Wholesale recovery still ‘months away’

A new report has found that while the automotive wholesale market has shown signs of recovering recently, a return to normal is still months away.

This is according to Cox Automotive, which has warned businesses to prepare for more difficult times ahead.

Philip Nothard, strategy and insight director, said: “We need to remember that we are in a seasonally slow period; however, although many retailers are increasingly cautious, they will require stock for the New Year. Within the results, the EV sector is showing signs of strength. Indications are that economic uncertainly and seasonal easing on demand will result in similar data for the next few months, as supply shortages and new vehicle constraints will remain in the short term.

“There are reports of key volume buyers holding back, and dealers will need stock for the new year January demand, but there is no tsunami of stock on the horizon. The increasing volumes of nearly new vehicles above the original cost of new is a factor why the trajectory of trade price increases observed since April of this year has shown signs of levelling.”

Meanwhile, the new car market continued to suffer throughout October 2021, showing the weakest monthly performance since October 1991.

Nothard said: “New car market performance is extremely weak compared to the pre-Covid level over the past few months. We are really starting to see the negative impacts of semiconductor and raw material shortages now. This is one contributing factor, but we do know that demand is subdued and consumer confidence has worsened.

“Supplies continue to be challenging for most manufacturers, but it is worse for some than others. There are reports that some manufacturers have sold their total 2022 allocation. Sadly, supply shortages look set to continue, with global magnesium shortages now affecting several vehicle manufacturers, as a key material for aluminium.”

A small beacon of hope for the new car market came in the form of plug-in vehicle uptake, with battery electric vehicles (BEVs) equalling their September market share of 15.2% with 16,155 units, while plug-in hybrid vehicles (PHEVs) grew to 7.9% or 8,382 units.

Nothard added: “We are starting to see signs of EV market growth, which is handing a lifeline to the new car industry and very slowly beginning to alleviate pressures in the used vehicle market. However, although there are signs of encouragement, we must remember that we continue to operate in exceptional circumstances and are by no means out of the woods yet.”