Used car prices may never return to a pre-pandemic normal, Cox Automotive has said.
In its monthly market tracker, Cox Automotive explained that while wholesale values will likely stabilise throughout 2022, the acceleration in online and digital compared to before the Covid-19 pandemic could result in a new benchmark for used vehicle values being reached – and never dipping to pre-pandemic levels.
The company said there is no ‘tsunami’ of stock on the horizon, and warned the market has lost around 1.4m vehicles which will never reach the used car parc.
Cox’s monthly market tracker also revealed November’s auction results.
Average first-time conversion decreased by 6.01 per cent to 82.9 per cent month-on-month. Similarly, CAP Clean experienced a marginal month-on-month fall of 2.32 per cent, to 97.35 per cent.
This easing resulted in a lowering of both the average age and mileage of vehicles observed through Manheim’s auction lanes.
The average age of cars sold also slightly decreased by 5.64 per cent to 97 months, and the average mileage of cars sold, decreased by 4.31 per cent and down by 2,987 miles to 66,343 miles.
However, despite four key indicators experiencing month-on-month falls, used car values continued to rise, with the average sale price experiencing one of the largest month-on-month increases of 16.8 per cent or £1,129, to £8,553.
Cox Automotive’s insight and strategy director, Philip Nothard, said: ‘Back in July, we asserted that the used car market has never been more critical to the overall health of the automotive industry than it has been in 2021.
‘The last few months have given more weight to this suggestion.
‘While prices have now increased for eight consecutive months, recent signs point towards a potential softening in the market. And while it remains the case that prices overall have continued to rise, the situation is becoming increasingly complex, with some models starting to see significant price decreases.
‘Moreover, some figures we’ve observed are misleading, as it doesn’t represent live market data where many models that saw an increase at the start of the month, which dropped off by the end.
‘It’s important to remember in the final month of the year that this is traditionally a slow period as retail activity slows ahead of Christmas.
‘Prices are expected to drop in line with usual market cycles, so current prices still reflect a high demand with a low supply market. With prices as they are, dealers are becoming increasingly cautious, but as the year draws to a close, they will require stock for the new year, so prices are unlikely to drop significantly.
‘We expect current market conditions to continue throughout Q1 2022, and it’s entirely possible that we are seeing a revised benchmark for the used vehicle parc.’