‘Unprecedented’ used car price rises to continue into Q3, VRA predicts
The current ‘unprecedented’ increases in used car price are likely to continue into the third quarter of 2021, the Vehicle Remarketing Association (VRA) is predicting.
While recent months have seen almost double-digit percentage increases in prices, there’s still headroom for further rises, according to VRA chair Philip Nothard.
“We recently held a webinar with experts from AutoTrader, Cap HPI and Cazana, and the general consensus was that the used car sector has never seen anything like the current conditions. We are in a kind of ‘perfect storm’ where stock is in very short supply, demand is high, and buyers are ready to spend freely.
“This is having all kinds of effects across the market. It is not simply that prices are rising but that stock turnaround is very fast and there are also signs that dealers are finding that they can increase margins.
“In fact, there is a general view that dealers could be even ‘braver’ when it comes to higher pricing, and this is something that we expect to see happening into Q3.”
Nothard added that not only was the situation encouraging franchise dealers to switch even more activity into used sales but it was also changing the kind of stock they retail.
“Many dealers are having so much trouble getting hold of stock that they are retailing almost everything they take in part exchange. Those who specialise in 2-6 year-old stock, for example, might be happy to now sell a 10-year-old car.”
The question remained as to whether this situation was advantageous for dealers in both the short and medium term, he said – while prices are high and margins are probably higher, volumes are lower, due to stock shortages.
And the VRA said it recognised that the current situation could not continue.
“At some point, we will see a levelling off of values as supply increases and demand normalises, although it does not appear to be imminent. The question is whether we will see a noticeable readjustment in values or something more subtle at that point.”