COVID 19 the effect of vehicle values
With January in full swing, our team of experts reflected on the outgoing effects of 2020 and looked forward to what 2021 is likely to bring.
In the car market, wholesale trade volumes declined steadily from September 2020, until the end of December, following a period of strength as we came out of Lockdown 1. In the first week of January, and firmly in Lockdown 3, volumes were almost 50% back on the first week of last year.
In terms of car valuations, December’s value movements and into January, dropped by an average of 6.5%, however, the change was coming with high prices towards the end of 2020 experience a realignment, more towards the natural order of things.
Derren compared a number of years directly to show that values today remain favourable compared with many previous years and there are still question marks as to whether 2021 can sustain the high values that are still being experienced over previous years.
COVID has thrown up a number of surprises, one of which was the ports sector increasing the most, by 5.1%, of all sectors. The City Cars and Superminis also fared well overall. The weakest sectors were large executive cars and upper medium or the D-sector.
In terms of fuel-type, there continues to be a lack of anti-diesel sentiment amongst buyers. Values were helped by lower volumes, although they still make up a high proportion of the data we see, behaving almost exactly as petrol cars.
The big story is what happened to alternatively-fuelled vehicles. Pure hybrids saw the heaviest drops last year, down 10.1%, with plug-ins also reducing. It appears that buyers forgot their green credentials when comparing the expense of AFVs compared with ICE equivalents.
With incentives in place, electric vehicles started the year off strongly but also dipped away given the currently look and expensive purchase compared with more traditional fuel-types.
At the time of writing, retailers are currently reporting business levels to typically be around the 60% of last year. With the announcement that Click & Collect would no longer be allowed in Scotland and it was already banned in Northern Ireland. England & Wales may well follow.
So far, values have only dropped by around 0.5% on average in January. For the remainder of this month Derren expects values to continue to drop away, but not by huge amounts. The severity of any drop will depend on Click & Collect. Value movements in the next few weeks and months are very dependent on how long this lockdown lasts for.
For LCVs, 2020 finished 11% down in sold volume compared to the previous year, and with high conversion rates from May onwards, 2021 was actually considered a good year for commercial vehicle sales, driven by the reliance on home delivery. This wasn’t the case across all sectors, however.
Two weeks into the new year and early indications are that there will be no large scale defleets taking place as we still battle the pandemic.
On values, a typical 3 year old vehicle has increased by 22.9% since we came out of our first “Lockdown” in May (subject to the vehicle sector). But, as with cars, there will come a point when values have to stop increasing month on month at the level we have seen, and this we started to witness at the end of quarter 4 2020.
For 2021, early indications for January are that stock levels will be an issue, with prices still strong in most sectors, in particular the van ranges. Both vendors & trade have adopted well to online sales and we predict that the
losers will be the ones that allow this not to be an important part of the sales process.
With businesses capitalising on the lack of availability of new vehicles in 2020 there was an increase in sales of vehicles less than 1 year old in the main van sectors. The lost production of 2020 was lost for good. The knock on affect of an increase in the less than 1 year old vehicles being sold, is that they will not become that 1 – 2 year old vehicle this year, and so with difficulty obtaining new stock, whatever stock does come to market in the short term will be sort after.