Stellar September in used car market thanks to better supply but a volatile period lies ahead

Time 9:00 am, October 21, 2020

The used car market continues to grow with September performing strongly, but one expert is warning of volatility in the market in the months ahead.

The market grew 6.3 per cent year on year in September fuelled by a five per cent rise in dealer stock, reports Indicata.

The sub-12-month-old market continues to suffer from OEMs reducing pre-reg and demonstrator activity, with sales volumes down 43 per cent year on year, says the firm.

Its data shows a 29 per cent increase in stock turn confirms the segment is in ‘extremely short supply’, which is fuelling strong prices, while older 60-144-month-old product is also short of stock.

Indicata reports stock levels are improving in the traditional leasing 36-month sector, but there are no real signs of increased stock turn and sales volumes are flat.

Used car prices overall rose by less than one per cent during the month.

Diesels and petrols are popular with high stock turns, which is creating a supply shortage, while EVs and hybrids have reported a 108 per cent and 55 per cent sales growth year on year based on improved availability.

After lagging behind the rest of Europe, the UK market finally increased its year-on-year sales during September.

If supply continues to grow, October will be a crucial month to see whether demand and prices stay firm, say company bosses.

‘Used car activity has been very strong across the board since June, but supply has not kept up with demand until September,’ said Jon Mitchell, Autorola’s group sales director.

‘Dealers are showing signs of buying used cars more sparingly as we enter October to avoid being left with cars on their forecourts that they have paid top prices for.

‘That slight cooling in demand matched with higher supplies of used cars coming to the market may mean a market correction is already heading for Q4.’

Meanwhile, data experts Cazana reported September’s used car market’s performance was ‘a lot better’ than the retail market.

Cazana’s director of insights, Rupert Pontin, said: ‘The strong demand from the used car buyer continued to bring positive news to the retailers who were able to focus on used car sales better than in the same period in previous years.

‘Despite the challenges, still evident in the logistics supply chain, used cars were still finding their way to the forecourts to satisfy demand and pricing remained firm on the face of it.’

But Pontin warns of a volatility in the retail and used car markets in the coming months.

‘It is important to highlight that as the month drew to a close there was a definite shift in the volume of retail customers,’ he said.

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‘Digital media campaigns began to return fewer inquiries and footfall on the used car pitches slightly declined.

‘In addition, the volume of cars in the wholesale market began to increase and the recovery of the logistics sector meant easier vehicle movement and thus the supply of used cars increased.’

He added that the result was ‘more choice for the consumer’ and ‘an increase in the volatility in retail pricing’ as well as ‘the settling of the often wild wholesale pricing swings’.


James Batchelor's avatar

James – or Batch as he’s known – started at Car Dealer in 2010, first as the work experience boy, eventually becoming editor in 2013. He worked for Auto Express as editor-at-large and was the face of Carbuyer’s YouTube reviews. In 2020, he went freelance and now writes for a number of national titles and contributes regularly to Car Dealer. In October 2021 he became Car Dealer's associate editor.

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