Reflecting the market through the COVID-19 Pandemic

Anthony Machin

20 May 2020, Blog Post

Glass’s reflects the automotive market through the Covid-19 Pandemic

Glass’s continues to evaluate industry data sources whilst working with OEMs, dealers and leasing companies to gain the best understanding of how the UK market is likely to react once it reopens.

Despite stark pessimism in how the UK will digest the economic aftermath of the pandemic in combination with Brexit negotiations, there is a positive note. Even with asset values falling across all industries, the expected impact on used-car values in the UK is not expected to be as severe as in other European markets. By the end of 2021, the UK will be recovering in terms of used-car prices to levels close to the start of 2020.

Nevertheless, in dealerships across the UK, inventories are aging and the stock continues to cost money. During lockdown, the Glass’s editorial team has continued to observe the market via our comprehensive set of data sources from online portals and auction houses. There continues to be little market activity and our sale observations are significantly reduced. With the market in stasis, there are no significant movements in sale prices and this is reflected in stable valuations in Glass’s products.

For the UK car market, the Coronavirus pandemic has effectively frozen new and used car sales for an undetermined amount of time. The lives we previously knew are on hold. Increasingly, economic forecasts suggest significant negative effects on the economy. New and used car dealers are unlikely to resume normal operations until 2021 with social distancing, deep cleaning, and appointment booking the new norms.

With fewer new car registrations affecting used car supply, especially the 6.5-year + profile, this reduction will positively affect RVs, as this age profile remains the mainstay of many retail outlets. Demand will not soften for this age profile soon, in fact if the UK enters a prolonged recession, retail demand will increase as consumers seek cheaper cars to reduce spending. Once auctions reopen, competition will increase to secure this stock, and traders will refocus on buying younger stock such as ex-rental cars further supporting RVs.

Autovista Group has released an updated whitepaper on the impact of the coronavirus (COVID-19) and the economic crisis on used-car markets across Europe. It includes scenarios and expert commentary on current market conditions and outlook to help track the impact of the coronavirus pandemic across major European markets. Find the report here.

Lockdown

With no prior precedence, world leaders are unsure about the correct lockdown exit strategy. The overriding concern is the balance between the continued risks to life, versus the ongoing economic impact.

Lockdown is affecting most UK households, high street shops are closed except for essential stores, and many companies continue to struggle to remain in business. Effectively, large parts of the UK economy is on pause. The interconnected nature of the UK economy means everyone is affected by the coronavirus crisis.

Reopening the market

As the lockdown eases and the car market reopens the Glass’s team will continue to interrogate all available data and bolster our market understanding holding virtual meetings with OEMs, dealers, traders, auctions, and leasing companies to ensure that Glass’s continues to accurately reflect the UK automotive market.

About the author

Anthony Machin

Anthony MachinHead of Content

Anthony joined Glass’s in early 2018 in a newly created role designed to pull our unique market-leading data, insights and experience under one roof. Anthony has over 20 years’ experience in the sector working for BCA, Volkswagen, Honda and Jaguar Land Rover. Outside of work Anthony spends a lot of time outdoors, either road cycling, hill walking, or taking trips in his Volkswagen camper van.