Trade and wholesale car sales delivered 3,500 vehicles into the used car market during April’s COVID-19 coronavirus lockdown automotive retail sector, according to Cap HPI.
The vehicle valuations and market data specialist said that, while physical auction halls have been closed since the lockdown announcement, other stock sources have meant that thousands of cars were still sold – albeit only about 2% of normal volumes for the post-number plate change month.
“While we have seen a reduction in the number of valuations requested by our customers in our Valuation Anywhere product we still see thousands every weekday,” said Derren Martin, head of valuations UK at Cap HPI.
Martin said that the number of sales meant that there was still too little activity to publish any revised valuations data, however, suggesting that Cap HPI’s temporary postponement of used car value adjustments was likely to continue.
Cap HPI did concede, however, that deflation could prompt a shift depending on the length of the current crisis.
Following clarification from the National Franchised Dealers Association (NFDA), and subsequently Government’s Department for Business, Energy & Industrial Strategy (BEIS), about car retailers’ ability to continue with car sales completed in a safe manner, away from the showroom, looks likely to give rise to increased activity in the coming weeks.
Martin warned that the market could become “volatile”, stating: “More businesses are starting to deliver, and auctions and storage facilities are seeking some clarity on whether they can open the doors to transporters.
“There are a large number of vehicles ready to be moved to the next stage of their remarketing journey, and this number will increase daily.
“When values do start to move, it could well be fairly volatile in the market initially.”
Cap HPI said that its analysis of car retail advertising in April showed that the volume of adverts increased around the turn of the month due to some attractive offers by online portals to assist their customers.
The volume has stayed relatively consistent since then, it added.
Retail advertised prices “barely moved” overall in April as retailers have chosen not to reprice their stock in the current climate, according to Cap HPI.
It said that prices are not the reason consumers are not buying, and reductions could lead to an unwelcome competitive race to the bottom.
Martin said: “The opening of dealer showrooms, with safe distancing measures in place, and the ability to buy and sell cars is likely to be in an early part of the release of lockdown and the earlier this is, the less of an impact there will be on value movements.
He added: “(Cap HPI’s) dedicated team of industry experts and data analysts continues to review all available trade and retail data and will make adjustments if the data reflects the used car market.
“Since lockdown began, for obvious reasons, there has simply not been sufficient trade data to represent the market accurately, so no values have moved thus far.”
As suggested by Aston Barclay last week, Martin suggested that cheaper used cars are likely to be most in-demand when the retail sector begins to ramp-up its sales activity once more.
Martin also reflected a sentiment voiced by Auto Trader, that an aversion to public transport amid ongoing social distancing measures, may drive sales in the near-term.
He said: “It is likely that when we come out of lockdown, cheaper cars will be proportionally more in demand, for several reasons, including prudence and a reluctance to use public transport.
“It is unlikely that there will be an immediate desire for more expensive used cars, although used finance offers will help stimulate this.”