1) Seasonal cycles
Ever since the supply of new cars changed to twice a year, August has been a relatively quiet month as far as car sales and the wholesale market goes. But this year, as with everything since the pandemic started, things are different. In the past month we have continued to see huge demand for quality used cars and CAP values have increased again by another 3% for vehicles up to three years old with 60k miles.
2) Supply issues
Over the past five months, the average value of a one-year-old vehicle with 10k miles has increased by £2,500, and many have increased by considerably more. However, volumes continue to be down on what we want to see, so buyers continue to log in online in their droves to snap up the cars that are available, helping to inflate prices.
3) Physical auctions
In July we made our much-awaited return to physical auctions at select sites. While online auctions remain very strong, we expect the vehicles that will benefit the most from physical sales are those of a lower quality. Buyers who can physically look over a grade 4 vehicle with 80k miles on the clock are more likely to be able to make an informed judgement as to whether there’s profit to be had.
4) Looking ahead
As we head into August, it is not anticipated that car prices can continue to rise at the current rate, so some form of stabilisation within the markets is expected. We could see some consumer caution around the ending of the furlough scheme in September and this may well force buyers into keeping their pounds in their pockets.
5) ‘Normal’ LCV performance
July saw more normal performance in the LCV market as some seasonality returned. First-time conversions in July fell by 6% versus June although the average selling price achieved was still very strong, at £10,189 for the month. First-time conversions are almost certain to dip again throughout August though we are still seeing respectable numbers of buyers logged on to each daily event - some even from their holidays abroad.
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