister throwing one thing of an financial lifeline within the form of a proposed cap on power payments. With out this, these prospects and not using a fastened power deal would have confronted the prospect of sharp will increase in payments because of the finish of Ofgem’s present power value cap and big will increase in international power costs. This might have had a serious influence on disposable incomes, with payments anticipated to have greater than doubled for a lot of shoppers.
“A monetary shock of this nature may have led to a major drop in client confidence, which is already at an all-time low. Though it seems to be possible this will likely be averted, it is very important do not forget that many households are already experiencing shrinking disposable incomes attributable to power value rises early this 12 months, along with value will increase of many on a regular basis necessities.
“Whereas there is no such thing as a doubt the UK’s used automotive market faces challenges in quarter 4 and into 2023, Glass’s doesn’t count on a crash in used automotive values. There may be prone to be extra depreciation than we have now seen over the previous two years, however that’s not uncommon as vehicles have traditionally been a depreciating asset.
“Delays in new automotive provide which have affected the movement of vehicles coming into the used market at both contract de-fleet or through the part-exchange route are nonetheless prevalent. This lack of inventory helps to guard residual values. Had there been poor demand and powerful provide over the previous few months, residual values would have come below severe strain.”
Jayson Whittington, chief editor, Glass’s
