Lower priced, older used cars have rocketed in value in June with some rising by as much as 25 per cent as consumers look for alternatives to public transport.
Car Dealer Magazine has spoken to a variety of used car experts and found that used car prices have generally risen across the board in the last month with older, cheaper used cars rising the most.
While the rises in monetary value might not be huge – reports of percentage rises of between 21 and 25 per cent represent massive, never before seen shifts in pricing, says Cap HPI.
Dealers are reporting busy forecourts too with many suggesting June could even be their best month ever.
Big Motoring World boss Peter Waddell told Car Dealer he was currently ‘having it off’ when we spoke to him last week and said he is likely to record his ‘best ever June’.
Cap HPI head of valuations Derren Martin told Car Dealer, in an exclusive video interview which you can watch above, that it’s currently a case of ‘make hay while the sun shines’.
He told us the top three highest rising prices for used cars in June (compared to May) were:
- Citroen C2 – UP 25 per cent
- Peugeot 207 CC – UP 22 per cent
- Mini One – UP 21 per cent
Martin said: ‘We’ve been really surprised there wasn’t a price drop going into June – we expected it to be really volatile and maybe come done before it recovered, but it didn’t do that, it stayed strong.
‘That has taken us by surprise.
‘It’s unusual to see a two-tier market like we have currently where older cars do well and new cars do not, you generally get similar percentage movements across the age ranges.
‘We did predict that older cars would do well but to this extent it has taken us by surprise. I’ve been at CAP eight years and I’ve never seen that. It’s very unusual for that to happen in such a short period of time.’
Cap HPI says the market has continued to be strong throughout June and they believe it will continue for the next few weeks as dealers continue to concentrate on used cars.
‘Some dealers are doing five used cars to one new and usually they’d see two or two and a half to one,’ added Martin.
‘Some of the dealers I have had video calls with have had smiles on their faces – they’ve been doing well and it’s much needed.’
Other used car valuations firms are reporting price rises too.
Cazana has seen MPVs jump the most with a 5.3 per cent price recorded in June and says it believes the largest rises have been in the £30-£39k price range, with cars up nearly three per cent there.
Cazana’s Rupert Pontin said the issue, though, is with auctions still struggling to get back up to full speed to replenish the cars sold from dealer forecourts.
He said: ‘The wholesale environment is still struggling with operational challenges. Cars are being offered for sale and dealers are eagerly buying, but delivery to the dealers is very slow.’
He said dealers can’t pick the cars up themselves from auctions in any great volume as social distancing and staff shortages at sites are causing issues.
The main problem appears to be with multiple car movements needed at auction compounds the level of cleaning needed every time a staff member changes slows down the process inextricably.
These issues, combined with high demand and problems replenishing stock is all pushing prices up.
Pontin added: ‘With good consumer demand and shortage of replacement stock, retail prices are still moving upwards. It would seem dealer margins are being squeezed as a result.
‘This position seems likely to continue for the next few weeks.’
Auction houses Car Dealer Magazine has spoken to have admitted privately there is an issue with social distancing and getting sold cars out of the door, but all said they were working hard to resolve the issues and get back up to speed.
BCA told Car Dealer it will continue to operate its auctions online for the foreseeable future but it is ‘keeping a close eye on government guidance’.
Today (June 30) it will offer the most cars for sale online ever, with 5,700 used cars offered on its online platform.
Stuart Pearson, BCA chief operating officer for UK Remarketing, said: ‘Conversions, average selling price and performance against guide values at BCA all remain at high levels, with sold volumes rising and the number of buyers participating increasing significantly.
‘Currently all sales remain online only and we’re keeping close to the latest government guidance in order to protect our people, customers and suppliers.
‘We’ll look to restart physical auctions when appropriate.’
BCA has doubled the number of Top Car sales it is holding online and the average selling price of used cars in these sales has been hovering around the £38,000 mark.
The most expensive car it sold during lockdown was a 2018-registered Lamborghini Aventador for £193,000.
Aston Barclay managing director Martin Potter told Car Dealer Magazine that they had also seen the older car – in the five-10 year bracket – rising the sharpest, up 5.7 per cent.
He said: ‘We saw wholesale prices rise each month from around 85 per cent of CAP in April to 90-95 per cent in May and 95-99 per cent in June – so the market has got back to full strength very quickly.
‘Small petrol cars, coupes and convertibles have been the strongest in June while overall across lockdown the 5-10-year old stock has been making very strong money.’
Jon Mitchell, director of online car auction Autorola, told us that stock on its site was diminishing fast as dealers look to buy up used cars.
He told us: ‘During June our portal stock levels fell from 10,000 to 7,745 at the end of June which we haven’t seen for a long time.
‘This is because dealers have been actively buying to replace depleted stocks while some dealers have taken the stock off the portal to sell it themselves due to the shortage of vehicles in the marketplace.
‘Prices have returned to pre-Covid levels in just a few weeks in June, which shows there has been a pent-up demand for used cars from consumers from the lockdown period.’
Cap HPI’s Martin added June took them ‘by surprise’ and that a lack of part exchanges because of fewer new cars being sold has created ‘a perfect storm’ for prices.
He added: ‘Generally it has been a tale of strength and some of that has been seen in the older cars. The Peugeot 107 has done well and BMW X3. Nicer, older cars have gone up £300-400 which, on a lower value car, is quite a lot.
‘If dealers want to replace a car they’ve sold there has certainly been a bidding frenzy and values have gone up.
‘We’ve seen a slight softening of that in the past week and CAP being achieved is not quite as high as it was, but it’s still strong. I think it will stay relatively stable for the next few weeks and the supply will still be an issue.’
Martin believes the demand will continue into July and August, but as the economic impact becomes clear, and the furlough scheme tails off, the market may slow a little, but not by much.
‘Demand is still there at the moment, but I don’t think that will last forever,’ he added.
‘Towards the end of summer we may see a little bit of a weakening, but I think it is a case of make hay while the sun shines.’
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