Since coronavirus lockdown started in late March Cazana has recorded a small uplift in values for sub-£10k vehicles, and there’s no been “race to the bottom” in the car market.
According to Rupert Pontin, Cazana’s director of insight, the market has “been slow, but not dead” and there has generally been price stability in relation to previous years.
“That’s important to acknowledge. We could’ve been sitting in a position where prices had dropped significantly. Looking at percentage of original cost new, there’s not a movement either way more than one percent the previous year. In fact ex-PCP three-year and 36,000 mile pricing is even with the last year,” said Pontin in Cazana’s latest webinar.
Since lockdown, he has noted a 3.1% pricing increase for sub-£10k vehicles. If there is such demand for these, caused potentially by people avoiding public transport due to the risk of virus transmission, there could be challenges with supply ahead, he said.
He said that in the overall market petrol stock has strengthened across every segment, and petrol hybrid remains strong too. This might be signs of the market getting ready for showrooms opening in June, Pontin said. Diesel stock pricing has declined in several segments, but not all. “It’s quite a balanced overall picture for diesel,” he said.
Pontin said retail pricing is still changing, showing that dealers are still active.
But there is no “race to the bottom”. “Demand will shortly come back. The demand for used stock is growing, there are people transacting vehicles online, but there is not much wholesale activity, and that firstly means the dealers that are selling vehicles aren’t able to source the ones they want and secondly it creates an opportunity for those people remarketing vehicles because of demand for those vehicles.”
Valuations market leader Cap HPI stopped adjusting wholesale prices after lockdown was announced on March 23 as its feed of around 40,000 wholesale price records per week dropped to just a couple of thousands in the first four weeks.
Head of valuations Derren Martin said price volumes had slowly increased since mid-April, and on reaching 12% of normal its analysts and editors have begun reviewing prices, alhough not of ‘late-plate’ cars due to the paucity of data.
Valuation movements will focus on cars aged 5+ years and early observations suggest a 2-5% decline in pricing for May, said Martin.
The previous five years have seen an average drop of 4% during April and May at a five-year age point, and last year Cap HPI witnessed a 6.3 % drop at the same point.
“So the movements we’re seeing are by no means seismic," added Martin. "What we're doing is reflecting the data as volumes increase."
He said there is still very little movement in retail advertised prices, which is reassuring.
"The stability of the market, as always, will be down to supply and demand, and to a certain extent vendors at every stage of the remarketing journey holding their nerve.
"If rental, fleet, leasing or finance houses choose to liquidate stock, there may well be an oversupply situation, although this may be tempered by transport, auctions and storage compound limitations.
"We encourage vendors to look back at their mid-March values as a barometer, and if consumer demand is relatively healthy, as it may be due to a lack of new car supply, PCPs ending or reluctance to use public transport, then prices may not need readjusting."
Martin said it is likely to be "a volatile period" for pricing. Cap HPI does expect a fall initially but some recovery thereafter.