Welcome to the cheap seats!
Car dealers across the UK are reporting record business for older used cars as the country emerges from lockdown, with some models even doubling in value thanks to widespread distrust for public transport.
A combination of limited stock availability and a desire from many families to add a second or third ‘back-up’ car to their household has seen demand for inexpensive cars – especially superminis – start to boom.
The trend backs up expert opinion revealed by Car Dealer last week, in which CAP HPI’s head of valuations, Derren Martin, reported a 5.7 rise in valuations of 10-year old cars – a percentage that appears to increase further with cars that are older still.
‘We’ve just had a record June,’ said Andrew Puddick, an independent dealer in Southampton, Hants, who specialises in main dealer part-exes between seven and 15 years old.
‘I did eight cars in three days over one weekend and demand is going up, not down.
‘Even during lockdown we sold several cars to people who needed them because to a lot of people public transport is an option they don’t want to consider right now.’
While the bulk of Andrew’s sales are mainstream cars in the £2,000-£4,000 bracket he’s currently got a waiting list for cars that are cheaper than that.
‘I wouldn’t normally retail anything older or less expensive unless it was interesting.
‘We get most of our stock out of main dealerships and the less valuable stuff I tend to let go to another trader who specialises in such things
‘But these past few weeks I’ve sold everything I’ve got in. I’ll always do well out of a two-grand Fiesta, but last week I shifted a 20-year old Peugeot 206 for £1,200. Before lockdown that would have struggled to make £500 on a good day, but once cleaned up, serviced and good to go the phone was ringing off the hook.
‘June 2020 was the best month I’ve ever had.’
With government advice beginning to change on public transport and the government encouraging people back to work, most think this boom will continue. Despite the change in tact, most people are still likely to avoid using trains and buses.
However, while many traders at the less exotic end of the trade are reporting similar experiences, it’s finding stock that’s the challenge.
Shane Nicholson runs Heritage Car Sales in Peterborough, Cambs.
He said: ‘The demand’s there but the stock’s getting hard to find at the moment.’
Most of Shane’s vehicles are acquired from auctions, but with physical sales not taking place and a limited number of cars going through online sales thanks to the wholesale closure of dealerships for over three months, he’s struggled to get stock.
‘I’ve been wary of buying from auction houses online as without seeing a car you just don’t know what you’re getting,’ he said.
‘I can’t take the risk of a car coming in and needing £1,000 spending on it as I don’t have the margin to allow that.’
Andrew Puddick agrees.
‘Rectification costs are the killer at any level and we have to be brutal with everything we get and decide if it’s worth it,’ he said.
‘Luckily we source most of our stock direct from a few local main dealers and now they’ve opened up again there’s quite a good supply of cars coming through and loads of demand from customers so for now we’re doing pretty well, but I’ve heard from other traders who are struggling as they simply can’t get the stock they need.’
BCA’s COO of Remarketing, Stuart Pearson, says this is a trend that is clearly reflected in auction sales.
‘Demand for lower value, budget vehicles remains incredibly buoyant,’ he told Car Dealer.
‘Maintaining the trend we have seen since the first days of lockdown and resulting in some unprecedented price increases.’
Shoreham Vehicle Auctions MD Alex Wright added: ‘The car market is showing classic symptoms of supply and demand economics.
‘Pent up demand from lockdown with supply struggling to keep up for a variety of reasons: fewer new-plate part exchanges, fleets extending lease contracts due to difficulty in getting replacements and used cars stuck in de-fleet compounds and on airfields waiting to be sold.’
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