Used car prices at auction have risen by up to 8% in the last two weeks since showrooms were able to re-open.
Demand for used car stock is so strong that dealers are facing the challenge of buying used cars in the wholesale market close to the prices they are selling cars for on their forecourts, according to Shoreham Vehicle Auctions (SVA).
Some dealers are pre-empting this by increasing forecourt prices as they prepare to pay more for replacement used stock in the wholesale market.
Alex Wright, SVA’s managing director, said: “We have held five used car auctions since dealer showrooms opened and we have seen prices rise at every sale. This represents a price rise of up to 8% which reinforces that demand is quickly outstripping supply.
“Dealers need to respond by increasing prices of their current stock immediately and review them daily thereafter. But they also need to be prepared to pay more for used cars over the coming weeks and even months to ensure they can keep their forecourts replenished.
“There has never been a better time to check market prices by the day or even by the hour and adjust forecourt prices accordingly.”
Some car supermarkets are reporting selling a few hundred used cars in a day since lockdown 3.0, dealers are hanging onto their own part exchanges from the recent 21-plate change and fleets are still experiencing extended replacement cycles. SVA says the market shows no sign of supply increasing anytime soon.
A further challenge is car makers such as Ford and Land Rover announcing they are halting production through the continued shortage of semi-conductors. This is set to delay new car orders just as they begin to recover after the original Covid-19 pandemic factory shutdowns and there are fears this could extend to other brands.
“It could take six months before the semi-conductor shortage is remedied so new cars will be in short supply which will in turn impact used car supply. It may be the end of the summer before the used market starts to settle down,” warned Wright.