A return of a rush in pent-up demand for used cars from dealerships following the second national lockdown failed to materialise.
When used car dealers were allowed to reopen in December, customers did not flood back into showrooms, as they did after the first national lockdown.
Cap HPI reports that while there was a small surge in demand when dealers were allowed to reopen following the November shutdown, this quickly dissipated.
The valuations experts believe this was down to the fact that many dealers managed to continue to operate during the second lockdown with click and collect services.
But looking ahead to the start of the new year, the firm believes that used car demand will be ‘buoyant’ and with consumers now used to buying online, dealers will continue to perform well despite increased restrictions.
In its January market report, Cap HPI said: ‘While there was a degree of pent-up demand at some dealerships and car supermarkets, it was nowhere near to the same levels as in June, when lockdown one ended.
‘However, activity levels were higher during lockdown two, so maybe that is unsurprising.
‘Dealers and consumers are now far more open to selling and purchasing online, using click and collect or safe deliveries.’
Cap HPI said that with Christmas approaching when the lockdown eased it was ‘always debatable’ whether large numbers of car buyers would be out there looking for a new vehicle.
December is traditionally a quiet month for the trade and a number of dealers in Tier 4 areas were forced to remain closed and continue operating online.
Cap HPI said it had not picked up on any used car dealers slashing prices as many ignored the amount of time they had cars in stock.
‘Most used car dealers resisted any temptation to reduce prices,’ said the firm.
‘Only small reductions have been noted where they have specifically been required. Whether this trend continues will depend on how the period from December 26 pans out with regards to consumer demand and to what degree the public embraces buying online once more, generally without test drives.’
January usually sees a surge in demand from buyers as Christmas is taken care of and they plan their new car purchases instead.
Used car prices
Used car prices continued to dip towards the end of 2020. October and November saw prices for three year old cars fall around five per cent and this dropped a further 1.4 per cent in December, but most of that happened in the first few days of the month.
Cap HPI added: ‘Prices have certainly stabilised since, and over the course of the month over one-quarter of individual models have not moved in value.
‘Around two-thirds of models have reduced in price, with the remainder actually increasing – this illustrates that, as always, it is important to review the detail rather than purely averages.’
The 1.4 per cent drop is ‘not unusual’ for the time of year, reports Cap HPI, and despite a turbulent 2020, the valuations firm says price movements are beginning to follow more usual patterns.
Some of the best performing models in terms of valuations are those that could be classed as more aspirational models – especially sports cars and convertibles.
Cap HPI believes this is down to buyers looking to cheer themselves up.
The firm said: ‘Convertibles and coupe cabriolets have also performed better than the average.
‘This continues the theme of consumers looking to buy a car that may not be the most practical but in mentally challenging times practicality is not necessarily the main driver, especially as savings have been made from lack of travel and socialising.
‘It also points towards the more affluent consumer being less affected by the pandemic than those employed in say lower-paid, hospitality sectors.’
Cap HPI said examples of aspirational cars that have increased in value during December included the Audi RS5, BMW M5 and Nissan 370Z.
Looking ahead to this month, Cap HPI said demand will be ‘buoyant’ and the Boxing Day bounce when many buyers start browsing is likely to turn into purchases.
The firm said: ‘All retailers that the editorial team have spoken to were gearing up for a busy few weeks post Christmas.
‘On a positive note, almost all used car businesses are well established to trade online now – both buying and selling, and consumers are getting more-and-more used to internet purchases, even of expensive items such as cars.
‘Test drives and visits to showrooms are still preferred, but the inability to do so will not stop many buyers.’
More used car stories can be found in our dedicated section here.