Christof Engelskirchen circle B&W smallerTHE new and used car markets are returning to pre-pandemic dynamics quicker than expected but there are reasons to remain cautiously optimistic, says Doctor Christof Engelskirchen (pictured), Chief Economist at European pricing expert Autovista.

He was speaking at a webinar held in February by Assurant, which works extensively in the automotive warranty sector in the UK, Europe and across the world. 

Regarded as an automotive industry thought leader, Engelskirchen told more than 100 delegates that a move was underway back towards oversupply and tight demand. He explained that values had fallen so quickly in recent months because the pent-up demand supporting them over the past four years had come to an end.

“I guess what many of us are a little surprised about is how quickly we are moving back to pre-pandemic automotive industry dynamics. It has come faster than many people have expected.”

“We’re returning to a market where there is increased supply and limited demand but there is cause to stay positive and optimistic. So, while car values might be falling as a result, consumer confidence and business confidence are trending up, and the industry needs to react appropriately to this changing situation throughout the year.

“There was an element of undersupply supporting car values that is going away quickly. On top of that, rising interest rates and a higher cost of living is also not helping. People are thinking twice and just maybe delaying car buying a little bit.”

The market for BEVs remains especially elastic, he said, and had suffered the biggest drop in values. “This is the result of a number of factors – the lifecycle depreciation you’d expect and which is already a bit stronger for this technology but also recent price cuts that are happening across manufacturers. Some have started a price war which is washing through and affecting what you can command for a used vehicle which is two, three, four years old and was originally priced much, much stronger. 

 “Another reason why they are coming under pressure is because EVs are moving into the mass used car markets but we don’t appear to be ready to absorb these cars yet. The demand just isn’t there.”

He added that there was a strong opportunity for dealers to maximise their business during 2024 by providing the best possible consumer journey, especially with an improved online presence. 

“It’s all about boosting the customer experience and loyalty with a seamless buying, leasing, owning and returning process, which is similar to something that we are seeing OEMs try to capitalise on when they implement the agency model.”

Damian Tyler

This was the third in a series of webinars held by Assurant in recent months, which its European Business Director and Commercial Director Damian Tyler (pictured right) said were becoming increasingly well-attended.

“These webinars are a really useful and effective way to keep our dealer community and others interested in motor retail well-informed about the latest trends developing in what remains a fast-moving UK car market.”

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