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Used car market reaching supply tipping point, says Glass's

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The used car market is starting to reach the long-predicted tipping point into oversupply with values coming under pressure as a result, reports Glass's.

Rupert Pontin, head of valuations at the pricing guide, said the volume of vehicles at auction had already increased 3.7% in 2016 and that a wide range of models were starting to fall in value as a result.

"We have been predicting this development for a long time and, if anything, the robustness of the used car market has meant that it has happened later than expected but we are now definitely moving into a period of general oversupply.

"This is something that we expect to continue throughout the rest of the year and into 2017 as increasing numbers of vehicles come to market. A large number of these are, of course, one-to-three-year-old returns from the ongoing boom in new car PCPs.

"We are certainly not going to see a sudden collapse in values, we believe, but there will be a slow decrease as volumes gradually increase."

However, Pontin pointed out the decreases in value would not be uniform across the market, with the falls concentrated on vehicles that are available in volume.

"What new car PCPs have done is bring a range of models into affordability," he said.

"For example, entry-level models from the prestige German manufacturers have been very popular on PCP and their values will certainly be under pressure over the coming months.

"However, there are other vehicles - niche models and those that are simply unavailable in high volumes - that we expect to see stay relatively firm."

The unknown factor in terms of the rest of the year was the EU referendum vote in June, Pontin added.

"If the UK votes to leave the EU, all bets are off and it is very difficult to predict the potential effect it could have on the new and used car markets. However, our general view is that it would be negative simply because of the high degree of uncertainty."

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