The number of dealers that are ‘optimistic’ about the used car market has fallen to just 12%, this month, a drop of 21% from the previous month.
There has also been a parallel 12% rise - up from 24% to 36% - in those who report feeling 'pessimistic', according to Startline.
Analysis from the Startline Used Car Tracker shows that even dealers who remain optimistic believe conditions have worsened – with factors mentioned including a 22% drop (down to 0%) in those who agree that the market and prices are strengthening and a 6% reduction (down to 33%) who agree motor finance availability is improving.
More than three quarters (76%) of dealers surveyed agree that used car prices have peaked and some kind of market readjustment is underway. Of this group, 84% say that supply is gradually improving and moving closer to demand. However, a significant percentage (67%) of the 24% who don’t believe prices have peaked say that supply remains poor compared to demand.
Respondants in both the optimistic and pessimistic camps say stock supply is improving. Optimistic dealers agree that supply is strengthening (up 22% to 83%) while there has been a 19% fall (to 42%) among pessimistic dealers who say supply is weakening.
Paul Burgess, CEO at Startline Motor Finance, said: “Over the last month, it has become ever-clearer that we are seeing a deterioration in the general economic situation thanks to factors including the war in Ukraine, rising prices and political uncertainty. This has now started to feed through into how dealers see the next few months shaping up and there is no denying that 21% is quite a marked fall in dealers who feel optimistic.
“The one bright spot is that there seems to be widespread agreement that the stock supply situation is getting better. This has obviously been a difficult area for dealers for some time now, so it is good to see that some improvement is taking place.
“From a Startline point of view, reports that availability of motor finance is weakening are interesting. It could be that some lenders are tightening their criteria and this may be affecting the amount of business that dealers are able to write.”
The Startline Used Car Tracker is compiled for Startline Motor Finance by APD Global Research. This month, 297 consumers and 54 dealers were questioned.
According to Indicata, the UK remains the only country in Europe where used prices are falling. From April to the beginning of May 2022 prices fell by a further 1.4% which are now 0.1ppts lower than the start of January.
Total used car sales for April were 1.2% up on the previous month but 16.2% lower than in April 2021 with the semiconductor crisis continuing to create havoc with the usual used car seasonal sales patterns over the past two years.
Earlier this month, the Society of Motor Manufacturers and Traders (SMMT) reported that 1,774,351 used car sales had been completed in the first three months of the year, resulting in a 5.1% year-on-year rise in a period where high values continue to deliver significant margins for car retailers.
But the year-on-year rise was 12 months after a period when car showrooms nationwide were closed due to COVID-19 restrictions, with only click and collect transactions allowed.