WLTP uncertainty could hit used car market, warns VRA
Current stability in the used car market could be hit by uncertainty surrounding WLTP, hitting company cars in particular.
The Vehicle Remarketing Association (VRA) said the potential issues are two-fold and cover the lack of NEDC Correlated figures for some models as well as limited availability of WLTP-approved models.
The VRA comments come two weeks after Zenith said there had been a rise in the number of driver orders being cancelled by manufacturers due to models being removed from production in recent weeks. In response, the leasing and fleet management firm has updated its quoting platform in a short-term move to take off all cars that are not yet WLTP-approved.
According to the VRA, which represents businesses that together process more than 1.5 million used vehicles every year, the ‘double whammy’ WLTP issues are hitting on normal sale and purchase patterns, including firstly fewer company cars being defleeted at three and four years as employers and drivers are choosing to hold onto them until there is greater certainty surrounding the amount of tax they will pay. Arval warned a month ago that such WLTP ‘limbo’ is prompting fleets to extend contracts.
Meanwhile, those who do want to take a new car are not able to do so because the waiting times for some models are running into several months or are even unknown.
However, Glenn Sturley, chair at the VRA, said the supply situation may suddenly improve. He explained: “When manufacturers change their production choices, it is a little bit like turning around an oil tanker. They take a while but once the momentum shifts, supply will suddenly jump upwards, and this again may lead to a glut of used cars hitting the market in a relatively rapid fashion.”
The organisation also warned that once NEDC Correlated figures are released, it is anticipated that pent-up demand will lead to longer manufacturer lead times as a large number of drivers and employers are expected to place orders for new cars – this in turn could lead to a glut of cars that may be released onto the used market in, potentially, quite a short space of time.
Sturley said that the main problem surrounding these WLTP issues was the large degree of unpredictability.
“We know that manufacturers have to make their WLTP figures available by September but we don’t know how quickly people will defleet in response. We could also make plans if we had a clearer picture about manufacturer production.
“However, there simply isn’t much information to hand and this could mean that, around the likeliest timescales later this year and into 2019, we could see a quite unusual looking new car market, with large amounts of stock becoming available at once.”
He added: “The used car sector is currently performing very well with some people calling this the ‘Year of the Used Car’ but if oversupply will always hit values and there is every chance that we could see some weakening among popular company cars especially.”