Freeze in car valuations set to be unlocked as transactions resume
The used car sector is preparing for a move in vehicle valuations as remarketing activities ramp up.
While vehicle valuations were frozen on 23 March, this looks set to move next month, according to Jon Wheeler, head of vehicle valuation services at CDL.
Auction houses are showing first signs of increased online activity, with the rest of the market set to follow, as dealerships prepare to re-open on 1 June 2020. This comes after data from CDL Vehicle Information Services (VIS) showed a collapse in used car sales following lockdown, with vehicle transactional data records 89% down in April compared to March – similar to the impact on sales of new cars.
Wheeler said early indications show pricing movements will kick in over the coming weeks, driven by pent-up demand due to a number of factors.
Wheeler added: “Fears surrounding public transport, the drop in fuel prices, increased home-working and growing environmental awareness all point to the likelihood of greater demand for small city vehicles and electric vehicles as people use their cars more selectively.
“We also anticipate an increase in secondary leasing of used vehicles, due to the interruption to supply of new cars, which is likely to give consumers some lower cost leasing options in the short-term.
“As long as dealers can provide consumers with reassurance that they have adapted their operations to be ‘Covid-secure’, with frictionless purchase, payment and delivery options for consumers, it’s likely that we’ll see new opportunities and trends emerging.”
The DVLA has already changed its rules to allow for unaccompanied test drives and the market is preparing to offer home visits and adapt to the requirements of social distancing.
Wheeler continued: “Like the rest of the country, the motor trade is adapting to the challenges ahead. We had seen strong growth in the first quarter of 2020, and the signs are that things will start to pick up again.”
CDL VIS data shows that used car values rose 2.9% in January 2020, 4% in February and 3% up to mid-March, before seeing a fall of 1.9% approaching lockdown; at this point, vehicle valuations were frozen.
The National Association of Motor Auctions (NAMA) has also reported good levels of sales activity from online auctions firms.
Although auctions were amongst the businesses that needed to close due to government restrictions, they have been able to operate online sales offering a valuable service to fleet companies and dealerships wanting to sell and buy stock.
Auctions have been able to accept sale stock and deliver vehicles to customers after purchase. This activity has been supported by other remarketing facilities such as inspection and grading that has been able to carry on.
Auctions have been able to continue operating their sites, though they are closed to the public, following the implementation of stringent hygiene and social distancing procedures.
Louise Wallis, head of NAMA, explained: “Motor auctions have seen a steady increase in business over the past few weeks as their customers begin to look at reopening their businesses as the lockdown begins to ease. Dealers are looking to buy stock for their forecourts and fleets have been able to dispose of vehicles to free up working capital.
“Motor Auctions have been shown to be resilient despite the difficult conditions and have been adaptable in finding ways to maintain operations to serve customers under the lockdown.
“The continued operation of auctions is vital in supporting the whole automotive supply chain and to assist getting the economy moving again.”