James Davis from Cox Automotive gives his take on the latest restrictions

We spoke to James Davis, Customer Insight and Strategy Director for CVs at Cox Automotive to get his take on the latest restrictions and how they might impact the market over the coming weeks and months.  

How did the first lockdown affect you and what trends have you seen in the following 10 months? 

In the first lockdown our physical auctions were closed within 24 hours – we already had a digital auction solution and we were ultimately able to scale this to re-start and help keep the wholesale market moving. And the trends we’ve seen since then have been unprecedented – CAP values increased by a quarter over eight months, you’re seeing similar trends in average prices on Auto Trader and our average auction selling price over the course of the year increased by 32%. 

Does this lockdown feel different to you?  

If you look at the new market last March, there was a global shutdown of auto factories, resulting in lead time issues and cancelled orders due to either production or order bank uncertainty.  But fast forward to this lockdown those factories are now on a level playing field, all dealing with COVID safe working, but they’re all producing – maybe not to the pre-pandemic level of output, but they are still producing and supply chains are flowing  so lead times won’t be as much of an issue as previously. Pockets of global component shortages, such as superconductors, are causing issues at factories and in some markets logistical issues are impacting supply chains.   

So you’re more positive about the coming weeks?  

Absolutely. This lockdown is actually less scary and stringent than last March, because the motor trade is allowed to operate, and even in Scotland where click and collect has been further restricted, dealerships are classed as essential retail, so logic would say that if that happens in England, the same rules would apply, obviously as long as everything is done outdoors and in a Covid-secure way.  

Sellers have also adapted well to the digital only approach. And we obviously have the vaccine roll-out underway, so I very much think this year will be a game of two halves once restrictions slowly start to lift later in the year.   

Even after the latest lockdown announcement on the 4th January, we’re seeing significantly higher levels of demand than last year, are you seeing a similar thing in the wholesale market? 

What we’re seeing and feeling in the wholesale market early doors this year I would best describe as traditional seasonality. Buyers are logging on in record numbers, at the end of last year active buyers participating in an auction was up a third for us, they’re participating and they’re logically buying the cleanest, most desirable, best presented stock. What we’re finding with damaged or higher mileage stock is that buyers are being more cautious – it’s not about over-supply or a lack of demand, but they don’t want to pay too much for stock requiring heavy investments of time and money to prepare for sale. 

And do you think that wholesale values will take a dip?  

CAP values shot up a quarter last year like I said, so there’s bound to be some realignment of that older product that has higher mileage and damage, but I think it’s very unlikely that there will be a flood of stock to the market that affects prices significantly. The 20% reduction in new van sales in 2020 is washing through; likewise in 2021 the volume of new vans required to enable old vans to come off fleet is simply not going to come in at any point soon because the manufacturing output  of factories is still below pre-pandemic levels. And with uncertainty about the economy, I’m not sure there’s a huge appetite to change fleets - many sectors will be looking at new vehicle orders and deciding to extend their way through the next year.  

Even in the post-Christmas peak in the run up to March when we normally see significant new registrations?  

In terms of home deliveries, for many home delivery fleets it felt like Christmas most of last year, so we haven’t seen the typical Christmas peak. You’re right, normally the industry sees a volume de-fleet in quarter one but we’re not going to see that this year. I believe supply will continue to track as it is now. The feeling of seasonality I described in the used market is largely driven by the trade who will be standing back and wondering when the typical annual influx of volume will come. From discussions with all the major fleets it is clear, as in quarter 3 last year, that this de-fleet volume is simply not going to come. All told I think 2021’s market will feel very much like last year so my advice to buyers is simple – secure retail van stock while you can