9:52 am, May 13, 2020
Used car prices held firm during April – even rising marginally by 0.1 per cent – according to the latest data from Auto Trader.
In an exclusive video interview with Car Dealer Magazine, the UK’s largest classified advertising site’s product director Karolina Edwards-Smajd said the future of used car prices now lies in the hands of dealers.
She called for dealers to be ‘patient and pragmatic’ and not to slash used car prices when they return to work on June 1.
She revealed data collected for April on the Auto Trader website – where more than 500,000 cars were advertised – showed the first marginal rise in prices in eight months.
Prices overall for used cars went up 0.1 per cent with petrol vehicles rising the most, up 1.7 per cent, while diesels were down 0.7 per cent.
She said: ‘It is encouraging to see used car values go positive overall for the first time.
‘It’s down to retailers who have been patient and pragmatic and not having a knee jerk reaction on correcting prices.’
The Auto Trader data revealed that during the course of the lockdown 88 per cent of car dealers have not been reducing prices.
Usually up to 3,000 dealers make price adjustments are made every day, but during the lockdown this has fallen to around 800. The numbers of cars these dealers have adjusted prices on has dropped significantly too – from 24,000 a day, down to 4,500.
Edwards-Smajd said: ‘Over the course of the lockdown, 88 per cent of retailers have not been reducing prices. That is really positive for values overall.
‘Prices are still being corrected but not as often and by as many retailers. It is almost like the market is on pause for a period of time – retailers are being pragmatic and patient and not reacting before activity will pick up again.
‘We expect it to change the closer we get to lockdown lifting with retailers looking at pricing and potentially changing pricing.
‘We would encourage retailers to be patient and look at the data and not make rash decisions when it comes to discounting because pricing is under dealers’ control.’
Consumers have been reported to be offering low-ball offers to dealers for used cars during the lockdown, but Edwards-Smajd says these buyers need to understand prices have not plummeted.
She said: ‘As consumers we need to appreciate the situation as we have all been in it. I think it is hard to expect to get bargains everywhere because of this unusual situation we are in.
‘A lot of businesses will have to adjust on a massive scale. We need to be pragmatic as consumers too.’
She expects used car prices to hold firm in May. She warned more rental cars heading to auction or dealers distress selling when they return could bring prices down, but said she hopes dealers hold firm.
Meanwhile, Autovista Group – the owner of Glass’s – has released research on the impact of the coronavirus on used car values across Europe it has seen.
It thinks prices in the UK will drop 0.4 per cent for the remainder of 2020, a further 1.3 per cent in 2021, before recovering in 2022 by 0.9 per cent.
The report says: ‘Despite stark pessimism in how the UK will digest the economic aftermath of the pandemic in combination with the Brexit negotiations, there is a positive note.
‘The expected impact on used-car values in the UK is not as severe as in other markets even in this darker scenario. By the end of 2022, the UK will have fully recovered in terms of used-car prices to levels above those in March 2020.’
The research does highlight a high chance of a deep recession with a slow recovery in the UK as the most likely scenario, though.
Investigation: Is now a good time to buy a used car and what will happen to used car prices?
Meet the used car dealer that’s continued to sell cars during the lockdown and offered collections
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