The Vehicle Remarketing Association has warned car dealers to expect an unpredictable used car market towards the end of this year and into 2019 as the sector feels the effects of the switch to WLTP fuel economy and RDE emissions test legislation.
The VRA has said that two major complicating factors will result from the shift, with many manufacturers yet to publish NEDC-correlated figures to satisfy the requirements of the company car sector and limited vehicle supply due to OEMs re-testing of many product lines.
AM highlighted the key issues faced by retailers in last month’s edition of the magazine and will reveal the findings of a survey into the anticipated effects of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) and the corresponding Real Driving Emissions (RDE) test regime – which both come into force on September 1 – in the coming issue.
Glenn Sturley, chairman of the VRA, said that the changes would see fewer company cars defleeted at three and four years, as usual, because employers and drivers are choosing to hold onto them until there is greater certainty surrounding the amount of tax they will pay.
He added that “even some who want to move out of their current car into a new one that has good MPG and CO2 figures under WLTP are not able to do so because the waiting times for some models are running into several months or even a waiting time of ‘we don’t know’.”
Sturley warned that the result of these issues would be the build-up of a glut of cars that may be released onto the used market in, potentially, quite a short space of time.
As more information on tax becomes available, many drivers and employers may place an order for a new car immediately and others are likely to do so in a short period of time, he said.
Sturley said: “The supply situation may suddenly improve. When manufacturers change their production choices, it is a little bit like turning around an oil tanker.
“They take a while but once the momentum shifts, supply will suddenly jump upwards, and this again may lead to a glut of used cars hitting the market in a relatively rapid fashion.”
Unpredictability in the used car sector was the key concern for retailers and remarketers, Sturley said.
“We know that manufacturers have to make their WLTP figures available by September but we don’t know how quickly people will defleet in response. We could also make plans if we had a clearer picture about manufacturer production,” he said
“There simply isn’t much information to hand and this could mean that, around the likeliest timescales later this year and into 2019, we could see a quite unusual looking new car market, with large amounts of stock becoming available at once.
“The used car sector is currently performing very well with some people calling this the ‘Year of the Used Car’ but if oversupply will always hit values and there is every chance that we could see some weakening among popular company cars especially.”