With certain used vehicles hit by “significant price cuts” in November, Cox Automotive has given assurances that prices will never fall back to pre-pandemic levels.
Insight and Strategy Director, Phillip Nothard, agreed with Cap HPI’s Head of Valuation, Derren Martin, and suggested that after eight consecutive months of appreciation that values have risen by around 30% a year, the sector should have one Has set up a “new benchmark”. on-year.
In his monthly Market Tracker report, Nothard said that after losing around 1.4 million registrations from the market, there was no tsunami of used stocks on the horizon in the industry for years to come ”.
Nothard said: “Back in July, we claimed that the used car market had never been as critical to the general health of the automotive industry as it was in 2021. The last few months have given this proposal more weight.
“Although prices have now risen for eight months in a row, recent signs point to a possible weakening of the market. And although prices have continued to rise overall, the situation is becoming more complex, with some models starting to see significant price declines.
“Also, some of the numbers we observed are misleading as they are not live market data, with many models rising early in the month and falling until the end.
“It’s important to remember in the last month of the year that it is traditionally a slow time as retail activity subsides before Christmas. Prices are expected to fall in line with normal market cycles so current prices still reflect high demand with a low supply market. With current prices, traders are becoming more and more cautious, but by the end of the year they will need inventory for the new year so prices will not fall significantly.
“We expect current market conditions to continue into the first quarter of 2022, and it is entirely possible that we will see a revised benchmark for the used car inventory.”
Manheim’s November wholesale metrics for the sector were down slightly month-over-month, with small declines being observed and month-on-month average first-time conversions dropping 6.01% to 82.90%.
CAP Clean also saw a slight 2.32% month-on-month decrease to 97.35% as the average age of cars sold decreased 5.64% to 97 months and the average mileage of cars sold decreased 4.31% by 2,987 miles to 66,343 miles.
Nevertheless, the used car values at the auctions continued to rise, reported Manheim.
The average selling price rose 16.8% or £ 1,129 to £ 8,553.
AM reported last week on BCA’s proposals that the stabilization of values in the used car market over the past few months could reveal “what is to come in the used car sector”.
Cox Automotive has adjusted its volume forecasts for the used car sector for the remainder of 2021 and the first quarter of 2022, giving best, medium and worst case scenarios.
Its worst-case scenario now looks the most likely, with 2021 likely to end with 1.552 million transactions after 245,204 Q4.
The result would be 4.8% less than 2020 and 32.8% less than 2019.
Nothard added: “In our forecast for the first quarter of 2022, we expect the quarter to end with 431,787 transactions, an increase of 1.5% year-over-year but 35% less than the 2000-2019 average. “
