What will happen to car values as we come out of lockdown? We take a look at what’s happened during this unprecedented time, and why motor traders can have cause for optimism in the year ahead.
Motor dealers of all sizes have curtailed activities or stopped altogether during lockdown. Some have carried on working throughout; but confined to online buying and selling, sales across the industry have dropped significantly.
While nobody realistically could have planned for what has happened, the fall in sales is inevitable in the circumstances. However, while dealers could have reacted nervously and tried to sell their stock quickly – pushing prices down – recent figures demonstrate that values have remained steady.
So, what is likely to happen to the value of new and used vehicles as we come out of lockdown?
What we already know…
During lockdown, new car sales were naturally at a standstill, with dealers closed across the UK.
However, sales continued in the used car market, albeit on a reduced scale. This has given us some data to analyse from the lockdown period.
As reported in Motor Trader news, the asking price for used cars held firm. Between April-May 2020 – in the most restrictive period of lockdown – there was an average decrease of only 2.8% amongst the biggest fallers in value. In contrast, there was an average increase of 12.3% in the most popular vehicles.
The research – carried out by Auto Trader – revealed the biggest fallers in value to be the Volvo V40 Inscription (4%), Volkswagen Passat GT (3.9%) and Vauxhall Insignia SRi Nav (3%).
The biggest gains in value were the Renault Scenic Dynamique Nav (up 15.7%), the Peugeot 3008 Allure (14.9% for the automatic diesel, 13.6% for the manual diesel), and the Peugeot 2008 GT Line (up 12.1%).
Further research from Auto Trader showed online leads for used cars increased 88% year-on-year when showrooms reopened on 1st June – an obvious sign of pent-up demand.
What does this mean for the value of cars for the rest of 2020?
This is positive news for motor traders.
There has been plenty of excitement about new car showrooms reopening on 1st June, as consumers get back on the road with lockdown easing. New car sales figures are likely to see a welcome short-term boost, so values will remain consistent with demand in the market.
Meanwhile, as the research shows, used car values remain buoyant. That puts used car traders in a good place to pick up from, as consumers begin to return to the market in bigger numbers.
This suggests that dealers have reacted calmly to the inevitable drop in sales across the market during lockdown. In fact, the figures seem consistent with price movements in a normal market.
While there has been talk of more people cycling to work and removing their reliance on cars, the value of vehicles has not been greatly affected. Motor traders taking a longer-term view and returning to the market now still have good opportunities to make money for the rest of the year; the demand is still there.
On this basis, it pays to keep your cool when it comes to valuing vehicles. Don’t slash prices in a bid to sell as many cars as you can; instead, take advantage of the pent-up demand and continue to track the market value of cars that you sell.
The move to online sales
Another key consideration for motor traders during lockdown has been to increase their online presence.
With so many areas of life moving online, the motor trade is no different. It makes sense for traders to advertise cars online and sell them with the minimal of contact with customers.
Online sales have helped to keep market values in a good place. With car auctions some way from returning to normal, online trading is a good way for smaller traders to pick up good value vehicles as well as sell them.
Most people are heading online first before they consider visiting a salesperson or showroom. This is likely to be a more permanent change in customer behaviour.
ChoiceQuote insures motor traders across the UK
Just as new and used car values remain consistent, so ChoiceQuote remains one of the leading motor trade insurance brokers in the UK.
Our motor trade insurance team search the market to find the best deals we can from leading insurers. No matter how many sales you make, and whatever area of the industry you work in, we have continued to insure traders and look after your needs throughout these unprecedented times.
Trust the experts in motor trade insurance at ChoiceQuote to find a great deal on your motor trade insurance. Get a quote or call us on 01625 885046.