Used car dealers are buying cheaper used cars at physical auctions as they search for ways to avoid the impact of limited vehicle supplies and soaring values, according to Shoreham Vehicle Auctions (SVA).

Observing the market trends following the West Sussex-based remarketing business’s 60th anniversary week, managing director Alex Wright said that dealers are visiting auctions in-person in order to get hands-on with older cars and ensure they make the right buying decisions.

While rising values have taken NAMA grade 1 and 2 used cars out of reach of some smaller retail operations, the trend for online auctions has left many at the front of the queue for the pick of the lower price NAMA grade 3, 4 and 5 cars, he suggested.

Wright suggested that online sales are playing their part, driving up values for retailers unable to inspect vehicle in-person.

He said: “Smaller dealers are typically using their own cash to replace stock, so they have to be creative. Typically, they run their own workshops and refurbish their own stock. Online only auctions don’t work for this profile of buyer.”

Indicata has said that the UK’s used car price rises are the highest in Europe, after values rose 28.3% in October.

BCA, meanwhile, has said that used car values remained at their second highest level ever at its auctions in October, despite signs of an “easing back” of 2021's "frenzied" market in the month’s latter stages.

Reflecting on feedback from his car retail clients, Wright said: “During our 60th birthday week we saw buyers that we haven’t seen since the start of the pandemic. It was good to listen to feedback from the smaller independent dealers to understand how they are dealing with this extremely hot used car market.

“Many admitted to NAMA grade 1 and 2 used cars being out of their price band which has meant bidding on the cheaper used cars that need work as they are confident of being able to add their own value.

“They are buying physically to avoid the risk of buying a damaged car without seeing it first,” he added.

SVA is welcoming many of these small independent dealers to its Monday night part exchange, and Thursday finance and fleet sales as they look to secure used cars out of the scope of buyers from franchised dealers.