The high-demand for sub-£10,000 used cars seen in Q1 is expected to continue when the COVID-19 coronavirus lockdown is lifted, according to Aston Barclay.
The remarketing business said that the wholesale used car market had been “on fire” ahead of last month’s closure of all non-essential retail operations by UK Prime Minister Boris Johnson, with £3,000 to £9,000 vehicles proving to be the market’s “sweet spot”.
Conversion rates consistently around 90% were seen during Q1, Aston Barclay said, with dealer part exchanges and petrol stock returning record prices and fleet vehicle values also on the rise.
Martin Potter, Aston Barclay’s managing director, auctions, said: “All our part exchange sectors have experienced high demand and prices during Q1.
“Dealers need to keep a close eye on stock mix to ensure they have plenty of cars priced between £3,000-£9,500, which remains the current sweet spot of the market.”
According to Aston Barclay’s Market Insights report, values in its young dealer part exchange sector (55-78 months in age) rose 3.8% (£237), from £6,153 in Q4 2019 to £6,390 in Q1 2020, and the old sector (79-126 months) rose by 4.2% (£146), from £3,408 in Q4 2019 to £3,554 in Q1 2020.
Both sectors reached their highest prices since Aston Barclay launched its report in 2017.
Average fleet prices rose by 1.7% (£174) from £9,799 in Q4 19 to £9,973 in Q1, helped by average mileage reducing 3,322 miles in the quarter.
Aston Barclay noted that the effect of fleet operators’ COVID-19 prompted extension of leasing contracts – a result of restricted new car supplies – was likely to cause initial shortages of used ex-fleet stock when trading resumes.
However, restricted driver movement during the lockdown should keep mileages under low in the interim period.
Aston Barclay claimed that fleet vendors’ remarketing strategy since the start of the Covid-19 lockdown has been to keep their brand and stock visible online via its e-Xchange online portal to ensure they are front of mind once buyers are more active in the used market.
Potter said: “Fleets are understandingly keen to sell assets currently in the marketplace to free up cash, but they are also mindful of a potential shortage of used stock while OEMs kickstart new car production.
“Hopefully this will help stabilise prices particularly in the sub-£10,000 sector.”
Petrol car prices reached their second highest level up 9.8% from £4,470 in Q4 to £4,910 in Q1, according to Aston Barclay’s Market Insights report.
This was fuelled by the popularity in smaller petrol hatchbacks, it said.
Diesel prices at £7,613 fell back slightly from Q4 2019 and the market is starting to see more consistency in hybrid and electric car prices.
Average Q1 prices at £13,332 fell just £43 from Q4 2019, despite a 30% increase in hybrid and EV entries.
“We have certainly seen more hybrids and EVs go through auction in Q1 and we believe this trend will continue. Once again used cars in this sector could benefit from the limited new car supply coming into the market over the coming months,” said Potter.