Coronavirus COVID-19: Advice on buying, owning and running a car during the outbreak | No thanks

Coronavirus: Used car prices set to soar as coronavirus hits new car production

Published 18 March 2020

Used car prices could be set to soar after the coronavirus led to a slow down in new car production.

With workers and key elements of the supply chain hit by the COVID-19 outbreak, experts reckon drivers will be forced to turn to used cars with increased demand pushing up prices of secondhand motors. 

While the UK is only in the second ‘delay’ stage, countries like China – where the outbreak is thought to have started – have seen new car sales fall off a cliff, with demand down 79 per cent at the worst of the outbreak. So bad is the situation in Asia that the China Association of Auto Manufacturers is calling on the government to help. 

Now senior data analysts are warning buyers that used car prices could rise and demand outstrips supply.

Neil King, senior data journalist at the Autovista group, says that new car supply issues of any kind often lead to increased demand for used models.

King said: “The outbreak will particularly reinforce the attractiveness of models that are subject to long delays and deliveries, with a positive impact on their values.” 

He went on to say: “Delays to new-car deliveries would result in fewer tactical, short-term registrations as dealers would only be able to sell the cars they have available. This would also increase or at least stabilise residual values of younger used cars because their volumes are reduced.”

At this stage, King doesn’t expect the new car market in the UK to suffer in the same way as China. “Many of the most important model launches in 2019-20 are all produced in Europe. They are therefore less likely to be harmed by a lack of personnel or shutdowns in Asia, but could still be derailed by components shortages and/or if similar measures are imposed in Europe.”

Meanwhile, Andrew Mee, head of forecast UK at CAP HPI said that the used car market had already got off to a good start: "We saw the strongest February since 2012, which saw overall used car values to increase by 1.1%. A result that was significantly higher than the five-year average for February of 0.2%."

And he confirmed: "A fall in registrations this year could, in fact, help support used values in the long term.”

Comments

gavsmit    on 18 March 2020

I was already prepared to keep my 5 year old car for a lot longer anyway, thanks to obscene new car price inflation in recent times.

This is the longest I've ever owned a car for - and as it is still working fine, I've resigned myself to spend the extra on a major service, new tyres and brakes to keep it going for possibly another five years as a two fingers up to the greedy car manufacturers and their ridiculously high prices.

Old.Roverboy    on 18 March 2020

I was already prepared to keep my 5 year old car for a lot longer anyway, thanks to obscene new car price inflation in recent times. This is the longest I've ever owned a car for - and as it is still working fine, I've resigned myself to spend the extra on a major service, new tyres and brakes to keep it going for possibly another five years as a two fingers up to the greedy car manufacturers and their ridiculously high prices.

But manufacturers were and are beginning to "Price In" the fines for being over the Co2 limits with new antipollution measures

The penalty amount is determined by different level of violations over the minimum CO2 emission target. For 2012-2018, the penalty settings are:

  • €5 for the first gram over the target
  • €15 for the second g/km over the target
  • €25 for the third g/km over the target
  • €95 for the fourth g/km and subsequent

After 2019, violation per g/km will be €95.

2020 mandatory 95 g/km 57.5 long-term target

gavsmit    on 19 March 2020

I understand your point but as a consumer it's the car manufacturer's problem to overcome regulatory issues and price their products competitively to ensure continued sales, just like other regulated industries do such as the energy sector. If that regulation becomes unrealistic, the manufacturers need to confront politicians to discuss and overcome those issues.

I can't help but wonder how an entry level small car from the supermini class such as the Peugeot 208 ever got to now cost almost £16k (or over that if you have metallic paint like most people do or are forced to by availability) - how could that ever be considered as good value for money?

I was looking to replace my car but the price has gone up by over 50% for the comparable model and spec in a relatively short space of time which is excessive, despite new challenges on the car industry from emissions regulation. That car is also full of equipment I don't want like pointless 'tech' that I'll never make full use of and is just another expensive thing to go wrong outside of warranty.

And I'm talking about cars from the small 'bargain basement' end of the market here - if I was ever tempted to look at a more prestige car to buy with my heart as well as my head, I'd have to remortgage my house!

   on 19 March 2020

I got a value form 'We Buy Any car" a week ago. I got an email yesterday saying the the guaranteed 7 day period had expired and so out of interest I got another valuation.
The result? A ten percent fall in value.....

   on 19 March 2020

Not sure who the experts are. We were thinking of changing our car this summer. Now there is no chance. Anyone with money in the bank will be hanging onto it with the future uncertain and not many will take on finance while job security is a worry. If you have to get a replacement car I'm sure they will be desperate for your money as most will hold back on such a purchase right now

Westbury33    on 19 March 2020

Far too many dealers with massive stocking loans on depreciating assests that are saleable to a smaller customer base. I dont see how "Neil King, senior data journalist" has managed to deduce his findings.

