Startline Motor Finance has warned that an uplift in used vehicle prices prompted by WLTP-sparked new car shortages “will not resolve quickly”.
The chief executive of the automotive finance specialist, Paul Burgess, said that the challenges presented by the implementation of the Worldwide Harmonised Light Vehicle Test Procedure on September 1 had benefited parts of the used vehicle sector, however.
New car stock shortages caused by WLTP will continue well into 2019, it said, adding that the rising demand for finance for cars under three years old it has experienced during recent months looks set to continue at least into the early part of next year.
Burgess said that it was possible that by the time the WLTP situation started to resolve itself next year, there would be some very strong economic headwinds caused by Brexit, which again could help to sustain interest in relatively young, used cars.
“This is a part of the market that could remain buoyant through 2019 and one in which we expect to see ongoing, strong demand,” he said.
Startline Motor Finance said that new car registration figures for the key ‘plate-change month of September had showed just how much WLTP is hitting the new car market.
The models that people want are just not available, in many cases and the delivery times being quoted often run into 2019, it noted.
A 20.5% decline in new registrations – as reported by the Society of Motor Manufactures and Traders (SMMT) – and 2.9% decline in October has also resulted in a dearth of pre-registrations and part-exchange vehicles entering the used car market.
A shortfall of stock from leasing companies and fleet operators has also resulted from a reluctance to step into new vehicles subject to the more stringent WLTP emissions tests.
Burges said that, while company car buyers will tend to want to hang on for the right model for reasons of tax, retail new car buyers are much more likely to switch into used alternatives, adding that “we are seeing lots of evidence of this, as are other motor finance providers”.
He said that this trend was causing an uplift in the value of cars under three years, even in relation to the current, extremely buoyant general used sector.
“We are definitely seeing an increase in both the prices and volumes of vehicles in the sector that we are being asked to finance and expect to see this continue into next year, purely because the WLTP situation will not resolve quickly,” said Burgess.
“Some dealers, especially franchise holders, are responding to this situation by increasing the amount of nearly-new stock that they are holding and becoming, at least temporarily, specialists in this part of the market.”