Cox Automotive has seen “unseasonal dealer activity” towards the end of this year in the new car market ahead of a potential no-deal Brexit.
Philip Nothard, Cox Automotive UK insight and strategy director, said the forecast of 1.57 million registrations in 2020, down 32% year-on-year, is likely to be exceeded due to dealer registrations rushing to be made before December 31.
However, Nothard said not all of the December boost is down to Brexit uncertainty.
He said: “OEMs have also focused on registering physical stock to try to boost 2020 market share recovery. In the dealer sector, we see increased activity with the taxation of derogation and fully paid vehicles.”
Used car prices maintained due to supply and demand
Despite all the uncertainty surrounding the automotive industry and the broader economy since the end of the first lockdown, the one thing Nothard said has remained consistent is wholesale demand.
He said: “Although we saw a slight dip in November, no doubt as a result of the second national lockdown, demand has so far increased slightly this month to 89.9 indexed points, helping to sustain a stable used car market.
“However, supply in December has dropped off to 61.7 indexed points as vendors shift their focus to 2021 and hold back stock.”
Average age and mileage of auction stock in December has seen a slight increase as a consequence as vendors keep hold of newer stock until the new year.
Although a drop in supply is usual at this time of year, the disparity between supply and demand has helped to keep wholesale prices and auction conversions high.
The market is facing uncertainty going into 2021
Nothard said Q1 is hard to predict due to a number of factors.
He said: “The effects of a potential no-deal Brexit are already being felt across the industry.
“I’ve heard that some planned shipments into Northern Ireland in the early parts of 2021 have been stopped by some retailers while it remains unclear what rules they will be operating under come January 1.
“Despite the possibility of a late deal, the news has come too late for many retailers, and this could have a significant impact on supply in Northern Ireland at the start of the new year.”
Nothard said that it remains to be seen whether the current market can be sustained into the new year.
He added: “Pent up demand in Q3 has undoubtedly created a false sense of a robust motor retail sector, and the bubble will likely burst for used car prices at some point in the near future once supply picks up.”