Independent dealers keep January used car market moving says SVA as buyers invest in stock to satisfy post lockdown demand
The independent dealer sector kept the used car market moving in January according to Shoreham Vehicle Auctions.
Independents continued to buy at auction to replace sold click and collect stock and unlike many franchised and national dealers who furloughed staff, have kept their teams employed in selling used cars locally and nationally.
Used car prices only fell by around 3% during January with the clever dealers buying up more stock at lower prices in readiness to satisfy anticipated pent-up demand when lockdown 3.0 ends.
The auction market started 2021 relatively slowly as dealers had stock left over from the Christmas rush that never happened.
Conversion rates increased to 70% during January, gradually rising back up to 95% in early February with prices starting to rise.
“While franchised dealers furloughed many used car staff, particularly buyers, the independents have kept trading and generally have been very busy,” explained SVA’s managing director Alex Wright.
“The independents held up the used market in January and we expect a similar trend in February and into March. They are still selling stock and the general demand for £3-12,000 used cars lies firmly in their sweet spot, although this price band is widening every week.
“Our conversion rates were still strong during January, despite demand being affected by fewer franchised dealers and car supermarkets in the market buying stock,” he added.
SVA believes supply is likely to be constrained from February onwards as restricted dealer part exchanges are coming back into the market as new car sales are dramatically down.
And lockdown 3.0 ends in early March, the 21-plate change will take a while to feed more used cars into the market which will push up prices as pent-up demand exceeds supply.
“The used car market may not take the huge price leap it did in the summer, but there will definitely be a pent-up demand. Prices are likely to rise although we must remember they are already higher than in Q1 2020 when the market experienced its first lockdown,” said Wright.
SVA has been maintaining its strategy of running online sales directly from the auction platform rather than from a home office. The buyer feedback has been positive, and it has experimented with driving used cars through the auction during online sales to re-create the auction buying experience.
“Buyers are telling us they are missing the auction so we thought it might be fun to drive cars through again just to improve the atmosphere of our online sales. We are not expecting to see buyers attend every physical auction in the future, but we expect a good few will be attending the first few physical sales as they look forward to the buzz of getting back into the halls,” he added.