ANALYSIS of retail advertising in April has shown that volumes of adverts increased around the turn of the month due to some attractive offers by online portals to assist customers.
The volume has stayed relatively consistent since then, according to cap hpi
Retail advertised prices barely moved overall in April as retailers have chosen not to reprice their stock in the current climate.
It is clear that prices are not the reason consumers are not buying, and reductions could lead to an unwelcome competitive race to the bottom. The traditional “days-in-stock” measure is less relevant than ever and should not be seen as a reason to reprice.
Derren Martin, head of valuations UK at cap hpi said: “Since lockdown began, for obvious reasons, there has simply not been sufficient trade data to represent the market accurately, so no values have moved thus far.”
Physical auction halls have been closed since the lockdown announcement. However, trade, or wholesale, sales have not stopped completely. Data from auctions and leasing companies have accounted for around 3,500 cars sold in April, but this is only about 2% of normal levels.
Martin added: “While we have seen a reduction in the number of valuations requested by our customers in our Valuation Anywhere product we still see thousands every weekday.
“The opening of dealer showrooms, with safe distancing measures in place, and the ability to buy and sell cars is likely to be in an early part of the release of lockdown and the earlier this is, the less of an impact there will be on value movements.”
Used car deflation is a fact of life, and the older cars get, the less they are generally worth. As a result, and depending on the length of the current situation, there may be a requirement for us to apply an adjustment to values to take this into account.
The previous five-year average Live drop for valuations during April is -1.4% at the one-year point and -1.6% at three-years. With the market showing only slight signs of softening before 16th March, it would be reasonable to have expected something in this region during April 2020.
Martin said: “It is likely that when we come out of lockdown, cheaper cars will be proportionally more in demand, for several reasons, including prudence and a reluctance to use public transport.
“It is unlikely that there will be an immediate desire for more expensive used cars, although used finance offers will help stimulate this.
“More businesses are starting to deliver, and auctions and storage facilities are seeking some clarity on whether they can open the doors to transporters. There are a large number of vehicles ready to be moved to the next stage of their remarketing journey, and this number will increase daily.
“When values do start to move, it could well be fairly volatile in the market initially. Live, daily valuations portrayed in our products will be essential for buyers and sellers at this time.”