It may be a reassuring read for dealers and those that have just purchased or about to, but the reality is, its unlikley to stop the inevitable reduction in used prices. Who exactly is going to be out buying one of the 224,979 sub three year old cars listed on a well known internet based car sales platform today?

"Coronavirus: Used car prices set to soar" hmmm, I think we can file that under wishful thinking.

Edited by Westbury33 on 19/03/2020 at 17:38

JBbgp022    on 20 March 2020

This is not a great time for car sales, but we have to believe that normal circumstances will resume. Possibly time to get a bargain though as I dont see car prices going up. Used or new.

Edited by JBbgp022 on 20/03/2020 at 07:46

aethelwulf    on 20 March 2020

The time frame of 'non normal' life is expanding by the day. Who knows? No one so it is all a gamble and I keep my cars for years , current Mondeo 15 years old ( 2L petrol estate) and it works fine. It is worthless to anyone else but not me and it MOT'd and easy to service. I also have a 10 year old Piccanto. No way I would buy a new one at the silly prices they want. I have run cars for 20 years successfully so a way to go yet. But commentators grumble about the fines re CO2. We let politicians ruin our life on the climate change rubbish whilst the rest of the world do not do anything. There is only one planet we live on and we are paying . Totally unfair.

Scot5    on 21 March 2020

To echo the above about selling a car. We were in the unfortunate position the other day of wishing to sell a car. WeBuyAnyCar gave me a shocking price. Let's put it this way, whilst WeWantAny car quoted £16300, WeBuyAnyCar quoted £10700. Evans Halshaw said they were no longer buying cars and Arnold Clark Quoted £17400 but said we couldn't book an online appointment. The quote was valid for 7days but when we went to dealership, they said the quote had elapsed after 3days and then made a derisory offer akin to WeWantAnyCar. I can see why companies do not want to spend cash buying cars right now, but all this talk of prices being higher. Based on what? Theory rather than true life I suspect. Either the experts are not living in the real world OR what might be more true, is that those companies buying cars are using CoronaVirus as an excuse to make an absolute killing on the deal. They're hoping to buy the car for £10700 and sell for say £19,000? If they do buy the car for £10700 then they can afford to reduce that selling price somewhat so I do not see why used car prices will rise. I pity anyone who finds themselves in a position where they need to sell a car rather than want to sell a car at the moment because the dealers are acting like vultures.

Edited by Scot5 on 21/03/2020 at 16:58

   on 21 March 2020

Absolute rubbish.

Will Green    7 days ago

Covid 19 and Car Finance

In 2017 86.2% of private cars were bought on some kind of lease. Billions are lent in the form of PCP's every year. Carmakers are banks that happen to make cars, their finance arm lends money so that customers can afford their cars. The new car can be a loss leader, the money's in the finance, repair and servicing. As long as there’s some equity at the end it kept rolling. If It's cheaper per month to borrow to buy new why buy used?

There is a storm upon us. Many people will be out of work, if they have already paid half of the car's value they can take the keys back to the dealer and walk away. Or they can try to sell the car privately and get some equity back. If you lease hire you may not have another. The car will always be the first thing to go.

All these scenarios mean that there are going to be millions of 2-3 year old cars, that people can no longer afford to finance or to buy and are no longer worth selling privately. They are in negative equity, but the loss lies with the lender. This is the saving grace of leases (for the customer). So what is that going to do to used prices, dealers, manufacturers?

No-one is going to want a 2018 BMW X5 on 21's if they can only afford a 2010 Kia Rio. So there will be demand for cars in the £1000-£2000 bracket. There will also still be demand for newer vanilla cars.

Millions of nearly new prestige cars will be sitting rotting because if they were released the market would saturate depressing used prices further, there would be fewer very wary buyers, basically a death spiral.

This happened in,1988-1990 and again in 2008-09, this will be far far bigger. This will be carnage and could easily bring down franchise networks and manufacturers.

   4 days ago

Makes no sense - basic supply and demand rules apply here, there will be a LOT less demand for cars especially currently people can't even drive far due to lockdowns.

I am now working from home so only need to use the car for grocery shopping once a week - people are not looking to spend £15,000 on a second hand car that they can use once a week.

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