The new and used car markets are returning to pre-pandemic dynamics more quickly than expected but there are reasons to remain cautiously optimistic, dealers have been advised.
During the “Optimising The Year Ahead” webinar held by Assurant, Doctor Christof Engelskirchen, chief economist at Autovista, told more than 100 delegates that a move was underway back to a situation where there was oversupply and tight demand.
“I guess what many of us are a little surprised about is how quickly we are moving back to pre-pandemic automotive industry dynamics. It has come faster than many people have expected.
“We're returning to a market where there is increased supply and limited demand but there is cause to stay positive and optimistic. So, while car values might be falling as a result, consumer confidence and business confidence are trending up, and the industry needs to react appropriately to this changing situation throughout the year.”
Christof explained that values had fallen so quickly in recent months because the pent-up demand supporting them over the past four years had come to an end.
“There was an element of undersupply supporting car values that is going away quickly. On top of that, rising interest rates and a higher cost of living is also not helping. People are thinking twice and just maybe delaying car buying a little bit.”
The market for electric vehicles (EVs) remains especially elastic, he said, and had suffered the biggest drop in values.
“This is the result of a number of factors - the lifecycle depreciation you’d expect and which is already a bit stronger for this technology but also recent price cuts that are happening across manufacturers. Some have started a price war which is washing through and affecting what you can command for a used vehicle which is 2, 3, 4 years old and was originally priced much, much stronger.
“Another reason why they are coming under pressure is because EVs are moving into the mass used car markets but we don’t appear to be ready to absorb these cars yet. The demand just isn't there.”
There was a strong opportunity for dealers to maximise their business during 2024 by providing the best possible consumer journey, especially looking to an improved online presence, Christof added.
“It’s all about boosting the customer experience and loyalty with a seamless buying, leasing, owning and returning process, which is similar to something that we are seeing OEMs try to capitalise on when they implement the agency model.”
This was the third in a series of webinars held by Assurant in recent months, explained Damian Tyler, European business director and commercial director, which were becoming increasingly well-attended.
“These webinars are a really useful and effective way to keep our dealer community and others interested in motor retail well-informed about the latest trends developing in what remains a fast-moving UK car market.”
A highly-regarded automotive industry thought leader, Dr Christof Engelskirchen holds degrees from the European Business School and the University of Pittsburgh.
Assurant is a Fortune 500 company that works extensively in the automotive warranty sector in the UK, Europe and across the world, partnering with businesses ranging from major motor manufacturers to small independent dealers.
About Assurant
Assurant, Inc. (NYSE: AIZ) is a leading global business services company that supports, protects and connects major consumer purchases. A Fortune 500 company with a presence in 21 countries, Assurant supports the advancement of the connected world by partnering with the world’s leading brands to develop innovative solutions and to deliver an enhanced customer experience through mobile device solutions, extended service contracts, vehicle protection services, renters insurance, lender-placed insurance products and other products.
Learn more at assurant.com.
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