Brexit fears affecting sales of high value used cars, says Glass’s
Potential buyers of higher value used cars appear to be holding back until the outcome of the UK’s referendum on its membership of the European Union is known, according to vehicle data provider, Glass’s. The company is increasingly hearing anecdotal evidence from dealers that cars priced over £15,000 are struggling to sell; it suggests the potential withdrawal of the UK from the EU could be the cause.
Rupert Pontin, director of valuations, said: “We have been tracking data for a while and it shows that demand for cars in this sector is falling and that they could be tricky to sell unless the colour and spec were right. Originally, we attributed this to oversupply and that is undoubtedly part of the problem.
“However, we have started to receive anecdotal evidence from dealers in recent weeks that the oversupply issue is undoubtedly being exacerbated by buyers adopting a ‘wait and see’ attitude to the EU referendum before buying a relatively high value car.
“Our reading of the situation is that these buyers are more affluent individuals who are concerned about the potential financial uncertainty that could follow a Brexit vote and don’t want to commit to higher value purchases until they know whether we leave or stay.
“Obviously, the effect is not uniform across all dealers and some will still be doing well in this sector but we also know of others who are being affected quite badly.”
Pontin said that the market was likely to recover quite quickly with a remain vote but that the effects of a Brexit would most likely be widespread uncertainty.
“In terms of the referendum, most of the dealers we talk to are adopting a ‘better the devil you know’ attitude. What they fear about leaving the EU is that they simply don’t know what the effects will be on the overall economy and therefore the used car market.”
Pontin added that the current used car market sweet spot appeared to be well below £15,000, with vehicles around the £7,000-£8,000 part of the market selling rapidly.
“Cars in this area of the market are flying out of auctions at the moment, especially if they are in a good colour and have a strong specification.”