Q4 car market “likely to set tone for 2022” says Startline Motor Finance

07 Sep 2021

The fourth quarter used car market looks likely to set the tone for the 2022 as the sector enters what Startline Motor Finance describes as “the real post-pandemic economy.”

Paul Burgess, CEO, said that the next few months would bring a number of economic headwinds – notably the end of furloughing – but there would also be potential benefits, including the easing of the semiconductor shortage.


He explained: “For some time, we have all been working in a pretty successful used car market created by highly unusual and sometimes artificial circumstances. However, it is now possible to see definite signs of that situation coming to an end in Q4.


“This doesn’t mean that the market is set to fall. In fact, we believe 2022 will remain relatively buoyant but we are very likely to see a scene emerging that will much more closely resemble business-as-usual.


“The two big factors here are the ending of government pandemic-based economic support to a major degree and the slow normalisation of supply chains meaning that new car sales will start to pick up.


“Arguably, we are now entering the real post-pandemic economy. The supply and demand trends that we are seeing are the ones that will probably come to represent the new normal for the used car sector in 2022.”


Paul said that there were several macroeconomic and social factors that were difficult to predict and which could have an impact on demand for vehicles.


“We’re likely to see an unusual employment situation persist for a little while where unemployment is quite high but wages are rising, too. It is tricky to understand how and if this will ultimately impact on car buying or how quickly it will resolve.


“It’s also probable that we’ll begin to get a clearer picture of the longer term impact of the pandemic on how people live and work. For example, we’ll start to find out how much less travel there will ultimately be as a result of home working.


“Finally, there is the chance of Covid reasserting itself before Christmas. Although the government is likely to be highly resistant to further lockdowns, very high levels of infection would likely affect consumer behaviour.”


He added that Q4 was also expected to see a final plateauing of used car values following several months of dramatic increases.


“Of course, people have been forecasting the end of this trend for some months and have been proven wrong, so I could well join that group, but it just seems that normal economic rules will start to assert themselves.


“What this will not mean, we believe, is anything that looks like a collapse in values. Even though new car supply is likely to increase gradually, there is a backlog of orders to clear. Used car stock will remain in short supply.”