As an industry commentator, it is hard to ignore a headline like ‘Used car market unlikely to return to “normal” as dealer nerves begin to increase’, as published by Car Dealer following James Batchelor’s recent interview with Auto Trader chief operating officer Catherine Faiers.
It is fair to say that since March 2020, we have seen unprecedented dynamics in the used car market.
Sustained periods of – at times – significant appreciation, thanks to increased demand and dwindled supply, would only be typically seen over the course of one or two weeks or months in a pre-Covid world.
Faiers noted that October heralded the first time for 40 months that the used car market had encountered year-on-year depreciation, to demonstrate the unique nature of the market we see in November 2023.
She also highlighted the segmentation and nuance within the used car market, in that independents and smaller dealers were seeing quicker sale times than bigger franchised dealer groups.
‘Following the data was crucial,’ Faiers said in predicting and reacting to consumer behaviour.
The question that came immediately to mind once I had watched the video was how is the market in November 2023 different to that of November 2019?
Faiers talked about how new car volumes are returning to more ‘normal’ levels and that manufacturers are pushing the need to deliver EV volume.
She said that as there is no large data set surrounding historic EV sales, it is hard to predict the market.
Over-supply of new cars feels normal to me.
It is too easy to suggest that inconsistent consumer buying behaviour of EVs is because of the suspicion that surrounds the benefit of electric vehicles.
Electricity is just the method of propulsion; it is still a car.
It is purely to do with price. Manufacturers – whether through increased production costs or greed in retained margin – have overestimated the demand in electric vehicle adoption.
Most manufacturers are slashing prices or supporting residuals of electric vehicles to drive volume. 2020 to 2022 would represent the only period this didn’t happen.
If the manufacturer has a greater ICE offering, they too have volume they are looking to shift.
The point around segmentation also feels ‘normal’.
If you care to dive into the Car Dealer archives, you’ll find editorials written by yours truly well before someone sneezed in Wuhan that advocated the sale of older cars by franchised dealer groups.
You’ll also find articles bemoaning the lack of urgency of preparation turnaround, resulting in strangled used car performance.
There is an oft-repeated line on a favourite TV show of mine in which the host proclaims: ‘The answer to all of your questions is money’.
Like a self-appointed used car prophet, Auto Trader is desperate for us to believe that the world has gone mad and that those without faith will be consigned to the fiery hell of no profit – ‘Subscribe to our recommended retail prices and a pox on those who buy a car with a less-than-20/100 rating’.
The fact of the matter is this (and you heard it from the used car heathen): The used car market has returned to normality, and those who do not follow the basic used car disciplines (the Commandments, for those who wish to extend the metaphor) will reap what they sow.
Watch James Batchelor’s interview with Catherine Faiers below: