Most dealers have performed better than expected during the first full month of trading in England post lock down.,
That’s the view of dealer analyst Mike Allen at Zeus Capital who said the key areas of pent up demand had been in used cars and aftersales, with private new car demand also “reasonable” given the economic backdrop.
“The strength of the used car market has also surprised us coming out of lockdown. The key question, similar to that in the new car market, is how long this pent-up demand is likely to continue for. We believe it is possible that any incremental pent-up demand could come in the form of affordable used cars versus more expensive options in the new car market.
“It is clear that the lack of activity during the second half of March, with less part-exchange volumes realised has restricted supply in some segments of the market and kept prices high, especially with pent up demand emerging post lock down.
“An additional important consideration that has hindered supply is the closure of auctions being closed with many being slow to return to full capacity. The source of the pent-up demand could well have come from increased savings during lockdown and a newfound nervousness using public transport for essential travel to work.”
There has also been pent up demand in aftersales despite a lot of capacity being open during lock down for essential workers. Anecdotally, we believe most of the labour resource that was on furlough have now returned in this important revenue stream for dealers.
Allen said it was too soon to issue a forecast for any listed group that the first real indicator of where the market is going would come after the plate-change.
“We believe it is too early to re-instate forecasts for any dealer at present, although a logical point to consider this is likely to be early October when we have an understanding of how the key September market has performed in the “new normal” post COVID trading environment.”