News Digest – Winter 18/19 Update

Used Markets Remain Steady

Yet again this Winter the markets across the board were ok, if not on fire.

The car market is beginning to suffer from a lack of retail demand at the forecourt, courtesy of Brexit uncertainty. It never takes much to upset the equilibrium of the markets in normal times, Brexit is certainly now having an impact on the public’s appetite to buy cars. The housing market has already all but stopped, so the car market is the next area to become affected.

With more stock now appearing at auction, the issue could get worse in the short term, but we are confident that with our rostrum management we can make the most of any bids received.

News Digest – Winter 18/19 Update

News Digest – Winter 18/19 UpdateThe LCV market is also beginning to tail off, from the very strong sales we have seen since August. It is in better shape than the car market but here too, we are seeing some signs of stalling. Volume into the market remains level though, not huge, so we believe that LCV sales will continue to be ok right through to the year end.

Truck and plant sales remain unaffected by the slow down currently, with some very strong results being posted from most sales.

Attendance at the sales is very good which, together with 20 or so internet bidders makes for a very competitive sale room, resulting in strong pricing.

Brexit Really Starting to Impact Markets

With SO much bad news about Brexit and the impact of the UK not achieving a trade deal, it is of little surprise that the public are choosing not to buy anything big at the moment, houses, cars or vans!

Again in the last quarter of 2018, traders tell us that footfall at the forecourt is so low as to be ridiculous for this time of year. Many Manufacturers are resorting to all sorts of tempting deals to get cars sold, new and used; 0% finance, free servicing and minimum part exchanges are just some of the tools in their armoury but, it has to be said nothing is having much affect this month.

We simply need some good news which, when it comes, the markets will really take off with some stored demand released. House and vehicle sales will bounce back and quickly, just as soon as we get good news like a trade deal agreed.

Clean Air Zones Coming

From April 2019 the ULEZ around London will be introduced, meaning that any diesel engine vehicle not meeting Euro 6 standard will face a daily charge. By 2020, there are several major towns and cities expected to follow suit with their version of the ULEZ, known as a CAZ or Clean Air Zone, which will again impose a daily charge on any diesel engine vehicle not meeting Euro 6 standard.

Now that the industry have some dates to work to, it can be expected that pricing in the used markets will begin to react accordingly.

News Digest – Winter 18/19 UpdateFor London markets, any Euro 5 vehicle or older will begin to see prices dropping, as there will be less demand for the stock. This will affect vans more severely than cars, as companies seek to avoid the taxation by moving to Euro 6 or petrol equivalents.

In real terms, this mean any diesel engine approved for sale before 1st September 2014 will face a daily charge. In practice this could mean any diesel engine vehicle registered up to 31st August 2016, that could still have a Euro 5 engine!

So every car captured in this image below at Shoreham Auctions recently could be affected by the new daily charge, really quite new cars.

News Digest – Winter 18/19 Update

One has to consider how this will play out politically, certainly in many of the local towns and cities, such as Southampton, Nottingham and Derby all of whom are required to introduce their CAZ by 2020. Many thousands of people living and working in those areas simply cannot afford a Euro 6 engined car or van, so what can they do? The van user could simply pass on the cost to their customers and, that is what most businesses will do in the short term. Car buyers may well switch to public transport (such that it is) or buy an older petrol engine car to buy some time.

So it is clear to see what the impact on the used markets could be, going forward into the next decade. The demand for older diesels will reduce, demand for any petrol engined vehicle will increase significantly and this of course will apply to any Euro 6 engined diesel. Demand for these vehicles is already beginning to increase in many markets, with nearly new stock reaching some strong prices.

We can expect some fleets to begin selling their older diesels early, in order to avoid the charges, which would see some chaos in the used markets, being flooded with older diesel product.

One thing is certain, prices for Euro 5 engined and older vehicles will reduce significantly as we head into the next decade, and that is before the Government extend the restrictions to Euro 6 diesels, once Euro 7 and 8 standards are released!!

As the song goes, “there may be trouble ahead……..”!!

2019 Outlook

There is not much more to say about 2019 that has not already been covered; the used markets are now SO susceptible to political announcements concerning Brexit and Clean Air Zones that they could go either way in 2019.

We do expect January 2019 to be sluggish, simply because of the almost total lack of forecourt demand in late 2018. But the markets will pick up again thereafter and trundle on, if not quite by the same pace as in 2018.

The UK desperately needs some good news though, to boost the economy. This may well come when we finally get a transitional agreement with Europe, or at least some clear way forward.

But warnings over the economy continue to flood in, from The SMMT, VRA and other eminent motor industry bodies. Many analysts point to the huge problems in trying to plan any business activity, in the face of such uncertainty. Sterling is key to many of the issues, as with a hard Brexit many are predicting a continuing fall in Sterling, to less than a Euro. This scenario has simply not been factored into many business plans and would undoubtedly create chaos for imports and exports.

News Digest – Winter 18/19 UpdateSo is there ANY good news for 2019? Well yes, potentially there is.

  • A good Brexit outcome would release some significant latent demand for new and used vehicles, giving a huge boost to the used markets
  • A relative continued lack of supply should see prices stable in 2019 across all sectors
  • New registrations continue to fall away, creating more demand for used product

Rostrum management will of course become even more important in such ‘steady’ markets, to persuade the trade to part with their money.

Classic Markets Remain Very Strong

Just about the only market to survive intact this month is the classic sales, where prices are reaching unprecedented levels.

News Digest – Winter 18/19 Update

This is quite bizarre because, in times of turmoil this is the very first sector to suffer, with prices generally dropping like a stone! Not so at the moment, with reportedly very strong prices being paid for even mundane stock.