COVID-19 Lockdown 2 delivered 22% downturn in used cars sales

The UK Government’s ‘Lockdown 2’ COVID-19 mitigation measures  in England contributed to a 22.1% decline in used cars sales during November, according to data from Indicata.

AM100 PLCs Inchcape and Marshall both delivered profitability upgrades to their financial forecasts this week after experiencing better than expected trading during the lockdown-impacted period.

But, while retailers were able to continue sales through the provision of ‘click and collect’ services, Indicata said that its data showed a 22.1% year-on-year fall in demand last month as dealers responded to declining used car prices with a 2.6% month-on-month increase in stock levels.

Last week AM reported that Dealerweb data had shown new car orders were down by 30% and used car orders down 39.5% against the same month last year, during November.

Indicata also said that used car prices had dipped 2.1% between the end of October and November in “the first price falls the market had seen since the Spring”.

Jon Mitchell, Indicata's group sales director, said: “We saw our online wholesale portal stock levels rise during November but not dramatically as many dealers have been investing in new stock at the lower lockdown prices.

“While prices did fall during November our insights have already seen a rise of 0.3% again in the first few days of December as dealers come out of lockdown.”

Indicata said that cautious dealers had reduced prices during November for fear of ending the year with high levels of stock, while others have reduced prices on the ageing and unwanted stock but continued buying cars at reduced lockdown prices in preparation for a strong end to December and start to January.

Last month Mitchell advised used car retailers to reprice and sell overage stock “immediately” in a bid to get on the front foot ahead of an anticipated easing of COVID-19 trading restrictions in the New Year.

The advice contradicted calls for calm from Auto Trader, which re-stated its call for retailers to “hold firm” on any price cuts during the new lockdown.

Mitchell has repeated his advice, however. He said: “Our message is the same as last month – clear out your ageing and unwanted stock quickly by reducing prices and invest in the fast-selling stock as everybody is expecting a strong trading period over Xmas and into Q1.”

Demand for electric vehicles (EVs) and hybrids slowed for the second successive month as consumers looked towards petrol and especially diesel for better value, according to Indicata’s data.

It said that dealer stock turn of diesels was 6.2 during November compared with 2.8 on EVs, suggesting that this showed how dealer pricing will have to reduce on alternatively fuelled vehicles (AFV) to ensure they remain competitive.