May’s used car sales volumes were 14% ahead of the same period in the pre-COVID trading period of 2019, according to data from Auto Trader.
As wholesale values continue to soar amid strong consumer demand and increased competition for stock, the online vehicle marketing portal said it now expects the “exceptionally strong” market to continue for much, if not all, of 2021.
According to Auto Trader the first week of June has already generated used car sales volumes 15% up on 2019.
Survey data published by What Car? this week said that the global semiconductor shortage’s impact on new car supplies and lead times had prompted one-in-four new car buyers to buy a used car in 2021.
Auto Trader said that “a myriad of factors” were responsible for the current surge in activity in the used car sector, not least the 1.7 million transactions ‘lost’ due to COVID-19 lockdown periods in 2020.
It said that this figure was calculated based on the average ownership cycle being extended from 3.5 years to 4.2 as a result of the pandemic, stating: “If the UK car parc of 35.1 million cars had turned at the typical frequency observed over the last 10 years, there would have been circa 10 million new and used transactions in 2020, instead of the 8.3 million that took place.”
- In the new, July edition of AM magazine car valuations experts and used car buyers told AM that “once in a lifetime” used car price rises had prompted them to throw the rule-book “out of the window”. Read our News Insight report here.
Catherine Faiers, Auto Trader’s chief operating officer, said: “From early this year, we have seen huge levels of consumer demand on our marketplace, which has accelerated dramatically since the reopening of physical forecourts in April.
“As well as fuelling incredibly strong used car sales performance, it’s also contributed to the very sharp uptick in prices, currently at a record 9.7% year-on-year and increased the speed of sale to just 22 days.
“This trend has led to robust margins and helped to compensate for the lower volume of transactions last year.”
Auto Trader’s market research found that disposable income and savings made as consumers were unable to eat out or take holidays during the COVID-19 pandemic had also played a role in the resurgent used car sector.
In February AM reported that The Bank of England (BoE) had said 70% of consumers would hold on to any savings they managed to accrue during COVID-19 lockdown.
The BoE said that private savings accounts were up £125bn in 2020, despite the economic uncertainty and growing risk of redundancies.
An onsite survey in May revealed that consumers' confidence in being able to afford their next car was at its highest level (8.76/10) since Auto Trader began tracking it in January 2020, surpassing the previous peak recorded in February (8.75/10), and even ahead of confidence levels recorded pre-pandemic (8.11/10 in January 2020).
A growing desire to own a car in order to mitigate the risk of being exposed to COVID-19 on public transport has also been a factor.
Auto Trader’s research revealed nearly one-in-three (29%) of the circa 1,000 consumers surveyed believed that owning a car is more important to them now than it was before the pandemic, with over 10% stating that they were buying a car specifically to avoid public transport.
Faiers said: “We believe that we’ve barely scratched the surface of this year’s potential. Whilst this is of course subject to the continued easing of lockdown restrictions and available vehicle supply, it does highlight the huge opportunities available over the months ahead.”