The used car market will enter a ‘fascinating’ period in the last two weeks of December, Cazana has said.
In the firm’s latest Weekly Pricing Insight, director of insights, Rupert Pontin, explained how December’s first full week of trading (Dec 7) showed showrooms were busy and retail pricing was down slightly, and the outlook for the rest of December will be interesting to witness.
‘The last week has seen some positive and negative influences and retail pricing that will have a material effect on used car retailing and valuation for part exchange. There are also implications for lenders and those dealing with forbearance,’ he said.
‘The next couple of weeks up to and including the festive period will be fascinating and pricing right and valuing older products to come in part exchange will also be complex.’
Cazana’s latest report also showed that in the first full week of retail in December, there was a rush ‘as pent-up demand flared’ and dealers reported a ‘good burst’ of sales.
Retail pricing on the whole dipped by just 0.38 per cent but there was no cause for concern, said Pontin.
‘The retailers have generally taken a positive stance, and although recent weeks have seen a general dip in pricing, it has not been over and above what the market would ordinarily expect during December,’ he said.
Older models bore the brunt of the decline as demand by consumers looking for a second car to avoid using public transport has been ‘satisfied’.
Pontin said: ‘It is also perhaps not a coincidence that Old cars now represent almost 26 per cent of all retail adverts with a 4.17 per cent growth in retail advert market share.
‘This is the only age profile to have shown a growth in the market representation and greater analysis will reveal whether this is because of improved sales for cars in other key age profiles such as Late and Low and Part Exchange. Between these three profiles, they account for almost 68 per cent of total retail adverts.’
December 2020’s pricing pattern is also broadly similar to December 2019’s, Cazana said, with limited movement for all price profiles except for the sub-£10k area.
‘This is reassuring as it shows that the market is performing broadly in line with expectations,’ explained Pontin.
‘Also, when looking at the movement in retail pricing of sub-£10k cars in 2020 has shown the marked decline of 3.27 per cent in contrast to the increase experienced in 2019.
‘There is significant volatility in the detail of the analysis relating to fuel type and mileage and as such greater insight is essential to ensure a robust commercial strategy that will need to change almost daily to maximise on sales and profit opportunity.’