‘Seismic’ shift in used car demand
Used car prices are undergoing a “seismic” shift upwards, according to cap hpi.
Its live values reported an overall increase of 6.7% at the three-year point during May, equivalent to over £800 per car. This increase is more than three-times the previous monthly increase in values. The company attributes this rise to strong consumer demand and dwindling supplies.
Derren Martin, head of valuations at cap hpi, said: “We really are in unprecedented times. From franchise dealers to car supermarkets and independents, activity levels across the board have been amazingly strong, with sales rates ahead of budget and in most cases ahead of pre-Covid rates.”
It found that some showrooms are seeing queues out the door and sites almost too busy to service all the customers coming in. With a degree of pent-up demand following lockdown restrictions, and new car supply issues, consumer demand for used cars has remained remarkably strong.
Martin said: “There is no tsunami of stock waiting to appear. There are well documented new car supply issues, meaning less part-exchanges and fleet returns due to component shortages, particularly for semiconductors.
“Currently manufacturers and dealers are switching some customers into cars they have in stock, but what happens when those stocks dry up? Undoubtedly, many lease terms continue to be extended too. From late June/July, stock levels will have dwindled and the component shortage could well be impacting supply more acutely, depending on the brand. The semiconductor issue could well have an even greater sting in the tail.”
It predicted that while current increases in value are extremely unlikely to continue at the current rate, prices are likely to stay high without huge volumes appearing in the market.
