Positive signs coming from used car market
AUGUST WHOLESALE PERFORMANCE
w The average wholesale price increased both YoY [+15.6%] and compared to July 2020 [+1.0%], rising to £6,549;
w The average mileage of vehicles observed through wholesale lanes decreased in August to 61,310 compared to both July this year [62,033] and this time last year [63,350];
w Following the lockdown period, first-time conversions have seen increased compared to 2019, with August rising to 82.1% compared to 81.5% in 2019;
w Average price funded in August increases and an average age of stock rose 0.7%, to 5.7 years
According to Philip Nothard, Cox Automotive UK’s Customer Insight & Strategy Director, the used car market remained buoyant with pent-up demand outstripping supply. He commented: “Auction values show signs of stabilising, with an average 96.77% of Cap clean following 96.92% in July, although this performance reflects the strength of the used car market with a +2.3% increase on the same period August last year (94.56%).
“Data from NextGear Capital, the stock-funding arm of Cox Automotive, also suggests similar trends, with the average price funded in August increasing to £9,692.67 – and increase of +3.8% MoM. Furthermore, the average age of stock rose by 0.7% to 5.7 years, implying the potential increasing diversity of dealers’ stock in both age and mileage. This also mirrors the broader used car market data, which shows that average mileage increased marginally 0.7% to 54,756.
“Whilst August new car registrations results were down -5.8% [87,226], with the headwinds the market faced, is a positive result compared to the 2000 – 2017 average of 73,875, as in context both 2019 [92,573] and 2018 [94,094] results inflated due to the influence of WLTP and RDE in the September months.”
“Our data and insight indicate that the profitability many retailers have enjoyed since lockdown restrictions lifted has continued through August, with many capitalising on retail and trade margins. Although there were reports of demand easing in both the retail and wholesale market as the month closed, early indications in September show a return to positivity as supply continues to be challenging.
“Order banks are favourable for the September plate according to many of the large groups which is great to hear given the challenges that the new car market has faced in recent months. However, this is very much brand specific and dependent on vehicles arriving on time. As we’ve seen for several years due to the external influences that the sector has faced, we need to look at the combined results from August, September and October to form accurate annual comparisons on market performance. However, I think many people within the industry are wondering how long the pent-up demand will last, with many cautious about the final quarter of 2020.”
Source: Cox Automotive