10:21 am, November 27, 2021
The used luxury and supercar market is currently experiencing an unprecedented buoyancy.
We’ve all heard the expression ‘What goes up must come down’. It might be a bit of an old chestnut, but gravity and market forces prove its validity time and time again.
Most automotive retailers say the uptake started when they began click-and-collect services post the first lockdown in June 2020 and continued throughout the year.
Reopening their showrooms again in April 2021 has done nothing to stem the tide and retailers continue to service pent-up demand in the market.
For us at JBR Capital, things in fact took off in March 2021.
In an average pre-pandemic month, we processed 350 applications for finance for customers wishing to purchase cars priced from £25,000 and above.
Now we are seeing more than 550 applications every month, and volumes continue to grow across high-end cars as well as the luxury end of the volume market.
We’ve just enjoyed our most successful business period ever since the business was launched at the start of 2015, lending £130m since March 1 and enabling customers to fund their passion for supercars and luxury vehicles.
Used prestige car values are up by around 30 per cent compared with the start of the year, but where will they be 12 months from now?
That depends on what happens to a range of unprecedented factors currently affecting the market.
Some of them, such as the fulfilment of pent-up demand and global semiconductor shortage, which is causing a shortfall in new cars, will abate.
Others, such as Brexit, which has forced UK car enthusiasts to purchase at home rather than in Europe and incur higher import taxes, will remain constant.
Prices of UK-registered desirable, limited-run left-hand-drive-only supercars are now very firm indeed, for instance – even taking the rest of the market into account.
Other factors, such as customers’ desire to procure a petrol-power super or hypercar representing the pinnacle of ICE engineering, are likely to increase, at least until the curtain comes down on car fossil-fuelled sales in the UK in 2030.
I can’t see the current market situation changing significantly over the next 12 months.
There is no over-supply in the used market – quite the opposite in fact, as dealers struggle to find the right quality of used stock – so no top-end dealer is likely to be left ‘holding the baby’.
But demand and values cannot keep rising indefinitely of course, and the market should remain cautious.
Eventually, with the global semiconductor shortage resolved, manufacturers will return to higher production levels.
But provided they don’t flood the market with new models – something virtually impossible in the supercar and luxury sector anyway – demand for used cars is likely to remain strong for the next year.
Given unforeseen disruption, like Martians landing on the White House lawn, I suspect that we will see subtle signs of a correction and the beginning of a return to normalcy, or at least a new normalcy by 2023.
But hopefully, what has gone up will come down very slowly and very gently.
For more information, visit jbrcapital.com.
Finance and terms are subject to status. JBR Capital Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number is 682493.
