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Lockdown-3
Unsurprisingly, the latest national lockdown has affected new car sales. Registrations fell 39.5% compared to January last year, according to figures released by the Society of Motor Manufacturers and Traders (SMMT).
The latest indications from the Government suggest a gradual unlocking of the economy once schools have reopened. The Government have already confirmed this will not be earlier than March 8. When schools start reopening, they will reopen in phases enabling student COVID-19 testing.
Following the schools reopening, it remains unclear which sectors of the economy will reopen first, whilst some businesses may not reopen until April at the earliest.
It will be damaging for new car registrations if dealerships do not physically open in March. Usually the largest registration month of the year, March is a pivotal month for the new car market. However, with dealers physically closed in January and February, the outlook for March was already bleak.
The used car market also suffered in January with dealers limited to offering ‘click and collect’ services. As a result, wholesale activity has been relatively poor, with dealers seldom needing to replenish their stock.
The Glass’s editorial team watched over 20 online auction sales in January. They report that despite low numbers of auction entries, conversion rates were only around 50%. Overall, the percentage of cars sold at the first time of asking was 77.8%. This result is over nine percentage points lower than last year.
Looking ahead to the rest of the year it is difficult not to be pessimistic about the new car market. A prediction of around 2 million cars seemed sensible just six weeks ago. This prediction is already at risk with March’s usual high registration total under threat. Glass’s expects an increase in used car activity when Lockdown-3 ends, it may not be quite as buoyant as when Lockdown-1 ended but should help dealers recover some of the ground lost in quarter one.