At the beginning of 2017 we published an opinion that this would be the year of the used car. Nothing has happened so far to discourage that view. As the year wears on it is increasingly clear that the balance of opportunity is weighted away from the new car market for the first time this decade.
We base this on two factors – the inevitable pressures on the new car market that weaker sterling will bring and direct observation of increasing activity in the used car sector. For new cars there will be an inevitable impact from the impending changes to VED, around which there is growing publicity about increased long-term ownership costs. There are also signs that manufacturers are almost buying new business with an unprecedented level of discounting on even their recently-launched models.
If you want to know what the future holds just follow the money – and the money manufacturers are currently throwing at new cars is unsustainable for profitable long-term trading.
Meanwhile there is still strong retail demand for cars in general and demand from AUTOi’s dealer customer base for used cars has increased markedly. We saw a 300% pro rata increase in dealer purchases from our Wizzle consumer car sales portal during January compared with the last quarter of 2016. But the biggest sign of increased demand in the trade for used car retail opportunities is the doubling – almost overnight – of dealer log-ins to chase fresh stock. This has been sustained and confirms that increased interest in used cars is here to stay this year.
This in turn signals another trend for 2017 – the diversification by vehicle retailers of their stock sources. Dealers are no longer content to fit in with the traditional routes from which they generate quality used car stock. Dealers want to feel more in control than they do by relying on customers walking in through the door or auction sales alone. Part-exchange and auction will be increasingly augmented by channels which enable them to be more proactive. A sign of this has been the immediate response to AUTOi’s independent auction channel which feeds stock into the portal and which saw cars exchanged immediately even before we promoted its existence.
Inevitably 2017 will therefore also provide fresh opportunities for the finance sector to provide funding for new stock-sourcing methods. All of this adds up to 2017 proving to be a year in which diversification will be a significant theme. Consumer caution is likely to grow as Brexit negotiations inevitably spark scare stories about the future of the economy, but they will respond by buying more carefully rather than not buying at all. The recent record years for new cars resulted in more high quality used car availability than at any previous time and dealers will make the most of those opportunities.