We are truly in unprecedented times.
Never before have we seen cars actually going up in value while we are driving around in them. There are even cases of some used cars being valued more than their like-for-like new versions!
Meanwhile, we are seeing more quality stock than ever before on Motorway – huge volumes of privately owned used cars and vans are going live in our daily online sales, and our dealers are purchasing more than ever.
So we thought we’d open up the floor to some of our trusted dealers on the Motorway platform to find out what stock is selling right now, when they think the used car price bubble will burst, how consumers feel about EVs and their predictions for the last quarter of the year.
All our dealers agreed that the summer months were a fantastic time for sales this year, caused in no small part by consumer demand following three successive lockdowns.
But Joe Sutton, managing director of Joseph Sutton Motor Co. Ltd, also credited its bumper sales with taking the time during lockdown to think more strategically about its stock, which led to it changing its stocking profile to better meet its customers’ needs.
He said: ‘We have had a fantastic summer of sales this year. We exceeded our own targets, sold more units, and made more profit per unit compared to this time last year.
‘I put that down to the demand we are seeing from customers wanting to buy a used car from us, but also because over the course of the past year we changed our stock profile to specialise in Fords and hatchbacks.
‘We used to buy pretty much anything we could make money on that caught our eye as an interesting vehicle.
‘One thing the pandemic did during the time we were in Covid shutdown was give us time to think more strategically about our stock.
‘Since better understanding what is best to buy to meet customer demand in our current market situation, buying cars has become much easier for us, as we are spending less time every day working out what not to buy.
‘We are simply more focused on exactly what we do want to buy before we even look at what is available.’
Dealers who sell both new and used have felt the pain as they just can’t get hold of the new cars they are accustomed to getting delivered within a week or two.
Joshua Osbourne, store & operations leader at Rockar JLR, said: ‘Due to some of the big delays in our volume drivers such as Evoque and Discovery Sport, we are finding that stocking one-to-two-year-old models of these has worked well to accommodate for the lack of new stock and delayed builds in these vehicles.
‘Our main driver is two-to-four-year-old models across the full JLR SUV range, and due to operating predominantly online we see a real mix of fuel types people are after.’
Used car prices – when will they fall?
We asked our dealers what they think about used car prices continuing to go through the roof, and when they think this bubble will burst.
Osbourne said: ‘We have found the appreciation a great position to be in as it has removed the worry about having to turn stock as quickly.
‘We have found that by doing regular price checks and actually increasing the prices by small increments seems to drive customers to order quicker, as those who have been watching the car have been seeing them go up.
‘With new cars still seeing huge delays in production and the OEMs still catching up on customer sold orders rather than building stock and certain engines seeing further delays, I do not see the situation changing until the new year and possibly even into Q2 of 2022.’
Sutton said: ‘With current demand being so high and supply being low, I can’t see prices falling until the supply increases enough to counterbalance the issue.
‘In saying that, I do think customers might start to hold off buying if prices become too unrealistic, compared to where they were not so very long ago.
‘But it’s not something I’d like to predict with any degree of certainty.’
Graham Beeson at Unit One Automotive summed it up by saying it was no different to any other industry.
‘It’s all about supply and demand – that’s business. The bubble will indeed burst.
‘I’ve been in the industry for 35 years now and there will always be ups and down. It comes in cycles and waves and is usually beyond our personal control.
‘Business is business, you have to adapt to survive.’
Consumer demand for used EVs has not surged… yet
Despite some UK cities adopting Clean Air Zones and London extending its ULEZ in October, our dealers have told us that when it comes to used cars they aren’t seeing too much consumer demand for used EVs just yet and that there is still a real mix of people looking for petrol and diesel cars.
Beeson said: ‘People are still very nervous about the whole EV revolution.
‘Don’t get me wrong, it will indeed come, but I think the consumers need to realise the real cost of this technology and that is only just starting to come to light.
‘As for diesels, we certainly haven’t seen any spikes of people trying to get out of them. Demand is still strong and still on a par with petrol engines.’
Sutton said: ‘Pre-Covid-19, I was stocking about 20 per cent of my stock in EVs, mainly leased Renault Zoes with a 24kW range.
‘I now don’t hold any EV stock at all. The reason for this is because technology has recently changed so much in the past 18 months, as it has in all areas of tech, eg, TVs and phone.
‘The older and lower-range Zoes in the price range that suited my stock profile around £5,000 are now almost redundant, as is the case with other technology such as VHS players and plasma TVs.
‘Currently, with the cost of the battery lease for electric vehicles and the cost of the charge company monthly subscription, it seems to be cheaper and easier for the consumer to buy a relatively low-emissions petrol or diesel fossil-fuelled car for under £5k than a greener EV. At least, that seems to be the case for now.’
Osbourne said: ‘In new cars we are seeing a huge demand for alternative fuel vehicles and an increase for EVs but a majority of customers are not quite ready to make the leap to full electric.
‘The new range of Evoque, Discovery Sport, E-Pace and F-Pace PHEVs are proving hugely successful for us, but in the used market we still see quite a mix across customers looking for petrol, diesel and AFV.
‘Within our local market petrol is still proving slightly stronger but we still see a strong demand for diesel.’
What our dealers predict in Q4
Osbourne expects that because of the lack of new stock, used car prices will hold strong and most likely continue to increase slightly – although probably not at the same rate as we have seen throughout this year.
‘For us, I expect models that cannot be ordered new currently or with 12-plus-month lead times to be hugely sought after.
‘In some models I expect nearly-new cars to be going for more than the RRP of a new model.
‘I believe we will continue to see a strong used performance with the lack of new stock available.’
Beeson is of the opinion that Q4 will be much the same – residual values will continue to be strong and, on some models, we will see an increase.
‘With new cars at an all-time low in 20 years, it again all boils down to supply and demand.
‘Personally, I think we may see a slump in sales towards the end of the year. We are certainly not out of this pandemic, and we could see further restrictions being enforced, but consumers are becoming more ‘‘financial savvy’’ and this little thing called ‘‘inflation’’ has recently reared its ugly head and is kicking in to directly hit the consumer and their pockets.’
Sutton is sure that the cars he will sell in the last few months of the year will be what he always sells – ‘Cars for the general population, particularly family cars for mums and dads, and small-town cars under £10,000.’
And while the Christmas season is usually a quiet month for them, this year is proving like no other.
‘December has always been a quiet month for us in the past, but then so has August and yet we have just had one of the best months this August than we have had in five years, so who knows what we and our customers will get for Christmas this year?’
If you need more stock for your dealership, Motorway has hundreds of exclusive, privately owned used vehicles to buy every day – sign up to Motorway here.