12:39 pm, December 16, 2022
The motor trade is exiting 2022 ‘with good momentum’ for the year ahead, despite looming clouds of recession and a deepening cost-of-living crisis.
That’s the view of Auto Trader’s Catherine Faiers, who spoke exclusively to Car Dealer as the curtain comes down on 2022.
This year could be classed as ‘stable and healthy’ and there are good headwinds for a successful 2023 for dealers, so far.
‘We’re exiting 2022 with the mood music feeling different, with concerns over the economy and a looming recession,’ Faiers said in the video, which you can watch at the top of this story.
‘But the car market was stable and healthy in 2022 and I do feel like we’re exiting with good momentum into 2023.’
The Car Dealer Live was a retrospective of 2022 but host James Batchelor also pressed Faiers for predictions for 2023.
‘I think when we’re looking back into that rear-view mirror, it’s definitely been a year where it’s been really important to look through the headlines to understand what’s really been happening in the automotive market.
‘Those headlines have been unsettling and really uncertain – whether it’s world events or politics or what’s going to happen to the economy.
‘And with those headlines as a backdrop, it’s then been easy to assume that in that period, from January to now coming up towards the end of December, that the automotive market would have been similarly volatile and on that journey as well.
‘We’ve been used to volatility, because in 2020 and 2021 we’ve seen these huge periods of lockdowns and pent-up demand; all of our market metrics and measures were all over the place.
‘But actually, I think from January to now we’ve seen a lot of stability in the market.
‘In the used car market in particular, we’ve seen a very stable demand-and-supply situation, and in the new car market we’ve seen a market that’s been in slow but gradual recovery over the course of the year.’
Faiers explained that at the start of the year, supply was very ‘constrained’, particularly with new cars, and due to demand tracking ahead of supply, prices for new and used cars rose fast.
We are going to be in a strange situation where the wider economy will be in recession, but we’ll see growth in the new car market
‘That backup led to really strong margins for manufacturers and for franchise and independents,’ she said.
‘For most retailers in the market, we saw record-breaking results and profit performance across the board.
‘So the year started with really good momentum, and I feel we’re also exiting with good momentum.
‘And momentum is the word I use, I think because the mood in the markets changed significantly.
‘It’s much more negative on the economy, on consumer confidence, and lots of other factors. And that, of course, brings with it some uncertainty when we look forward.
‘But there’s definitely still momentum today that I think will see us through into the new year.’
As proof of the momentum, Faiers pointed to the way the current market’s performance is still being driven more by supply than demand, which was the case in January 2022.
‘Although used car sales are still behind 2019 levels,’ she said, ‘it’s being driven by lack of supply.
‘Where the stock’s there, the demand’s there, and with the new car market’s gradual recovery it will support volumes into the new year.’
Predicting what may happen in the next 12 months, Faiers said: ‘We are hoping for a new car market at around 1.8/1.9m transactions – we’ve been at 1.6/1.7 for the past few years.
‘We are going to be in a slightly strange situation in 2023 where perhaps the wider economy will be in recession but we’ll see growth in the new car market.
‘We are expecting new car supply to gradually recover over the course of the year, but we’re not expecting it to reach what we would have considered normal levels before the pandemic.’
And on used cars, Faiers stuck to the current industry view that prices won’t fall through the floor.
‘There’s nothing in the data and we’re not hearing anything from manufacturers around supply that would suggest a big price correction anytime soon,’ she said.
In the wide-ranging retrospective and look ahead, Faiers chatted about used EV values that have stuttered in recent weeks, and Auto Trader’s plans for its dealer partners in 2023.
