Used car sales grew by 5.7 per cent in October, new data shows.
October’s figures were aided by a 7.4 per cent month-on-month growth in stock levels according to the Indicata’s latest market insights report.
However, says Indicata, just as more used stock has been coming into the market and dealers have been filling their forecourts again, England’s new month-long lockdown has immediately shut franchised dealer showrooms and slowed consumer demand.
As Covid-19 infection levels rise the current used car market dynamic of short supply and rising prices is coming to an end warns Jon Mitchell, Indicata group sales director.
‘The supply shortage has contributed to higher prices at a time when traditionally the used car market is slowing down. As supply improves, we are starting to see that trend reverse with prices softening,’ he said.
‘With Lockdown 2.0 firmly in place for November limiting the market to online sales, and December typically a slow used car month, dealers should be prepared to manage an overstocking issue on the back of reduced demand.
‘Importantly, any 90-120-day stock should be immediately repriced and sold to tidy up stock portfolios ready for a potential fast start in January.’
The firm says that even with stock levels rising, stock turn is still showing a high degree of constraint, with diesel at 8.6 and petrol at 7.9 indicating popularity in the used car market.
This is especially the case when compared to BEVs where despite an 80 per cent increase in year-on-year sales, stock turn is low at 4.9, a 16 per cent fall over October 2019, says Indicata.
The firm reckons the lack of OEM tactical action in the new and pre-registration market is seen by the 41 per cent drop in sales in October (-43 per cent compared with September).
But a 15 per cent increase in stock turn for sub-12-month old cars shows there is pent-up demand for the limited supply available.
Mitchell added: ‘With the speed of market change governed by Covid-19 dealers should be prepared to review stock on a daily basis and make tactical pricing decisions accordingly.
‘Online selling will ensure dealers sell some used cars during Lockdown 2.0 but only by using market data, insights and keeping their finger on the local and national pulse will they ensure their used car businesses are in the best shape moving into 2021.’