Auction Wholesale Market
It is fair to say that the UK used car auction market recovered quicker than many expected. All the key metrics – first time conversion rate, sale value and sale volume – climbed rapidly with no signs of letting up at the end of the month.
These key measures are virtually back to pre-lockdown levels. However, while it is tempting to take a bullish view of the market for the next few months a degree of caution is advisable as it is likely there will be some “over-recovery”, especially for sale values.
The possibility of further lockdowns is looming ever larger and whilst they are likely to be regional, they will clearly be centred on those areas of higher population density. They will not only affect used car activity in those areas but are likely to temper the enthusiasm of buyers across the country.
Clearly, July will give a better indication of the level of sustainability for the used car wholesale market. Early indications are that the auctions are showing similar performance to June, and Glass’s editorial team will continue to monitor them through the month.
Used Car Retail Market
Naturally, the recovery of the used car wholesale market has been driven by the recovery of the used car retail market. Whilst it has only been reopened a matter of weeks, the number of sale observations and the average sale price have not only recovered, but are exceeding pre-lockdown levels. To a degree this may be down to the pent up demand resulting from three months of lockdown, but it is still encouraging to see the rate of recovery. Like the used wholesale market, a degree of caution is appropriate when planning for the next few months.
Glass’s Live Retail Pricing tool also reports on the average time a car spends on the forecourt, and given retail sites have only reopened relatively recently it is no surprise that June’s average of 81.9 days is twice the usual figure. This figure will undoubtedly improve in July, although it probably will not return to “normal” levels until August.
Early indications are that June’s healthy recovery of both the wholesale and retail used car markets has continued into July. Should the easing of travel and trade restrictions continue – not just in England but especially for the rest of the United Kingdom – then it is reasonable to expect the improvements to continue for the rest of the month. Localised lockdowns are a distinct possibility. However, depending on the areas affected and the lockdown duration, they may impact this recovery. The country is clearly are not out of the woods yet, but the current signs across the industry are very positive.