With Brexit trade deal negotiations still unresolved at the time of writing, and COVID-19 an ever-present danger, the outlook for the new car market in 2021 looks gloomy. The prospect of an import tariff on new cars coming from the European Union, could have a severe impact on sales rate. Enhanced Customs processes and other red tape will also hamper stock availability. Stock issues could be exacerbated should European manufacturers lower their UK sales expectations and reduce the production of right-hand-drive cars.
The challenges for the new car market do not end there, with the prospect of further lockdowns a possibility as COVID-19 continues to make its presence felt. There is hope on the horizon now that a vaccine is beginning to be rolled-out, however, it will take several months to administer. Consumer confidence has taken a knock this year and the threat of more redundancies could also negatively impact new car sales.
On a more positive note, regardless of the outcome of free-trade talks and the fight against COVID-19, Glass’s expects registrations in 2021 to be higher than this year, now that dealers have developed ‘click and collect’ and other delivery strategies. During the latest lockdown, in November, registrations fell by 27.4% compared to last year, which whilst severe, was a vast improvement on the 97.3% and 89% drops in April and May during Lockdown-1.
The outlook for the used car market is not gloomy at all. In fact, Glass’s is reasonably optimistic that 2021 will be strong. This year has not been without its challenges but the used car market has proven to be very resilient, helped by the British public’s desire to change their cars, no matter what, so a level of demand remains throughout the toughest of times.
Add to that the prospect of new car price increases coupled to the potential for new car supply constraints and used car demand could rise further, further underpinning residual values. Glass’s expects the used car supply and demand dynamic to be reasonably balanced. There is the prospect that a volume of lease cars that were previously extended will come back into the market next year, which could put extra pressure on remarketing channels, however fresh extensions caused by new car supply issues and economic uncertainty will likely balance that. Consequently, Glass’s expects no crash in used car values in 2021.