Are we Headed Towards a More Volatile Market in Q4?
Cap hpi have stated that as the year progresses towards its ending months, the motor trade market may experience some turbulence in the form of fluctuating prices and stock availability. Indeed, James Dower, Senior Black Book editor at cap hpi said;
“We do predict that stock availability will change dramatically moving through October as significant de-fleets begin to hit remarketing channels and, as a consequence, believe that prices will fall as the month progresses.”
Overall, it seems as though the market place has been stead-fast in remaining strong and fairly stable. September’s statistics indicated that there was a decrease in only 0.2% amongst price reductions to vehicles that have averages 60,000 miles, however Vehicles that have become prevalent in the last few years such as electronic cars have seen a price reduction of 1.4% in the month of September alone.
The sudden drop in price for electronic vehicles is nothing to be worried over just yet. As a fairly new product, there is always going to be volatility within the market place until electric cars establish a firm position within the automotive industry. It just seems as though for the moment, electronic cars are struggling to settle, which is understandable given that the end of the year generally sees price drops anyway.
Dower also noted “Historically, we move into a far more turbulent marketplace in the closing months of the year and, if history repeats itself, we are likely to see average monthly drops of more than 2% for the remainder of the year as high levels of stock hits the market.”
So why do the ending months of the year typically lead to a price reductions within the motor trade industry?
Well, there is no concrete answer to this, prices fluctuate daily, stock numbers change and the used car market peaks and spikes. Though, logically speaking, with Christmas around the corner it is predictable that people would be less willing to fork-out for a new car when they already have to deal with the single most expensive month of the year. Indeed, studies from the Telegraph last year estimated that the average UK family will spend £800 celebrating Christmas, with 35% of people borrowing money last year to survive the festive period. As you would expect, the month of December generally leaves pockets feeling empty for the following few months.
So, it is safe to assume that we should be expecting a drop in automotive trade prices in Q4, and the marketplace should experience a bit of turbulence and volatility, however there is nothing to suggest that the motor trade industry will crash and burn. It is instead safer to suggest that whilst prices may drop slightly in the last Q of the year, things will start to pick up again fairly soon, leading to a healthy market place for the up and coming year or 2017.