Will the car market crash?
Discussion
I think all the while there is a shortage of new cars and the government is printing money like it is going out of fashion I cannot see it crashing. It will be interesting to see if the Furlough money millions of people are still being paid will be switched off at the end of September.
It really depends on what is causing the rise.
If its lack of supply due to production issues, i.e. wait times for new cars then once that is sorted out it will likely correct itself eventually but whether it will be a crash or a gradual decline in prices due to the supply starting to outstrip the demand remains to be seen.
If its people not buying new cars due to increased costs of them or other factors like working from home more etc then it might prop the market up and continue to be high and therefore become the norm.
The day of the cheap lease deals seems to be gone and combined with many doing less miles overall, I wonder if people can justify brand new cars anymore, especially considering what they cost.
In summary, I have no idea
If its lack of supply due to production issues, i.e. wait times for new cars then once that is sorted out it will likely correct itself eventually but whether it will be a crash or a gradual decline in prices due to the supply starting to outstrip the demand remains to be seen.
If its people not buying new cars due to increased costs of them or other factors like working from home more etc then it might prop the market up and continue to be high and therefore become the norm.
The day of the cheap lease deals seems to be gone and combined with many doing less miles overall, I wonder if people can justify brand new cars anymore, especially considering what they cost.
In summary, I have no idea
ArthurLee said:
It really depends on what is causing the rise.
If its lack of supply due to production issues, i.e. wait times for new cars then once that is sorted out it will likely correct itself eventually but whether it will be a crash or a gradual decline in prices due to the supply starting to outstrip the demand remains to be seen.
If its people not buying new cars due to increased costs of them or other factors like working from home more etc then it might prop the market up and continue to be high and therefore become the norm.
The day of the cheap lease deals seems to be gone and combined with many doing less miles overall, I wonder if people can justify brand new cars anymore, especially considering what they cost.
In summary, I have no idea
Have to agree, my thoughts!If its lack of supply due to production issues, i.e. wait times for new cars then once that is sorted out it will likely correct itself eventually but whether it will be a crash or a gradual decline in prices due to the supply starting to outstrip the demand remains to be seen.
If its people not buying new cars due to increased costs of them or other factors like working from home more etc then it might prop the market up and continue to be high and therefore become the norm.
The day of the cheap lease deals seems to be gone and combined with many doing less miles overall, I wonder if people can justify brand new cars anymore, especially considering what they cost.
In summary, I have no idea
Pandemic, people at home thinking life is too short or bored in furlough!
Business loans/furlough.
The potential end of petrol cars and the last chance to own their dream car?
Lack of new car availability.
Maybe people seeing cars as an investment with QE meaning inflation and or savings getting bugger all interest?
There are lots of things going on in the used car market - but I think new car supply at the top of the chain is the biggest issue sustaining higher used prices. I personally feel that increased used car prices are here to say.
Pre-pandemic, a "normal" year of new UK car registrations was about 2.1-2.3m (peak of 2.7m in 2016).
1.6m new cars were registered in 2020, down 0.5m on 2019 for pandemic-related reasons. It's almost inevitable that this decline at the top of the supply chain will impact on what have for many years been low used car prices in the UK.
Recent SMMT forecasts suggest we won't see new car sales reach 2005-16 average levels of 2.3m sales in 2021, nor in 2022. Cumulatively, this means there will probably be c.1 million fewer 0-3 year old cars in the system sometime during 2021-22 than there might have otherwise been. Overall demand might be down slightly for reasons like business travel, but these currently seem outweighed by the supply loss.
New car prices have been increasing due to the shift to electric, hedging for customs changes (Brexit) and spreading fixed costs over few new sales.
In addition, some businesses appear to be capitalising on structural changes (e.g. shift to online buying) by offering strongly for stock. These sorts of factors may also be reinforcing prices for now.
Pre-pandemic, a "normal" year of new UK car registrations was about 2.1-2.3m (peak of 2.7m in 2016).
1.6m new cars were registered in 2020, down 0.5m on 2019 for pandemic-related reasons. It's almost inevitable that this decline at the top of the supply chain will impact on what have for many years been low used car prices in the UK.
Recent SMMT forecasts suggest we won't see new car sales reach 2005-16 average levels of 2.3m sales in 2021, nor in 2022. Cumulatively, this means there will probably be c.1 million fewer 0-3 year old cars in the system sometime during 2021-22 than there might have otherwise been. Overall demand might be down slightly for reasons like business travel, but these currently seem outweighed by the supply loss.
New car prices have been increasing due to the shift to electric, hedging for customs changes (Brexit) and spreading fixed costs over few new sales.
In addition, some businesses appear to be capitalising on structural changes (e.g. shift to online buying) by offering strongly for stock. These sorts of factors may also be reinforcing prices for now.
Hard to know what to think.
https://www.cnbc.com/2021/05/12/the-global-chip-sh...
From same news outlet:
https://www.cnbc.com/2021/06/08/goldman-disruption...
https://www.cnbc.com/2021/05/12/the-global-chip-sh...
From same news outlet:
https://www.cnbc.com/2021/06/08/goldman-disruption...
georgeyboy12345 said:
In that "how will the coronavirus affect used prices" thread that was made in GG last year, many people were predicting at the start that used car prices will crash and they have done exactly the opposite.
I think that - more than anything - proves how pointless this guessing game is.Logically, it did make sense that the market would crash during the last year. Lots of people on furlough, lots of businesses struggling to survive during lockdown, lots of people WFH and told to stay at home - hence not needing cars so much etc. etc.
The fact that car prices shot up kind of proves that nobody has a clue what will happen with prices in the future!
jimPH said:
Hard to know what to think.
https://www.cnbc.com/2021/05/12/the-global-chip-sh...
From same news outlet:
https://www.cnbc.com/2021/06/08/goldman-disruption...
What's happening to some extent if that if customers can't get one chip, then they don't need all the others that would have been used - you can't realistically part assemble printed circuit boards. So stuff suddenly becomes available. I think there's a good chance that once everyone is swamped with devices they can't use then the market will implode.https://www.cnbc.com/2021/05/12/the-global-chip-sh...
From same news outlet:
https://www.cnbc.com/2021/06/08/goldman-disruption...
For cars, I guess the same must be happening to every parts supplier if vehicles are being built at a much reduced rate.
davek_964 said:
I think that - more than anything - proves how pointless this guessing game is.
The fact that car prices shot up kind of proves that nobody has a clue what will happen with prices in the future!
Agree , my opinion is there is a two fold issue, there are people with MORE money available to them having perhaps worked from home/saved on eating out/leisure trips/holidays who perhaps for the first time are shopping for something outside their normal remit. Maybe Mr Mondeo man is now Mr Mx5 man..perhaps these people have also been influenced by all the talk of cars as investments.The fact that car prices shot up kind of proves that nobody has a clue what will happen with prices in the future!
There are also people who have had additional money prior/during COVID that would normally have gone into stocks and shares but is instead going into a physical asset.
Then there are those with LESS money as a result of COVID who are perhaps selling reluctantly which makes them hold out for the highest price they can get.
Lastly let's be fair there are some real chancers out there with some of the asking prices for cars which have been for sale for months or in some cases close to a year are hilarious. However to the untrained eye this can still be interpreted as cars going up leading to the I must jump on that band wagon feeling!
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