Wholesale funding software provider Sword Apak expects the UK used car market will remain ‘resilient’ to at least the end of 2017 in the face of both economic and political changes.
Explaining why, James Powell, executive vice president at Sword Apak said: “While the new car market is expected to slow in the months ahead, we expect the used sector to remain resilient overall. Modelling on historic consumer car buying behaviour during terms of economic challenges, there is typically a shift of interest towards greater affordability which is associated with a used car. A similar pattern, albeit on a shorter-term basis, is reflected during major political events such as an election.
Over recent years, the growth of new car PCP finance has offset affordability advantages of used cars, but the emergence of used car PCPs has once again changed this dynamic swinging the affordability balance back to used vehicles. We also believe the post General Election Brexit dialogue will provide an unusually long ‘tail’ to the political influence on car buying; this uncertainty will, we expect, benefit the used car sector.”
In the short term, falling disposable income, rising inflation and the election have seen auction businesses reporting a softening of used car activity by dealers, but Powell said he expected both conversions and values to stabilise in light of consumer demand.
He added: “There are many disruptive and evolutionary influences on the car buying market place, including the (as yet uncertain) Clean Air approach, along with the previously identified political and economic influences. However, for car buyers, a used car has historically been seen as the safe haven option. We expect to see this scenario to play out again as the year unfolds.”
Elsewhere trade-to-trade online auction site Dealer Auction has said that the average selling prices of diesel cars has so far remained stable.
In May, the retailer said the volume of diesel vehicles sold on the online auction platform increased by 29% year-on-year, with more than 3,000 sold by Dealer Auction in May, but the average selling price fell by just £5 per vehicle.
Kieran TeeBoon, operations director of Dealer Auction, said: “Despite diesel cars continuing to face negative media attention and the spotlight of the government and other authorities, our data indicates that demand for diesel cars is remaining stable. The uncertainty surrounding them is not putting dealers off stocking them, and does not appear to be putting consumers off buying them in the used market.”