Q1 used car market ‘on fire’ prior to Covid-19
The used car market saw consistent 90% conversion rates during Q1 2020, while the first 10 weeks of the year were “extremely buoyant” for fleet prices until the lockdown affected volumes.
Data from Aston Barclay shows average fleet prices rose by 1.7% (£174) from £9,799 in Q4 19 to £9,973 in Q1, helped by average mileage reducing 3,322 miles in the quarter.
The market was fuelled by high demand for sub-£10,000 stock, according to Aston Barclay, which expects this to continue as consumer confidence returns to the market later in 2020 and 2021.
With fleets currently being forced to extend leasing contracts as new car supply is restricted, this is likely to cause initial shortages of used ex-fleet stock once the current vehicles stuck in auction compounds and de-fleet centres are sold and as OEMs get production lines operational again.
However, restricted driver movement during the lockdown should keep mileages under control for when the extended contract ex-fleet stock finally reaches the used market.
Since the Covid-19 lockdown, fleet vendors’ strategy has been to keep their brand and stock visible online via Aston Barclay’s e-Xchange online portal and weekly e-Live sales, to ensure they are front of mind once buyers are more active in the used market.
“Fleets are understandingly keen to sell assets currently in the marketplace to free up cash, but they are also mindful of a potential shortage of used stock while OEMs kickstart new car production. Hopefully this will help stabilise prices particularly in the sub-£10,000 sector,” said Martin Potter, Aston Barclay’s managing director, auctions.
The firm’s data also shows strong demand in the young dealer part exchange sector and the old sector, both of which reached their highest prices since Aston Barclay launched its Market Insights report in 2017.
Petrol car prices reached their second highest level, up 9.8% from £4,470 in Q4 to £4,910 in Q1. This was fuelled by the popularity in smaller petrol hatchbacks.
Diesel prices at £7,613 fell back slightly from Q4 19 and the market is starting to see more consistency in hybrid and electric car prices. Average Q1 prices at £13,332 fell just £43 from Q4 2019, despite a 30% increase in hybrid and EV entries.
“We have certainly seen more hybrids and EVs go through auction in Q1 and we believe this trend will continue. Once again used cars in this sector could benefit from the limited new car supply coming into the market over the coming months,” explained Potter.