In a recent interview with Car Dealer Podcast, motoring industry expert Phil Nothard, who serves as the insight director at Cox Automotive, the owners of Manheim Auctions, discussed the surprising drop in used car prices and its impact on the motor trade industry. This development, as reported by Car Dealer Magazine, has sent "waves across the sector" and presents both challenges and opportunities for car dealers.

According to Nothard, used car prices have fallen by a significant 13.7% since April, with expectations of further drops, around 4%, in November. This downturn in prices has coincided with an increase in used car supply, leading to a more challenging market environment, particularly for cars priced above £6,000. Despite this, there are still pockets of strength in the market, notably in the sub-£6k category.

Nothard expressed concern about the uncertainty surrounding the continued decline in used car prices, with some dealers implementing "buying bans" to manage their inventory. While he believes that the market will remain challenging for the rest of the year, he also anticipates that used car dealers will need to start replenishing their stock in preparation for the crucial first quarter.

Cox Automotive predicts a "slight uplift" in used car prices next year but warns that 2024 will mark a "key point of change" for the sector. This prediction is based on the impact of reduced new car sales during the pandemic, which will affect supply in 2024. Cap HPI also predicts a fall in supply matched by reduced demand, potentially softening the impact in the new year.

Nothard emphasises that the industry needs to remain calm and avoid panic, as continuous market instability could further drive down prices. He believes that opportunities exist in certain market segments and advises vigilance as the year comes to a close, suggesting that large dealer groups could quickly return to the market to stock up for Q1.

Despite the current challenges, Cox Automotive expects 2023 used car transactions to reach 7.15 million, representing a 4% year-on-year increase. However, this figure remains 3% below the 2010-2019 averages, indicating the market's adjustment to recent developments.

In conclusion, the UK used car market is undergoing significant changes, with unexpected price drops causing ripples in the industry. Phil Nothard's insights shed light on the challenges faced by car dealers, as well as the potential for recovery in the coming year. Remaining calm and strategic in their approach will be crucial for businesses navigating this evolving landscape.

Attribution: This article was originally published on cardealermagazine.co.uk. For more details and the full interview, please visit their website.