When it comes to the Covid pandemic and the car industry, things can get confusing. Consider this: The way it looks, car prices have actually risen over the past year.
Does that sound unlikely to you? How can prices rise when no one is buying cars? Wasn’t the lockdown supposed to be the time when prices drop and you can strike a bargain?
Allow us to explain.
The end of stability?
For years, prices on the UK’s used car market had been pretty stable. Demand was excellent, supply was great and the increased professionalism of car dealers lifted the used buying experience to another level.
In fact, if anything, prices were slowly dropping.
When the first lockdown was announced, car sales initially fell precipitously. Over the course of March and April 2020, almost no one bought cars anymore.
We don’t mean that as a figure of speech. Turnaround literally dropped by over 90%.
So, with this in mind, surely, prices would have to drop as well, to entice consumers to start buying again?
Curiously, that’s not what happened.
The reason is probably that there were still enough people who had to buy, but not enough drivers wanting to sell. So, in an ironic twist of fate, although the demand was low, it was still higher than the even lower supply.
What’s more, those select few who did want to spend cash on a car completely stayed away from the new car market. And so, all available budgets went into used models, thus further depleting stock.
As the lockdown continued, those with a tight budget were even less willing to sell their old car. And so, the trend continued for a while.
So, will prices continue to rise indefinitely?
A lot depends on the developments over the next few weeks and months. Here are some things to consider:
- Gradually, people have been more willing to sell their cars again, partly motivated by good prices. This has narrowed the gap between supply and demand.
- The government are slowly lifting the ban on repossessions. As soon as the ban is gone, it could flood the market with a plethora of affordable used cars.
- The economic effects of Covid are making themselves felt. Increasing unemployment and reduced job security are making car finance harder to set up. It also means fewer people will be affluent enough to afford current price levels.
This is why experts mostly expect prices to drop again and return to their pre-pandemic levels.
That said, they’ve been wrong before!
One thing’s for sure: At Concept Car Credit, you will get a great and fair price – alongside car finance even for those on a shoestring budget.
Browse our online salesroom for our wide range of cars on offer. And if you need car finance, contact us now at 0800 093 3385 to get a free quote.