WLTP named as cause of inflated used car prices
23 October 2018
Author: Sean Keywood
The introduction of the new WLTP vehicle testing system has had a knock-on effect of increasing used car values, according to Shoreham Vehicle Auctions (SVA).
The firm says that following a 20.5% decline in new car sales in September, as reported by the Society of Motor Manufacturers and Traders, there has been a noticeable increase in franchised dealer activity within the used car buying sector.
WLTP is designed to provide more realistic fuel economy and emissions figures, but has been blamed for vehicle supply problems as manufacturers adjust to its partial implementation last month.
SVA managing director Alex Wright said: "Franchised dealers are quite simply short on stock and are seeing the used sector as a solution to improve their profitability following lower new car sales in 2018.
"Certain brands are finding it a challenge to source new vehicles post-WLTP and their franchised dealers are searching online and physical auctions country-wide for sufficient used stock for their forecourts."
According to SVA, 2018 has seen an increased number of franchised dealers buying good quality two and three-year old ex-fleet cars to keep their used forecourts full, and this supply is also being affected by WLTP as fleets are being forced to extend lease terms due to difficulties in sourcing new cars.
Wright said a further result of this is that with dealer groups buying more and paying more for nearly new and ex-fleet stock, independent dealers are finding it hard to compete - they are having to temporarily shift their focus to cars of a lower specification at a lower price.
Wright said: "What all this has served to do is artificially inflate prices within the used market. Prices at auction can increase very easily and it takes time for the books to readjust.
"Everyone in business likes a seasonal trend for comfort and WLTP has thrown that out for now.
"I have no doubt the market will settle but we're of the opinion that won't be until the next registration introduction in March next year."