Brexit had a huge influence on the remarketing arena in 2019, but it certainly wasn’t the only story in town.
It’ll be no shock to hear that Brexit had a big impact on the trends driving used vehicle demand and remarketing values in 2019, with the levels of political chaos and uncertainty being one of the driving forces behind a turbulent year.
“The auction market experienced a game of two halves,” says Glass’s chief car and leisure vehicle editor Jayson Whittington (pictured, below right). “The first six months were tough, in particular Q1, a quarter that tends to be buoyant.” Instead, he explains, vendors chose to hold over stock that would have been remarketed in December, hoping for a better climate in January that didn’t arrive.
“The first six months were very much a buyers’ market, with lacklustre buying activity leading to much more severe valuations book drops than in 2018,” he continues.
However, the market turned in the second half of the year. “The final quarter of 2019 was much stronger, with demand in December a big improvement on the past few years.”
But Whittington highlighted that vehicle condition came into sharper focus during the more challenging period. “What was evident in 2019 was that those cars presented in best condition and in line with lower auction grades performed consistently well,” he said. “This underlines the importance of vendors refurbishing cars wherever possible, in particular to improve the condition of grade 4 cars, which can achieve disproportionately lower hammer prices than grade 3 cars.”
A major influx of ex-company cars could be heading for the used market in the first half of 2020, according to auction firm Aston Barclay.
“There wasn’t the major increase in used car volumes that was expected after a large used car market three years previous in 2016,” says the company’s managing director Martin Potter. “However, based on Aston Barclay’s average used fleet cars reaching auction at 42 months, this volume could reach the market in the first few months of 2020.”
EXCEPTION TO THE RULE
The alternative fuel segment was the big growth area that defied the norms of 2019.
“It was clear that alternative-fuelled vehicles have improved in popularity at auction,” says Glass’s Jayson Whittington. “It’s difficult to measure the impact that the introduction of London’s clean air zone has had on demand, but pure electric vehicles and plug-in hybrid electric vehicles, which have been challenging to sell at auction in recent years, have been easier to move on with decent hammer prices.”
Aston Barclay boss Martin Potter agreed: “Interest in alternative-fuelled vehicles and electric cars grew rapidly during the year as dealers responded to consumer demand for cleaner cars,” he said, also pointing out that the used diesel market remained “strong in 2019”, despite a fall in new car sales.
THAT WAS THE YEAR THAT WAS
Stuart Pearson, COO UK Remarketing at BCA reflects on an interesting year
1. Price pressures bring need for greater insight
When prices are under pressure due to seasonal or economic pressures, particularly if volumes are high, it inevitably means that buyers and sellers drift further apart during the monthly trading period. This results in a significant cliff-edge drop when the next price guides appear, disturbing the equilibrium of the wider market and almost inevitably creating further uncertainty for vendors and frustration for buyers.
2. Quick-churn beats price falls
The fast-moving market conditions during the late spring and summer months were a significant factor of 2019, although the reality was this was really a market realignment of values following an incredibly strong 2018 for used vehicles. Our advice to customers during this period was to remarket stock in line with market expectations and churn vehicles quickly to avoid issues of depreciation and any unexpected moves by the market.
3. The year ended on a more stable footing
Values stabilised ahead of the September plate change and the remainder of the year saw a good balance between supply and demand, with average values rising as buyers competed strongly.
4. Online buying is on the up
Online trading was significantly boosted with the BCA Buyer app introducing live bidding from mobile devices during 2019. It also generates insight that helps BCA meet the needs of its buyer customers.
5. EV demand aligned to greater understanding and knowledge
The past year brought improving levels of demand from professional buyers for electric vehicles. Knowledge and confidence in the product has definitely increased. However an accurate valuation remains key in a dynamic market.