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OCTOBER’S energy price cap increase – if implemented – would drive down used car prices and values in Q4 of 2022, according to research from September’s Startline Used Car Tracker.

That’s the feeling of 85% of dealers surveyed and of these, 28% predict the adjustment will be “small” and 42% “moderate” – but 30% believe that a “significant” impact is likely.

Additionally, 95% say that if Ofgem’s recommendation was carried out, it would negatively affect the overall used car market in Q4, with 60% believing that most car buyers will have less to spend, 35% that there will be a general loss in consumer confidence and 5% that supply is finally starting to exceed demand.

Paul Burgess, Chief Executive at Startline Motor Finance, said: “If implemented, the energy price cap increase would be just the latest in a line of economic shocks that mean personal finances are coming under more pressure than at any time since the 2008 financial crisis and perhaps longer. It is no surprise that dealers believe that this will affect used car values and prices but it is perhaps more a matter of concern that almost a third believe we are likely to see a significant adjustment.

“Our own view is that the market is likely to remain relatively stable. Certainly, while supply remains as constrained as it has been in recent months, we don’t foresee it being outstripped by demand, even if the latter suffers quite a bump. Some kind of downgrading of prices and values is possible or even probable but is likely to be limited.”

Further dealer caution is visible in Startline’s research when looking at the challenges they say are likely to affect the future retailing of used cars. While stock availability remains the top factor in September, it is down to 65% from 77% in August, and a reduction in desire for car ownership has moved into second place – up significantly to 42% from 18%.

Burgess said: “This is quite an interesting point from the Tracker research. We are hearing some anecdotal feedback in the market that families who previously owned two cars are making savings by cutting back to one. Plus, there are undoubtedly some people who are selling their only car, faced with spiralling living costs. All of this would explain why dealers feel, in the current climate, that there are simply fewer people who want to own a car. However, these are probably quite small numbers, otherwise the trend would be more visible.”

However, despite all of these concerns, overall optimism among dealers is increasing. When asked whether they felt more optimistic or pessimistic about the used car market than last month, optimism is markedly up at 24% compared to 12% in August, while pessimistic is 32%, down from 40%.

Starline’s research also revealed that a fuel cap price increase would result in a safety risk for motorists as around one in five say they plan to cut back on car maintenance.

September’s Startline Used Car Tracker shows that 77% believe the rise in gas and electricity prices would impact on whether they can afford their car with 18% putting off replacing tyres and 22% delaying having their vehicle serviced.

Burgess, said: “The research shows the huge pressure that the fuel cap increase would bring to bear on personal finances, and how it is likely to affect whether people can afford to simply keep their cars safe.

“Routine maintenance and replacing worn tyres are basics when it comes to making sure your car is fit to use on a day-to-day basis – for you and other road users.”

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