Buyers Now Spending More on Their Next Cars
It can be pretty amazing just how quickly market forces change buying habits, and the car business certainly going through some changes at the moment. It's now coming to light that premium car brands are dominating online searches for cars at the moment as buyers look to more expensive cars than they were considering only a short while ago.
What's going on?
When something comes along completely out of the blue like the coronavirus pandemic, you’d be in a great position if you could predict how things would pan out over the coming weeks and months. Let's be honest though, even the virologists, behavioural psychologists, epidemiologists and economists have had a pretty abysmal record of predicting how Covid-19 would work out, so how would mere car dealers and private sellers have been expected to know how the pandemic would affect the market?
Just six months ago, the average price of used cars being sold fell to more than £2,000 below where they were in March and April 2019. Now, however, it turns out that used car prices have not only recovered to pre-Covid levels, in August they rose to a level more than £1,100 higher than the same month a year earlier.
According to online sellers, this increase in average prices is being driven by people choosing more expensive models than previously, with the likes of Mercedes-Benz, BMW and Audi now dominating online searches for used cars.
No flash in the pan
This isn’t some one-off flash in the pan, however. This trend started back in June when the government started to relax some of the lockdown rules to try and start getting the economy out of its enforced hibernation, and it's not showing any signs of slowing down.
It isn’t that sellers are asking more for their cars because they're not. This rise in average prices is purely down to buyers choosing more expensive models more often than they have been doing previously.
The increase in the average price isn’t totally down to premium brands though, as it appears another section of buyers are starting out looking at the prestige German brands online and are then settling for newer versions of mass-market volume cars like the Vauxhall Corsa.
Why are we spending more?
At the moment we can only speculate about the reasons for this dramatic shift in buying behaviour, but you don’t have to be a nuclear physicist to have an idea of what's going on. A lot of people are understandably shunning public transport and going back to cars as a more Covid-safe means of commuting and getting around generally, and many have more to spend than they might have had in the past.
Staying in more due to the restrictions has left some people with money in their pockets, and those who used to commute to the workplace on a daily basis but are now working from home no longer have the expensive train, bus or tube tickets to shell out for.
Combine this extra disposable income with record-low finance rates and it's not difficult to see why buyers are looking to get something a little more upscale than they might have done before this hideous virus came along to throw our normal lives up in the air.
Just as it's hard to say if the change in working practices to many, many more people than we've ever seen before working from will be permanent, we don’t know if the car market has now changed forever too. It could all go back to how it was as quickly as changed, but don’t bet on it.
What will it mean for buying and selling used cars in the coming months and years? Who knows? The only thing that's predictable at the moment is the sheer unpredictability of everything.
