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The Independent Automotive Aftermarket Federation

Diesel used cars help set record prices

Date: Thursday 23 July 2020

Diesel used car prices rise by 31.3% as demand for older vehicles in the used car market outstrips supply.

Aston Barclay says it recorded its highest ever used car prices in Q2 as demand exceeded supply during and after lockdown.

During Q2 older used cars were the most in demand with stock between 55-78 months rising by 20.6% and stock between 79 and 126 months rising by 13.1%.

Diesel used cars rose by 31.3%, which was an all-time high at Aston Barclay.

Meanwhile, on the back of that strong diesel market, fleet prices rose 9.6% with Aston Barclay selling cars online for fleet vendors online throughout the pandemic lockdown.

The increase in demand for older used vehicles is reflected in new data from Indicata, which reports that six to 12-year old cars helped contribute to a 3.7% rise in sales in June 2020 compared with June 2019.

Sales of cars aged 6-9-years old and 9-12-year old rose by 12.6% and 8.6% respectively, while the 0-3-year old sector fell by 7.1% mainly down to a shortage of stock in the sub 12-month sector.

SUVs, sports and luxury cars continue to be in high demand while mini and small car sales fell by 4.7% and 3.6% respectively.

Since dealers opened on June 1, used car sales have reached a seven-day rolling average of 12,000 per day which compares with the 10,000 per day dealer restocking rates. This has led to dealers being short of roughly 125,000 used cars against April levels, which has been hampered by wholesale stock still stuck in compounds or parked on airfields.

Indicata suggests that this has weakened supply into the wholesale market which has meant demand has continually exceeded supply. With prices rising by just 0.7% in June it suggests many dealers could be brave and increase prices of stock on their forecourts.

Data from Aston Barclay shows that alternative fuel vehicles (AFVs) rose again in Q2 by 7%, but it says that the market should be cautious about used prices of hybrids going forward.

In Aston Barclay’s recent customer poll, 32% said their go-to fuel type of choice currently was diesel, 26% petrol and 41% hybrid and EVs.

When asked what their preference would be in 12-months’ time hybrids and EVs rose to 63%, while diesels fell to 21%, reinforcing the speed at which the fuel landscape is predicted to change.

Regarding the current stock shortage, Aston Barclay saw more supply coming into the market during the first two weeks of July, while finance houses are working through a backlog of collections following cars coming off fleet during the lockdown.

Aston Barclay expects this gradual rise in volumes to continue through to October when the Covid-19 enforced lease contract extensions reach the used market, which suggests prices may well calm down over summer.

Businesses are being advised to review their vehicle remarketing strategies to ensure they are prepared should lockdown measures be reintroduced.

Jonathan Holland, managing director of Adesa UK, is urging fleets and car retailers to deploy digital remarketing strategies which will help them avoid being unable to dispose of vehicles if lockdown rules are ever reapplied.