The average price of used cars under 24 months old surged by more £1,000 over the past quarter, auctioneer Aston Barclay said, as dealers invested in second-hand stock to supplement a shortage of deliveries from manufacturers.
Vehicles no older than two years – “late and low” stock – fetched £15,589 on average in Q3, up £1,132 from the second quarter of the year. Aston Barclay attributed this to increased demand for near-new cars, as manufacturers struggle to deliver factory-new stock timely due to WLTP.
The new emission testing standard, which became mandatory in September, has seen the likes of Volkswagen and BMW post double-digit drops in deliveries over the past quarter, as they struggle to get vehicles through testing quick enough to meet buyers’ demand. The Society of Motor Manufacturers and Traders recorded a 20.5% year-on-year drop in UK new vehicle registrations for September.
“Dealers [are] acquiring young used stock to offer customers … who are unwilling to wait for a new car,” said Martin Potter, group operations director, Aston Barclay.
“We believe the high demand and rising prices in the late and low and fleet sectors will continue until the WLTP new car supply challenges have been resolved, which could be Spring 2019,” he added.
Late deliveries across Europe in turn dragged on car finance business. The Bank of England singling out the sector as one of the main contributors to a September slowdown in consumer credit in Britain.
Delays in deliveries are set to have an effect not just on new buyers, but also on retention of existing customers – a major selling point of PCP and PCH for dealers.
As customers nearing the end of their PCP term come in, dealers will have difficulties securing a new vehicle to roll the customers’ equity onto, Philip Nothard, head of external communication at Cox Automotive, told Motor Finance in September.
“The dealer can try and look after the customer, [but] it does not create the part-exchanges that the dealers would have normally seen at the start of September in previous years,” Nothard said.
“The final quarter is going to be very, very tough for certain manufacturers,” he added.