Coronavirus and Brexit making long-term planning difficult, VRA warns
28 September 2020
Author: Sean Keywood
The coronavirus pandemic and the potential effects of Brexit are making it almost impossible to plan beyond the short term in the remarketing sector.
That's according to the Vehicle Remarketing Association (VRA), which says that a currently booming market in used vehicles is arguably obscuring potential dangers that lie ahead.
Chair Sam Watkins said that the current widely-reported trend for rising used vehicle values during autumn was highly unusual.
She added: "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."
According to Watkins, the high degree of current uncertainty is unnerving for an industry that is historically very good at predicting and forecasting.
She said: "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."
Watkins added that some upcoming events would have an almost definite impact on vehicle supply.
"As an example, 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," she said.
"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.
"This could well be accompanied by a wave of early terminations and short-term contract extensions on personal leasing. However, we just don't know when this will happen or the extent.
"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."
Watkins said the situation was likely to continue until a coronavirus vaccine became widely available, and Brexit details were better known and understood.
She said: "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."