Stock shortages and slow new car supply have resulted in a fall in both used car sales and adverts and a rise in retail prices, new data reveals.
Cazana’s Weekly Pricing Index for week commencing July 26 showed the used car market returned to more levels of activity following a surge during Euro 2020.
However, stock shortages and slow new car supply are a ‘concern’ and are having a big impact on the used car market.
Used car sales for week commencing July 26 fell by a substantial 12.8 per cent, but Cazana countered this by revealing sales the week before rose by nearly 27 per cent, and across the period of July were up by 75.7 per cent.
Cazana’s director of insight, Rupert Pontin, said: ‘The expectation is that sales will now stabilise for the coming month or so, although this will be dependent on the potential for foreign travel, and the consumer appetite for spending on leisure pursuits during the rest of the summer.’
The data also revealed the number of retail adverts being listed has been on a downward trend since May 2021 – a pattern Cazana wasn’t expecting.
Numbers dropped by a ‘worrying’ 22.6 per cent, said the firm.
Pontin explained: ‘This is likely to be a direct reflection of the lower volumes of cars in the wholesale market overall.
‘Whilst some auction houses have experienced a drop in volume, third party remarketing platforms have also been finding it tough to find stock to offer to the wholesale buyers.
‘This is of concern as consumers that are not able to find the car they are looking for may decide to defer purchase until there is more choice.’
Meanwhile, the data found retail pricing has moved upwards by 1.7 per cent and by 14.4 per cent across all of July.
The average retail price of a car shows a lift of 9.1 per cent indicating there are more valuable cars on the market at the moment, said the company.
Pontin said: ‘Of more concern is what is happening with the supply of used car stock and the difficulty the retailers are having in trying to source replacement cars for the forecourts, many of which are already at a lower than ideal capacity right now.
‘It is possible that this uncomfortable situation will ease in the coming weeks although this is far from certain, as the new car stock availability continues to constrict the number of new cars coming to the market.
‘The release of the SMMT new car registration data later this week is eagerly awaited, as the data will highlight which OEMs have struggled the most and at the same time, give an indication of those that have switched production to model ranges with better profit margins to try and replace lost revenue from lower overall sales volumes from less profitable cars.
‘The lack of both semiconductors and other parts required for the industry has not improved and shows little sign of doing so in the short term.’
The latest SMMT data will be published at 9am on Thursday, August 5.