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Used car market in fourth quarter ‘is likely to set the tone for 2022’

  • Motor finance firm says we’re now entering ‘the real post-pandemic economy’
  • Market predicted to remain buoyant next year and much more like business as usual
  • Warning that Covid could return before Christmas and affect consumer behaviour
  • Last quarter expected to see used car values plateau
  • New car sales are poised to pick up again

Time 11:11 am, September 7, 2021

The fourth-quarter used car market looks likely to set the tone for next year as the sector enters what is being described as  ‘the real post-pandemic economy’.

That’s according to Startline Motor Finance chief executive Paul Burgess, who said the next few months would see various economic headwinds – notably the end of the furlough scheme – but there would also be possible benefits, including the semiconductor shortage easing.

‘For some time, we have all been working in a pretty successful used car market created by highly unusual and sometimes artificial circumstances.

‘However, it is now possible to see definite signs of that situation coming to an end in Q4,’ he said.

‘This doesn’t mean that the market is set to fall. In fact, we believe 2022 will remain relatively buoyant, but we are very likely to see a scene emerging that will much more closely resemble business as usual.

‘The two big factors here are the ending of government pandemic-based economic support to a major degree and the slow normalisation of supply chains, meaning that new car sales will start to pick up.

‘Arguably, we are now entering the real post-pandemic economy. The supply-and-demand trends that we are seeing are the ones that will probably come to represent the new normal for the used car sector in 2022.’

A number of macro-economic and social factors could have an impact on demand but were difficult to predict, he said.

‘We’re likely to see an unusual employment situation persist for a little while where unemployment is quite high but wages are rising, too.

‘It is tricky to understand how and if this will ultimately impact on car buying or how quickly it will resolve itself.

‘It’s also probable that we’ll begin to get a clearer picture of the longer-term impact of the pandemic on how people live and work.

‘For example, we’ll find out how much less travel there will ultimately be as a result of home working.

‘Finally, there is the chance of Covid reasserting itself before Christmas. Although the government is likely to be highly resistant to further lockdowns, very high levels of infection would likely affect consumer behaviour.’

The final quarter was also expected to see a final plateauing of used car values after several months of dramatic increases, he added.

‘Of course, people have been forecasting the end of this trend for some months and have been proved wrong, so I could well join that group, but it just seems that normal economic rules will start to assert themselves.

‘What this will not mean, we believe, is anything that looks like a collapse in values. Even though new car supply is likely to increase gradually, there is a backlog of orders to clear. Used car stock will remain in short supply.’

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

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