The current health of the used car market could deteriorate rapidly in Q4 due to a combination of emerging issues, according to the Vehicle Remarketing Association (VRA).
The impact of the Budget on October 30, falling consumer confidence and larger defleet volumes are considered risk factors.
Marcus Blakemore, chair of the trade body’s Industry Trends Sub Committee, said: “The government has spent a lot of time warning that there are hard times ahead and tax rises are widely expected in the Budget.
“This could dramatically reduce the propensity for people to make major purchases such as cars.
“At the same time, there are larger defleet volumes quickly coming down the line meaning that the market could tip into oversupply, putting pressure on values and prices. It’s not quite a perfect storm but there is potential for the current, relatively upbeat situation to change before the end of the year.”
The higher volume of vehicles entering the market would also include an increased proportion EVs.
“When talking about the EV sector, it’s important to caveat that uptake of EVs continues to rise quickly, and that the market now appears stable, certainly compared to the convulsions of the last couple of years. Some dealers are now having a relatively good time selling EVs.
“Despite this, we continue to hear concerns from some independent dealers about EV volumes. They are aware that stock availability of petrol and diesel is already starting to decline thanks to company car buying trends and the ZEV Mandate. They feel neither they nor their customers are prepared for electrification.”
The VRA has suggested there may still be a possibility that the positive market could continue into Q4.
“While there are an unusually high number of risk factors present, it is not inconceivable that the government has overmanaged negative expectations of the Budget and that once the new measures are announced by the Chancellor on October 30, consumers feel relatively positive and soak up increased stock volumes.”