The Covid pandemic and new vehicle production problems have transformed the used vehicle sector and values may never dip back to pre-pandemic levels.

While wholesale vehicle values will show signs of stabilisation throughout mid-2022, it’s entirely possible that a new benchmark for used vehicle values has been reached, according to Cox

Philip Nothard, insight and strategy director at Cox Automotive, said that while wholesale vehicle values will show signs of stabilisation throughout mid-2022, the coronavirus crisis has rapidly accelerated the online and digital marketplace to what existed two years ago.

And as a result, it’s entirely possible that a new benchmark for used vehicle values has been reached that may never return to the levels seen pre-pandemic.

While the market is trying to return to normal, Nothard warned there was “no tsunami of used stock on the horizon” and said an increased focus on the detail will be required as the shape of the market evolves.

And the fact remains that around 1.4 million new vehicles have been lost from the market, never to reach the used vehicle parc, due to the semiconductor shortage. Although the impact in the sub-12-month market has been felt already, the used vehicle sector as a whole will be affected for years to come.

Cox’s latest market tracker, which shows wholesale values from November 2021, lays bare just how much the market has changed.

It reveals a record 16.8% month-on-month increase in average sale price – one of the largest-ever rises and increasing the total by £1,129, to £8,553.

Average sale price is also up by 33.8% year-on-year.

Nothard said: “Back in July, we asserted that the used car market has never been more critical to the overall health of the automotive industry than it has been in 2021. The last few months have given more weight to this suggestion.”

But he added: “While prices have now increased for eight consecutive months, recent signs point towards a potential softening in the market. And while it remains the case that prices overall have continued to rise, the situation is becoming increasingly complex, with some models starting to see significant price decreases. Moreover, some figures we’ve observed are misleading, as it doesn’t represent live market data where many models that saw an increase at the start of the month, which dropped off by the end.”

Cox’s November data reveals month-on-month falls in four key indicators, likely due to the seasonal period.

Last month’s average first-time conversion decreased by 6.01% to 82.90% month-on-month. Similarly, CAP Clean experienced a marginal month-on-month fall of 2.32%, to 97.35%. This easing resulted in a lowering of both the average age and mileage of vehicles observed through the Manheim lanes.

The average age of cars sold slightly decreased by 5.64% to 97 months, and the average mileage of cars sold, decreased by 4.31% and down by 2,987 miles to 66,343 miles.

Nothard continued: “It’s important to remember in the final month of the year that this is traditionally a slow period as retail activity slows ahead of Christmas. Prices are expected to drop in line with usual market cycles, so current prices still reflect a high demand with a low supply market. With prices as they are, dealers are becoming increasingly cautious, but as the year draws to a close, they will require stock for the new year, so prices are unlikely to drop significantly.”

He added: “We expect current market conditions to continue throughout Q1 2022, and it’s entirely possible that we are seeing a revised benchmark for the used vehicle parc.”