Fleet News

Coronavirus and Brexit thwart used vehicle market long-term plans

queue of cars in auction lane

The remarketing sector says the ongoing impact of Covid-19 and uncertainty around Brexit are making planning beyond the short term "almost impossible".

The Vehicle Remarketing Association (VRA) believes that the record performances being seen in the used car and van market market are obscuring the potential dangers that lie ahead.

VRA chair, Sam Watkins, explained: “As has been widely reported, the sector is very, very busy and we are seeing highly unusual trends such as car and van values continuing to rise through the autumn when they would normally be written down.

“However, those working within the sector are almost obsessively asking when this boom period will come to an end. There is a fear that there must come a point when the coronavirus crisis will really start to have a negative influence in terms of the impact of factors such as growing unemployment and the end of furloughing.”

Watkins says that even if there is a soft economic landing from the pandemic, there are massive fears about the results of Brexit, largely because they still don’t know what effect it will have on the motor industry as a whole.

“There are just so many unanswered questions,” she continued. “For an industry that is historically very good at predicting and forecasting, this high degree of uncertainty is unnerving.

“It is almost impossible to plan beyond the short term. While we are all firefighting to handle current levels of business, there is also a definite fear that the situation could change very quickly.”

Major defleeting predcited

The VRA thinks that it is very likely that at some point soon, there will be large scale defleeting from some major daily rental companies of vehicles that have been held for longer periods awaiting freer new car supply.

Watkins said: “This would follow on from the restructuring that we have already seen in that sector, especially among businesses being affected by dramatic loss of airport business. This could well be accompanied by a wave of early terminations and short-term contract extensions on personal leasing. However, we just don’t know when this will happen or the extent.”

Watkins argues that this potentially sizeable wave of vehicles might simply be absorbed by the market but they could also act as a prompt for an overall realignment of values.

She also believes that the situation is likely to persist until a vaccine became widely available for coronavirus and the details of Brexit were better known and understood.

“It’s the lack of certainty and information that is stopping businesses within remarketing from planning,” she said. “Really, we are waiting for these two major situations to be resolved before we can start to look ahead with any degree of certainty.”

The VRA represents companies involved in all aspects of remarketing used cars which between them handle, sell, inspect, transport or manage more than 1.5 million used vehicles every year.
 

Click here for remarketing best practice and procurement insight

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