Used car retail prices haven’t been jumping at the same rate as trade values, according to Cazana data, but it doesn’t expect to see prices fall when demand drops of.
Talking on the Car Dealer Podcast this week, director of insight at Cazana Rupert Pontin gave some of his views on other stats reported in the market and said that while there was ‘no doubt’ they are seeing an increase in price that there isn’t the ‘huge jump upward’ others had seen.
Commenting on Auto Trader stats that saw average used prices up 8.1 per cent, he said: ‘Interestingly, I think this notification was about older vehicles not being moved up in price to match with the marketplace.
‘We do a lot of work with a lot of large dealer groups in the UK where we help them to understand speed churn of their vehicles, how their vehicles are affected on a day-by-day basis, and how it relates to the rest of the marketplace.
‘A comment that tells you to move your old stock up in price is an interesting comment, but the reality is that if that stock at that price still hasn’t sold then it still isn’t priced right. Putting it up isn’t necessarily going to sell that vehicle.
‘There is no doubt that there is demand for some vehicles, but we’re not seeing these huge jumps that Auto Trader is seeing.’
Pontin, however, did add that while Auto Trader is looking at its own data Cazana takes a view of the whole market, and this is why like with many platforms shifts can vary dramatically.
Looking to the trade market, he also said that while they were seeing some high prices they weren’t seeing this increase transfer to retail pricing.
‘We’re not seeing in those instances where the prices in the wholesale market is much higher, that the retail price increases in the same proportion,’ he said.
‘That is because there’s either other competitive vehicles out there and you can’t say you spent £2,000 more so you’re adding that to the retail price. You just won’t sell the car because nobody will look at it.
‘The other side being that some dealers are short of stock and therefore they need something on their forecourt and they’d probably rather take that with a reduced margin knowing that they can make money from the F&I side of it, as well as the profit from the metal.’
Pontin believes that in six weeks we can expect to see a return to some stability – but that doesn’t mean dramatic increases in stock or drops in prices.
He said: ‘In terms of live listings in the marketplace, they are slightly up in May but that would have gone down in June.
‘We’ve still got a period ahead of us where we’re going to be short of stock. It’s half term this week, it’ll be interesting to see what happens with sales and volume of stock.
‘As we move into summertime we’re going to find ourselves in a period where the remarketing and logistics functions that have been struggling a bit with the social distancing measures in place, which has been slowing them down in processing stock available and also delivery.
‘We’re going to see that in a better place.’
He added: ‘If there is more used car stock in the marketplace, which there may well be coming through from defleets, then there will be more stock available. I’m not talking about huge price drops, but I think there will be more stability.
‘We also need to be aware we are coming into a summer holiday period, and a lot of people will go away. There is also a discussion around that there are alternative ways to spend your money at the moment. Those ways are other leisure pursuits.
‘It’s going to remain important for dealers to keep their online showrooms in absolutely tip top form because they will find they’ve got competition for where the consumer spends that money.’