Used vehicle values are being artificially inflated as competition hots up amongst buyers for nearly new and ex-fleet stock amid WLTP-related new car shortages, according to Shoreham Vehicle Auctions (SVA).
Auto Trader, BCA and Cox Automotive are among the used car specialists who have seen record values in 2018 and many classified websites and remarketing specilaists saw a spike in wholesale and retail prices in September.
Remarketing specialist SVA believes that values are likely to remain at record levels until Spring 2019 as manufacturers continue to iron out their WLTP challenges.
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SVA said that it experienced a “noticeable increase in franchised dealer activity within the used car buying sector” as new car registrations tumbled by 20.5% in September.
Managing director, Alex Wright, said: “Franchised dealers are quite simply short on stock and are seeing the used sector as a solution to improve their profitability following lower new car sales in 2018.
“Certain brands are finding it a challenge to source new vehicles post-WLTP and their franchised dealers are searching online and physical auctions country-wide for sufficient used stock for their forecourts.”
During 2018 more franchised dealers than ever have also been buying good quality two and three-year-old ex-fleet stock to keep their used forecourts full.
With fleets being forced to extend lease terms as they have been unable to source new cars for clients, the challenge is clear, SVA said in a statement.
According to Wright, the used car sector has seen a major shift in what buyers are sourcing at auction.
With dealer groups buying more and paying more for nearly new and ex-fleet stock the independent dealers are finding it hard to compete with that buying power and are having to temporarily shift focus to lower specification and lower price cars.
His comments reflect those of Vehicle Remarketing Association chairman Glenn Sturley, who suggested that many retailers were relying on finance and insurance (F&I) to retain a margin on sales as used car values soared.
Wright said: “What all this has served to do is artificially inflate prices within the used market.
“Prices at auction can increase very easily and it takes time for the books to readjust.
“Everyone in business likes a seasonal trend for comfort and WLTP has thrown that out for now.
“I have no doubt the market will settle but we’re of the opinion that won’t be until the next registration introduction in March next year.”