Industry braced for used car figures
News that used car sales were nearly 50% down in the second quarter of the year has not surprised the motor industry.
The SMMT reported yesterday that the used car market declined by 48.9% in the second quarter of 2020 with just 1,039,303 units changing hands, meaning year-to-date sales are 28.7% down.
Ian Plummer, commercial director, Auto Trader, said: “With the majority of quarter two under lockdown conditions and all but a few retailers unable to sell in a meaningful way, it’s little surprise to see such a significant decline in used car sales. Over the full year, we almost certainly won’t make up for all the weeks of lost sales, however, from what we’re observing on our marketplace and what we’re being told by our customers, quarter three is tracking ahead of the same period last year and is likely to finish that way.
“Whilst consumers couldn’t buy during much of quarter two, we still saw a healthy level of demand. After an initial dip, it continued to increase during the second phase of lockdown with our audience, vehicle advert views and sales leads to retailers all above the previous year’s performance. And since showrooms have been able to reopen, we’ve seen these levels accelerate dramatically; in June we recorded 64 million visits across our platforms, and in July, a record 64.4 million, which is a 22.7% increase on the same period last year. This is translating to a significant increase in engagement with retailers too, with sales leads surging 67% year-on-year.
“This is all indicative of a market which was paused, rather than stopped, which was also reflected in average used car prices remaining stable during the period. Unlike the financial crisis, where retailers slashing their prices to entice car buyers had a very negative impact on the financial health of the market, with Covid-19, retailers have held firm. With such high demand, coupled with challenges in the supply chain, it’s absolutely the right decision, and in fact we’ve seen four months of consecutive growth in used car prices, with July recording the highest rate of growth since August 2018.”
The SMMT figures revealed that while sales were 74.2% down in April, they had made up much of that ground by June when they were just 17.5% below last year’s figures.
Andy Hamilton, CEO at LKQ Euro Car Parts, said: “We expected to see sales pick up in June, as lockdown restrictions were relaxed, and with people being encouraged to use private modes of transport. Assuming this continues, it’s good news for the independent aftermarket, as older cars that are out of warranty will likely be taken to local garages for service and repair work, rather going back to the dealers.
“After an extended period with little to no business coming through the workshop doors, this will give independent garages a welcome boost, and an opportunity to expand their customer base. And with a spike in MOTs on the way as well – as those that were deferred in lockdown will soon need to be completed, alongside those that are also due – the key for garages is going to be managing this demand safely and effectively.”
