BLOG: My worry is what goes up must come down

The shortage of new vehicle supply has pushed consumers and subsequently dealers towards used vehicles.

This has had an obvious impact on the supply and demand dynamics that directly impact used vehicle values.

Across the industry, we are seeing values increasing daily. This is great news for inventory owners who would traditionally be grimacing at sales values in May, which in the auction calendar is normally one of the toughest months of the year for conversions and prices.

However, for those buyers urgently seeking to replenish their forecourts, the phenomenal increase in prices is proving to be a real challenge.

It’s extremely difficult to accept that a vehicle that was £8,000 in March could now cost £9,000. My worry is that the adage of “what goes up must come down” will ring true and seeing as, in some cases, we’ve seen values increasing by circa 20%, a balancing monthly depreciation level of 5% could bite, which will have a significant impact on dealer vehicle write-downs and subsequent profits or losses.

The question is whether this is likely to occur and what will it look like.

Cliff Deller is a remarketing consultant and a former group used car director with Inchcape UK.  This blog is an extract from a briefing from the Vehicle Remarketing Association (VRA) issued  on 8 June.