Used car dealers’ pessimism swells amid stock shortages and consumer confidence

The number of used car retailers who describe themselves as “pessimistic” about the sector’s current fortunes has almost quadrupled in the space of just a month.

In total 49% of respondents to the latest Startline Used Car Tracker survey said they had a negative view of the current trading environment – up from just 13% a month earlier.

Most (83%) cited faltering consumer confidence as their top reason for the negative view of the market with weakening stock supply (27%) and the reduced availability of motor finance (24%) among the other key factors at play.

The changing attitude follows the Bank of England’s record interest rates rise, to 3%, earlier this month and comes as Chancellor of the Exchequer Jeremy Hunt prepares to give an autumn statement which is likely to impact household finances with an increase in taxation – just a month after he took up his new post.

Despite the economic factors at play Startline Motor Finance chief executive Paul Burgess said that he believes that the market “continues to show an incredibly high degree of resilience”, adding: “Dealer confidence might be falling but most continue to sell used cars successfully.”

Burgess added: “We’ve been through a period in the last few weeks of intense economic and political turmoil that has had a direct impact on the personal finances of many people, so it is unsurprising that dealers are feeling as though things look more bleak.

“The hope is that having a new prime minister in place, along with a new set of comparatively sustainable economic policies, will create more of a sense of stability and dealers will hopefully feel a little more secure within a few months – although there are clearly several major downside risk factors in play that could spoil this prospect.”

Last week the Society of Motor Manufacturers and Traders (SMMT) chief executive Mike Hawes urged Government to stimulate new electric vehicle (EV) sales after the volume of used car sales transactions dipped 12.2% in Q3.

When the 59 respondents to Startline’s most recent Used Car Tracker survey were asked about the biggest challenges their businesses faced in the future, stock availability remained the top concern at 76%, in line with recent months.

Over two-thirds (67%) cited the availability of finance, however, compared to 34% in October.

Earlier this month The Car Expert reported that UK finance debt for new and used cars had risen to £40 billion per year, prompting concerns that consumers may default on agreements amid soaring living costs.

Its analysis showed that UK car finance debt has increased by £29bn since 2009.