Coronavirus and Brexit inhibiting long-term planning, says VRA
The impact of the coronavirus crisis and potential effects of Brexit mean planning beyond the short term is “almost impossible” for the remarketing sector, according to the Vehicle Remarketing Association (VRA).
While the sector is currently seeing a boom period – with car and van values actually rising when they would normally be written down into the autumn – the concern is when the coronavirus crisis will really start to have a negative influence in terms of the impact of factors such as growing unemployment and the end of furloughing.
And although the latest post-furloughing government measures announced by the chancellor could help provide a soft economic landing from the pandemic, there are massive fears about the results of Brexit and its impact on the motor sector.
VRA chair Sam Watkins said: “For an industry that is historically very good at predicting and forecasting, this high degree of uncertainty is unnerving. It is almost impossible to plan beyond the short term. While we are all firefighting to handle current levels of business, there is also a definite fear that the situation could change very quickly.”
Watkins added that there were some events forthcoming that would affect the remarketing sector that would have an almost definite impact on vehicle supply.
“As an example, it seems very likely that at some point soon, there will be large-scale defleeting from some major daily rental companies of vehicles that have been held for longer periods awaiting freer new car supply. This would follow on from the restructuring that we have already seen in that sector, especially among businesses being affected by dramatic loss of airport business. This could well be accompanied by a wave of early terminations and short-term contract extensions on personal leasing. However, we just don’t know when this will happen or the extent.
“Because values have been so strong, it is possible that this potentially sizeable wave of vehicles might simply be absorbed by the market but they could also act as a prompt for an overall realignment of values.”
Watkins said that the situation was likely to persist until a vaccine became widely available for coronavirus and the details of Brexit were better known and understood.
“It’s the lack of certainty and information that is stopping businesses within remarketing from planning. Really, we are waiting for these two major situations to be resolved before we can start to look ahead with any degree of certainty.”