8:16 am, September 24, 2020
Brexit might benefit used car sales but the ending of the furlough scheme won’t do them – or the economy as a whole – any good at all, according to Cazana.
The ‘B’ and ‘F’ words were just two of the topics discussed on Car Dealer Live by Cazana director of insights Rupert Pontin and host James Batchelor as they looked at fluctuating used car values.
Pontin said Cazana, which provides trade car checks and vehicle valuation services, was now expecting to see a stabilisation of demand for vehicles sought by people for commuting.
There had been a surge as people shunned public transport, but more recently there had been a rise in available vehicles, which had perhaps led to a softening of pricing that it had seen.
Pontin said that over the past week the average retail price of older vehicles – more than 10 years old – had dropped by 3.68 per cent.
‘Perhaps we’re beginning to see that area of the market tail off,’ he said.
He hadn’t been surprised by it, he added, as those people seeking a car, either because they didn’t want to share public transport or because there simply wasn’t a bus or train service in their area, had got themselves sorted.
‘That’s why I see pricing returning downwards slightly to a more realistic level, if you can call it that.’
At this time of the year, the used car market tends to quieten down anyway in the approach to Christmas, although he pointed out that this year there were different dynamics
Anything from 3.5 years and over had begun to show a decline in average retail price, said Pontin.
However, he quickly reassured viewers, saying: ‘It’s certainly nothing to be panicking about from the point of view of somebody who’s retailing vehicles. It’s something to watch.’
Looking ahead, he acknowledged that there were still some major challenges.
Referring to Brexit, Pontin said: ‘We are surging towards it and that will have an impact.
‘Perhaps more so on the new car market because of adopting the WTO tariffs, but the used car market as a result may benefit from that. We’ll have to wait and see.’
But he highlighted furlough as a key issue.
‘With furlough ending at the end of October…it will be interesting to see whether that actually happens.
‘In an ideal world, the government will extend it. They certainly have done in other European countries, particularly Germany.’
But he said it was also possible that any changes would only be made to sectors unable to operate at key levels, which would be a halfway step.
‘What I genuinely believe we can’t as a country and as an economy afford is to just step away from furlough completely.
‘That won’t just hurt the automotive sector, it won’t just hurt used car sales, it could be devastating for the economy, so I don’t believe the government will let us get into that position.’
He added: ‘In terms of used car sales, I think we will see a tail-off. It’s very difficult to judge at what level that will be in terms of used car pricing.
‘We also need to consider there will be more used cars coming to the market.’
But even if there is an increase in supply, it’ll all hang on how the consumer feels and how they want to spend their money.
Pontin said there was a continual line of improvement in consumer confidence, adding: ‘Let’s just hope that continues.
‘I don’t believe there will be a crash in prices. I do believe there will be more pressure, but I also believe that the consumer will still have confidence and will still want to change their car.’
You can watch the interview in full – in which supply chain problems are also among the topics discussed – by clicking on the main image.
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