Car market: ‘calm before storm’
The UK’s decision to Brexit probably won’t materially start to affect the UK used car market until the fourth quarter of 2016, according to Glass’s.
The motor industry data market leader is forecasting that it will take at least this long for the initial impact of Brexit to start to make itself felt. The summer break, which usually signals a quieter period in the trade, is also likely to delay the Brexit aftermath.
Rupert Pontin, director of valuations, said, ‘We’re in a period that you might characterise as the calm before the storm. The decision to leave has been taken but we have yet to see many material changes.
‘The first factor to hit the car and van markets is likely to be fuel costs. As the pound has dropped in value, oil will become more expensive and pump prices are likely to rise.
‘The second will be the choice of prime minister. Based on their decision, we will start to get an idea of when article 50 will be enacted and their overall approach. This may also trigger a period of further instability.
‘Hopefully, from there, we will soon start to see a picture emerging of the timetable for the next few years, which will at least allow dealers and manufacturers to plan more accurately. One of the issues at the moment is the sheer number of unknowns.’
Rupert added that later in the year, Glass’s also expected larger scale economic issues to start to emerge.
‘The next set of indicators is likely to be seen in areas such as retail and the housing market if consumer confidence continues to fall and lenders become more risk averse, making borrowing more expensive.
‘What is challenging, if not impossible to predict, is how strongly all of these factors will affect the car market. It has been very strong and resilient in recent times, which is a good starting point.
‘However, it is difficult to foresee a situation in which the decision to Brexit does not have a negative effect on both new and used car sales in the short-medium term even if, as leave campaigners promised, it turns out to be good for the economy in the longer term.’