Customers are likely to become less impulsive and more thoughtful when it comes to buying cars moving forwards, one industry heavyweight has said.
Black Horse’s head of motor finance Tim Smith believes some of the trends that powered the used car sector during the height of the Covid-19 pandemic have subsided, while others have enforced how important the used car business is.
‘People are able to go on holiday again, so there are now alternative routes for disposal income,’ he told Car Dealer Used Car Awards host Mike Brewer.
In the full interview, which you can watch at the top this story, Smith added: ‘With these alternative routes for their disposal income, I think car buyers are now a lot more thoughtful about what they do going forwards.
‘Less impulsive and more thoughtful, but I do think the demand for used cars will remain strong.’
Smith described the current state of the used car market as ‘crazy’ with high prices and demand, strong car usage and poor new car supply.
He added: ‘We’ve got a couple of big entrants into the market with a really big appetite for buying up stock, and add in record high conversion rates at auction, it’s crazy at the moment.’
As to when he thinks the market will settle down, Smith said: ‘I think it would be a brave person to predict it, but there are a couple of bits that split up.
‘There’s obviously the supply issue with new cars due to the semiconductor shortage, along with shortages of aluminium, steel and rubber, but also it’s going to be trickier for consumers because they’ve got interest rates rises, tax rises and general price rises to contend with.
‘Both of these need to play out against each other.
‘I think the really interesting bit will be when new car production begins again in earnest.
‘It’s to what extent and what sort of prices that those cars are going to come into the market, because that will be the influential factor. And we’ve got electric cars to contend with amongst all of that.’
Smith went on to say: ‘The used car industry has been even more significant this year, but for a slightly different reason.
‘Because of the lack of new car coming through into the market, used has become much more important. I think it sort of speaks volumes for us [in the used car industry] – the cars are already built, the distribution networks are out there with dealers doing a great job, and it sustains .
‘I think it’s been a very significant part of the economy this year.’
Smith was chatting to Mike Brewer a less than two weeks before the Car Dealer Used Car Awards 2021 takes place.
The event is returning to The Brewery in central London for the first time in two years, and will see the used car industry’s best of the best being honoured. You can see the shortlist by clicking here.
‘I speak for all of us here – it has been a really, really tough two years, and there hasn’t been much time to celebrate.
We’ve all been busy doing the job at hand and making things work, so being back and celebrating, seeing some old friends and new faces will be fantastic.’