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Used car price increases to continue into Q3, VRA predicts

Date: 21 June 2021   |   Author: Sean Keywood

Significant rises in the price of used cars are expected to continue into the third quarter of this year by the Vehicle Remarketing Association (VRA).

The organisation's chair Philip Nothard said valuations experts and dealers were united in the view that prices still had room to grow, despite almost double-digit percentage increases having already been seen from the market in recent months.

Nothard said: "We recently held a webinar with experts from Auto Trader, Cap HPI and Cazana, and the general consensus was that the used car sector has never seen anything like the current conditions. 

"We are in a kind of 'perfect storm' where stock is in very short supply, demand is high, and buyers are ready to spend freely.

"This is having all kinds of effects across the market. It is not simply that prices are rising but that stock turnaround is very fast and there are also signs that dealers are finding that they can increase margins.

"In fact, there is a general view that dealers could be even 'braver' when it comes to higher pricing, and this is something that we expect to see happening into Q3."

Despite the expected continuing rise in prices, Nothard added that the VRA did recognise the situation could not continue.

He said: "At some point, we will see a levelling off of values as supply increases and demand normalises, although it does not appear to be imminent. The question is whether we will see a noticeable readjustment in values or something more subtle at that point.

"The danger is, of course, that dealers could be left holding stock that is falling rapidly in value but, so far, there is simply no sign of that occurring."