ALMOST a third of used car dealers (32%) believe that used car values and prices will fall by more than 10% during 2023 as a result of the current financial crisis.
A further 19% of motor retailers say the drop will be between 5-10% and 26% by up to 5%, shows January’s Startline Used Car Tracker. Only 23% think prices and values will continue at their current level or better.
The latest research also asked dealers what they thought would be the biggest challenge facing them during the New Year. The cost of living crisis was the top response at 85%, followed by continuing poor vehicle supply (66%), stricter motor finance criteria (38%), reduced motor finance availability (32%) and demand for electric vehicles (26%).
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Paul Burgess, Chief Executive at Startline Motor Finance, said: “It’s clear that dealers believe the cost of living crisis will bite further during 2023. They think prices and values will fall at the same time as stock availability continues to be a problem. The picture that the data paints is of a market that is going to be more difficult.
“Specific concerns highlighted in the research surrounding motor finance are interesting. From a Startline point of view, business has continued to be buoyant but there is clearly concern among dealers about both the wider availability of motor finance and potentially stricter criteria being used by lenders in a time of worsening personal finances.”
Dealer feelings about the used car sector are largely unchanged from December’s Used Car Tracker, with a 1% fall in those optimistic about its prospects and a 2% increase in those who are more pessimistic.
Burgess said: “The mood of dealers hasn’t really changed for some time, according to our data. There was a definite fall in optimism around September last year as the scale of the cost of living crisis became appararent but since then, survey results have been relatively flat. Dealers certainly don’t seem to think any fall in the market will be modulated.”
Finally, 17% of dealers questioned in the January’s Tracker said that the introduction of the FCA’s new Consumer Duty principles covering motor finance would be a challenge in 2023.
Burgess added: “This is definitely something that is beginning to appear on dealers’ radars and represents a substantial shift in compliance aims and responsibilities. We are already doing good work in conjunction with our partners in this area.”
The Startline Used Car Tracker is compiled monthly for Startline Motor Finance by APD Global Research, well-known in the motor industry for their business intelligence reporting and customer experience programs. This time, 305 consumers and 62 dealers were questioned.