- Attention to used market shifts will be crucial in the year ahead
- Navigating the coming year means a deepening use of data and insights
- EV sector set for continued volatility
Vigilance in the face of used market complexities will be key to success for industry players in 2024 – according to Cox Automotive.
Several continuing trends, including the realignment of vehicle values, supply shortages, economic uncertainty, and continuing EV market volatility, are likely to underpin those complexities.
Writing in the leading automotive services provider's Insight Report, multiple industry commentators point to a needed evolution by dealers and manufacturers to weatherproof their businesses in the year ahead.
Cox Automotive's Insight Director Philip Nothard said: "The used market remains in a delicate transition, as we have seen over the past few years. Inconsistency persists in many areas, including where vehicle values and production shortages are concerned. The latter continues to have a marked impact on the number of vehicles entering the used arena.
"In 2024, navigating the changing landscape requires all concerned to have a steadfast connection to data and insights. Used vehicle operators must react to change and should not wait in vain for a return to old market dynamics."
As the repercussions of production shortages persist, Philip thinks that the industry must prepare for ongoing transformations in vehicle stock profiles, new fuel types, varied ages, and distinct mileage profiles in the used vehicle parc. He believes the EV market is poised for continued volatility as volumes rise, retailers gain confidence, stocking dynamics evolve, and price entry points decrease.
"Volumes of used EVs are growing fast, but consumer demand remains damagingly low," Philip said. "The used market for them is yet to find its feet - all of which is fuelling the instability of values. These negatives will surely be diluted as the sector continues to evolve, as prices lower, range and technology improves, and pricing becomes more attractive thanks to competition from new entrants."
ICDP Managing Director Steve Young gives a stark warning in the Insight Report about the used market road ahead, predicting that things are set to become 'bloody' when it comes to vehicles from zero-to-four years old.
He insists: "The used market is becoming increasingly competitive; dealers need to differentiate by offering a superior customer experience."
REGIT CEO and Founder Chris Green believes manufacturers may feel like they've missed out on the used market regarding sales and utilisation of customer data.
He said: "If manufacturers are going to maximise what they can get from used cars long-term, they will need to adopt localised customer retention strategies, as what works in one region may not work in another."
Ian Plummer, Commercial Director of Auto Trader, says the reshaping of the used market in recent years has underscored the value of data and requires a greater emphasis "on retail values rather than trade" and meeting the challenge posed by a drop in the supply of younger vehicles.
"This has brought unique challenges," Ian said. "Not least the necessary reconditioning impacting both overheads and stock turn."
Cox Automotive believes an anticipated surge in demand will prompt retailers to swiftly replenish their stock levels for a strong start to 2024.
Philip Nothard concludes: "Ongoing value realignment is creating a market division between retailers and vendors. Dealers will strategically manage a mix of old and newly priced stock. At the same time, the fleet and leasing sector continues its vehicle de-fleeting process with residual values set before the pandemic bounce."
Read Cox Automotive's Insight Report here.