With delays in opening car auctions and with logistics companies still not working at full capacity, used car stocks appear to be limited for dealers.
There has been an initial surge with strong used car sales being reported after they reopened their doors on 1st June, with many reporting a surge in demand for used cars.
Pent-up demand during lockdown has been compounded by customers ditching the use of public transport to get around and customers spending cancelled holiday cash on a used car.
These strong sales are draining supply and dealers that have bought from auction are now struggling to get their cars delivered.
Car dealers are buying stock in online auctions, which have generally replaced physical auctions for now, but they are struggling to get hold of the cars once they’ve purchased them.
We took part in a Webinar in which a valuations expert from Cap HPI who monitor used car and auction prices said he has also seen problems in logistics but thinks the problems will ease as we enter autumn.
He said: ‘There are issues sourcing stock at the moment. The logistics bottleneck does not help. There are still people on furlough from transport companies, so they are not yet at full capacity.
‘There are also issues with social distancing in this area that slows the whole process down. This issue should ease over the coming months and more stock will be in the market, particularly from lease extensions that will come to an end.
‘The supply/demand balance is likely to be tipped at the end of the summer or into the autumn in our opinion.’
‘This is a classic case of a short-term supply and demand imbalance.
‘The demand and speed of sale of used cars is better than the most optimistic forecasts during lockdown, combined with a resolute holding of used values, has created a feeding frenzy in the wholesale market.’
With demand currently shifted to used vehicles over new since exiting lockdown we could be in for an extended period of demand and a shortage of supply.
No doubt if the demand remains for a sustained period of time this may result in manufacturers having to look at the prices being charged for new vehicles and perhaps lower prices to sell already built stock and therefore release more quality part exchange vehicles into the marketplace.
If this is the case then it may pay to wait that bit longer before taking the plunge and looking to upgrade your vehicle.
