Large volumes of ex-daily rental to impact used car market

The Vehicle Remarketing Association has warned that the used car market could be impacted by a glut of cars coming off daily rental.

It said that large daily rental firms had postponed renewing fleets during the pandemic, but this could change soon.

“It seems very likely that at some point soon, there will be large scale defleeting from some major daily rental companies of vehicles that have been held for longer periods awaiting freer new car supply. This would follow on from the restructuring that we have already seen in that sector, especially among businesses being affected by dramatic loss of airport business,” said VRA chair Sam Watkins.

“Because values have been so strong, it is possible that this potentially sizeable wave of vehicles might simply be absorbed by the market but they could also act as a prompt for an overall realignment of values,” he said.

Generally, Watkins said that Coronavirus and Brexit meant that planning beyond the short term was “almost impossible” for remarketing sector.

“As has been widely reported, the sector is very, very busy and we are seeing highly unusual trends such as car and van values continuing to rise through the Autumn when they would normally be written down.

“However, those working within the sector are almost obsessively asking when this boom period will come to an end. There is a fear that there must come a point when the coronavirus crisis will really start to have a negative influence in terms of the impact of factors such as growing unemployment and the end of furloughing.

“Even if there is a soft economic landing from the pandemic, something that we are hoping the latest post-furloughing government measures announced by the chancellor will help provide, there are massive fears about the results of Brexit, largely because we still don’t know what effect it will have on the motor industry as a whole. There are just so many unanswered questions.

“For an industry that is historically very good at predicting and forecasting, this high degree of uncertainty is unnerving. It is almost impossible to plan beyond the short term. While we are all firefighting to handle current levels of business, there is also a definite fear that the situation could change very quickly.”

“It’s the lack of certainty and information that is stopping businesses within remarketing from planning. Really, we are waiting for these two major situations to be resolved before we can start to look ahead with any degree of certainty.”

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