- December 28, 2018
- Posted by: Celine Evans
- Category: Automotive Industry, News
Year after year, car buyers have been willing to pay more for second-hand cars as their prices have inevitably risen. Values have increased by 42% in the last seven years compared to those of new cars, whose values increased by a mere 19% during the same period. Will used car values continue to rise into Q1, 2019 or have their prices finally reached their upper limit?
After statistics revealed a very healthy 2018 for the used car market, manufacturers strive to leave car buyers with plenty of options in the new market throughout the upcoming year. Close competition in the industry means that prices of used cars are likely to increase, as are their values.
Where the Market is Going in 2019
Jayson Whittington, chief car editor of Glass’s, believes that the future of used car values hugely depends on the volume of fresh auction entries in the first quarter of 2019, but more importantly that WLTP is a new factor that could impact the market next year.
‘’Ordinarily fresh stock is limited at the beginning of January and combined with strong demand can lead to values rising.
‘’However, over the past couple of years we have seen vendors holding back stock in December and releasing it in January, which has resulted in supply and demand being even. As we progress through February stock volume does reduce and prices rise’’, added Whittington.
After researching trends in the used car market over the last 12 months, Whittington further added: ‘’There has been an increase in the volume of contract hire extensions over the past three months as a result of WLTP related stock availability issues.
‘’In October, less cars were available in the market than last year and it is believed that this is related to the extension rate. If this continues into quarter one, then it is reasonable to expect demand to outstrip supply with prices rising as a result.’’
Taking this into account, Whittington expects that as we could face a spike in contract hire returns, demand will only marginally outstrip supply early in January, thus prices are likely to increase in February.
The Effects of WLTP on the Market
Head of UK valuation at Cap hpi, Derren Martin, is expecting values to drop in December but not nearly as much as they have previously. He also points WLTP as a contributing factor, as well as Brexit.
“The first quarter is generally a strong period for prices, and we don’t envisage anything dramatic happening to alter this view. What is likely, however, is that prices will not drop as much as they traditionally have in the balance of this year, or therefore increase as much in the first period of next year. Prices of petrol cars, in particular, are already high so they are unlikely to go up in the short-term,” he explained.
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