Used Markets Were Stable
After a pretty good winter trading period, both the car and commercial vehicle markets remained in good shape as we headed into Spring.
However the Coronavirus crisis started to impact trading on dealer forecourts in late February and, by mid-March it had caused retail activity to reduce by as much as 70% in some cases.
And of course shortly after that, trading stopped completely on 23rd March with a Government enforced shut down. All auction centres closed their doors on this day, as did nearly all of the retailers with unsold stock remaining behind closed gates.
Quite what this means once the markets are able to trade again is anyone’s guess. Book values are the main concern for most traders and dealers, fearing big drops in pricing from a point just after Christmas where prices were very strong and high indeed. If this happened then it would wipe millions of pounds worth of value off Dealer stocks, causing many to perhaps not re-open their doors at all. Indeed such a magnitude of book drops would also massively affect the balance sheets of the vehicle Leasing industry, creating a huge downturn in profits, jobs and ultimately surviving businesses. It is for these reasons that at XBG we believe values will drop, but not massively. Values must come down anyway, as they had been climbing ever higher following many months of successful trading since September 2019.
It does remain to be seen where values will end up, over the coming months the industry will find out; hopefully any reductions will not be too harsh, enabling business to resume once the lock down is lifted. Another word of caution is that it is likely to be the late plate/relatively new vehicles which will suffer the biggest book drops, as this has been the case anecdotally when the market retracts, the vehicles with an age profile of 5 years or older are less likely to have such big drops, certainly in £ terms and probably % too.
The truck and plant world has been somewhat decimated though, largely due to the absence of an export market with this world wide pandemic enforcing borders to be closed down. With dealers unable to export goods easily, sales of items are left to the home market only. With the absence of some bigger export buyers, bidding at plant sales especially the larger plant had already been on the low side, and for the foreseeable future this is likely to deteriorate further. Sales values for smaller to mid-size plant items predominately going into the UK market will be very much determined by how this enforced break effects the UK Construction market in the short to medium term.
Truck markets are slightly better with a bigger audience, although even here the lack of export opportunity is affecting sales of the older Euro 4 and earlier stock, especially desirable vehicles such as 6×4 Tractor Units and Tippers.
We are expecting by late summer the used markets across the board to have improved dramatically, with the usual summer slowdown in trading not happening this year. People will want to ‘catch up’, so we expect some good trading, once the full lock down is lifted. We personally anticipate a full release towards the end of June, but that is pure guess work based on known demographics around the world.
New Model Updates
With the current health crisis and with most Manufacturers on shut down, any new model releases have been delayed. That does not mean there will be no model launches going on later this year and, indeed several new vehicles have already been launched onto the markets this year.
New Landover Defender Finally Arrives
Following its Frankfurt Show launch back in September 2019, physical versions of the new Defender are finally starting to arrive in showrooms and with launch customers.
So far, trade and press reviews are outstanding, some going as far to quote this is the best 4×4 available. We are not quite sure about that claim, having not yet had the opportunity to drive one and, certainly the eye watering price list might cause some folk to think otherwise.
Van and other commercial versions are on the way too, although no residual value forecasting is yet available. It is no doubt a premium product though and, like the old model Defender, any quoted RV’s are likely to be on the conservative side.
Mercedes X Class Dropped
After just 2 years availability, Mercedes have quietly dropped their version of the Nissan Navara Pickup, the X Class.
No doubt sales figures have much to do with this decision but, the appalling state of the ‘lifestyle double cab pickup’ market must also have influenced Mercedes.
Indeed in Spring 2020, before the market closure, pickups of all manufacturer from the ‘lifestyle’ range were simply not attracting any interest from the trade, at any price. Work horse versions remain ok for the time being, particularly the Ford Ranger which still has a good following.
For our client stock of lifestyle pickups we are reverting to retailing them, through trusted partners, in an effort to derive some reasonable value from them. The process takes slightly longer but does provide far better results.
The next market update will appear later in the Spring when hopefully we have returned to normality or near normality. In the meantime from all of us at XBG please stay as safe as you can during these testing times for all, and do watch out for further Covid19 Blogs on our website.