THE reopening of car showrooms has been good news for the industry and even though the Covid-19 pandemic has increased the pace of digitisation, the majority of car owners still buy their cars from a showroom.
That’s the findings of a survey of 2,000 UK drivers commissioned by InsuretheGap.com. It showed that 76% of buyers still want to go to a showroom with nearly a quarter (24%) of these second-hand cars.
The survey found that car showrooms are particularly popular with the over 55s with 81% buying from a showroom, compared to two thirds of 18-34s.
According to data from INDICATA, the used car market in England bounced back out of lockdown with sales up by 3.4% in the first 10 days of June compared with the same period in 2019.
Looking at the seven days between the 4-10 June the used car sales picture looks even brighter with sales growth of 13.3%. That equates to around 12,000 used cars per day which is where the market was pre Covid-19 lockdown.
But INDICATA analysis shows dealers are being more cautious about replacing sold stock with sales exceeding supply by 71%.
That equates to the UK dealer network being short of 100,000 used cars against pre-lockdown levels which could cause a scramble to source stock in the coming weeks to avoid forecourt spaces being left empty.
Used prices have risen by 0.5% in the first 10 days of June and there are some immediate winners and losers post lockdown. Hybrid sales were up 22% year-on-year, while diesel demand has fallen 8%.
The 6-9-year-old and 9-12-year old sectors are both up by 10%, while the 0-3-year old sector has fallen by 6.5% reinforcing the market’s move to older and cheaper used car stock.
The sports and luxury car sectors remain the big winners, up 39.9% and 29.8% respectively. SUVs remain popular with a 11.2% growth while the biggest losers are the MPV and small car sector which were down by 12% and 5.5% over the same period in 2019.
Neil Gilligan, INDICATA UK’s business development manager, said: “It is surprising how quickly the used market has bounced back from the Covid-19 lockdown.
“With reduced output from car makers and fewer dealer part exchanges and ex-fleet cars coming into the market then demand should exceed supply throughout the rest of 2020 with prices continually strong.
“INDICATA generates used car insights from 13 countries so looking at what has happened to the German used car market could be useful for the UK.
“German dealers opened on the 20 April and experienced a swift bounce back to pre-lockdown levels like the UK has, and used car sales have continued to grow. This could bode well for the UK market for the rest of the summer,” he added.
ADESA UK research undertaken last month asked dealers how they intend to restock following the reopening of car showrooms.
As a result of the COVID-19 crisis 78% said they will look for alternatives to visiting physical auctions, with 60% saying they will now either use, or only use, digital auctions.
Only 11% of dealers said they would feel comfortable attending a physical auction when lockdown measures are eased to allow them to do so.
Jonathan Holland, managing director of ADESA UK, said: “This research shows how dealers restarting their businesses are discovering the efficiency and safety of a digital approach which enables them to adhere to social distancing rules when restocking.
“One of the consequences of the COVID-19 crisis is that dealers are now more comfortable with transacting online and are migrating from physical to digital auctions to replenish stock,” he said.
New car registrations showed a slight improvement across Europe in May with a less severe decline than in April, as lockdown measures began to ease and dealers reopened.
Sue Robinson, Director of the National Franchised Dealers Association (NFDA), said: “By comparison, while about 80% of dealerships have now reopened in England and reported two positive trading weeks, it is important to note that a lot of sales were boosted by pent-up demand.
“We will continue to monitor the situation very closely to ensure our industry receives the support it needs going forward”.