There have been significant changes to the car market in recent years – really since the COVID-19 pandemic hit. And the used car market has not been immune.
It looks likely that the market will continue to be impacted by other emerging factors, from the war in Ukraine to the cost of living crisis being seen in the UK. Both of which have the potential to impact both the supply of new cars and the demand for changing vehicles.
Factors impacting the used car market
The availability and supply of new cars has greatly affected the used car market.
Wait times for new cars are at record lengths. In some cases, 6 months to a year. As a result of these uncertainties, many are holding on to their current vehicles for longer. Both out of caution and necessity. And this is having the inevitable knock-on impact on supply of used cars to the market.
With reduced supply, prices rise. One set of figures put used car prices at 31% higher in January 2022 than they were in 2021. But as we have moved into 2022, whilst still strong, used car values have started to decline. Leading many to comment that the value of used cars is past its peak.
We are also starting to see a reduction in demand for used cars. But despite this, figures from SVA, an auction firm, suggest the used car shortage means prices will remain high for the next 2-3 years.
Other factors which look set to impact the used car market in 2022 include
- disruption to new car supply due to the war in Ukraine
- the continued shortage of semi-conductors, which is not expected to be fully resolved until 2023. Causing ongoing disruption to new car supply
- the cost of living crisis currently being seen in the UK, and the impacts that this may have on buying behaviour and a likely reduced demand for cars
What implications could the state of the used car market in the UK continue to have on fleets
This is an ongoing issue, and one that your fleet is likely be familiar with depending on which point you are in your vehicle life cycle.
But we’d expect these implications to be ongoing areas of concern for fleets.
Less vehicle choice
If you haven’t already, you’ll likely be faced with less choice over the vehicles that you choose for your fleet.
The importance of maintenance
With extended life cycles of vehicles, vehicle maintenance will become more important. You’ll need to update your maintenance requirements and processes. Make sure you keep up to date with requirements such as MOT’s and services. This could add additional costs to your business. But is a vital step in managing the safety of your drivers and upholding your duty of care.
A push towards electrification
Some fleet managers are reporting a desire to move towards electric vehicles in light of car supply issues. The added pressures of all time high petrol and diesel prices may also factor into your decision making here.
Grey fleet safety
If you have people who drive for your business, who use their own vehicles, then you will need to also be mindful of this. Individuals may be forced to keep their vehicles for longer so may be running older cars which can present their own issues for safety. And with squeezes on household budgets, we may reasonably see less money invested in vehicle maintenance.
If you are reviewing your fleet insurance, then don’t hesitate to get in touch with us at Anthony Jones. We understand the current issues impacting fleet managers are wide ranging. But we are here to help ensure obtaining the right insurance for your needs is not one of them. Get in touch with our team of fleet insurance experts on 020 8290 9099 or email us at firstname.lastname@example.org.