With car showrooms remaining closed until at least April 12th, March’s plate change is being severely impacted. Whilst ‘click and collect’ is possible, evidence from January and February’s new car market suggests March’s potential registration deficit will be unrecoverable in 2021.
In March 2020, Lockdown-1 brought an early end to trading with dealerships forced to close on the 23rd, with registrations down over 200,000 compared to the prior year. There were other COVID factors at play affecting the market other than the lockdown, but a reasonable proportion of the deficit was due to dealerships closing for business. Although click and collect services are available this year, the last few months have reminded us that a significant proportion of the UK public is not ready to buy big-ticket items in this way. Once again we should expect a large downturn in March’s registration activity compared to even last year, and compared to a “normal” year the gap will be huge.
Throughout much of the pandemic, the used car market remained resilient, although, through this latest extended lockdown period, activity has been lack-lustre. With retail activity slow, again only conducted by click and collect and over the telephone, dealers have not needed to replenish stock as regularly. As a result, wholesale trading has been poor with low conversion rates and subdued hammer prices. The percentage of cars selling on the first time of asking at auction in February was 76.5%, 1.3 points lower than in January, and over ten percentage points lower than February 2020.
Now that dealerships have a clearer indication of when they can reopen, we are expecting a significant uptick in activity as dealers begin building forecourt stock. That said, at the time of writing (the second week of the month) there has been no significant improvement. There currently does not appear to be an abundance of stock available in auction channels, so if the activity does increase it will likely lead to a strengthening of hammer prices. However, it remains to be seen whether any fresh stock has been held back recently, with vendors waiting to benefit from better trading conditions. If stock levels do increase it will be good news for dealers.