THE incredible rise is used car prices is going to continue into Q3 says the Vehicle Remarketing Association (VRA).

VRA chair Philip Nothard said that the view of both vehicle valuations experts and dealers indicated there was headroom for further rises. This is on top of almost double digit percentage increases in recent months.

“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.”

Nothard addded that the situation was changing the kind of stock dealers would normally retail, switching greater activity into used stock, although stock availability remained squeezed.

Is the price rise good?

Nothard said that the price rises were double-edged.

“Prices are high and margins are probably higher but, because of stock shortages, volumes are lower. The winners in this situation will almost certainly be those dealers who are managing to maintain a strong supply of cars. However, doing so is difficult.”

He added that there was also recognition within the VRA 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.

“The danger is, of course, that dealers could be left holding stock that is falling rapidly in value but, so far, there is simply no sign of that occurring.”

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