Analysis by wholesale finance software expert Sword Apak indicates the UK used car market will remain ‘resilient’ throughout 2017 as the new car market struggles.
Sword Apak based its prediction on its historic detailed knowledge of dealer stocking activities and how the market tends to respond to economic changes.
James Powell, executive vice president of Sword Apak, said: “While the new car market is expected to slow in the months ahead, we expect the used sector to remain resilient overall.
“Modelling on historic consumer car buying behaviour during terms of economic challenges, there is typically a shift of interest towards greater affordability which is associated with a used car.
“A similar pattern, albeit on a shorter-term basis, is reflected during major political events such as an election.”
Powell said that although over recent years the growth of new car PCP finance has offset affordability advantages of used cars, the emergence of used car PCPs has changed this dynamic, swinging the affordability balance back to used vehicles.
He added: “We also believe the post general election Brexit dialogue will provide an unusually long ‘tail’ to the political influence on car buying; this uncertainty will, we expect, benefit the used car sector.”
In the short-term, falling disposable income, rising inflation and the general election have seen auction businesses reporting a softening of used car activity by dealers.
Nevertheless, Powell expects both conversions and values to stabilise in light of consumer demand.
Powell said: “There are many disruptive and evolutionary influences on the car buying market place, including the (as yet uncertain) clean air approach, along with political and economic influences.
“However, for car buyers, a used car has historically been seen as the safe haven option. We expect to see this scenario to play out again as the year unfolds.”
Sword Apak has provided leading global financial software solutions to the banking and wholesale finance sectors since 1979.
Today, the business works extensively across the automotive and asset finance sector globally and is recognised for its expertise in wholesale finance stocking software.
As well as wholesale funding software, Sword Apak provides a number of innovative software systems across the retail banking sector.
Sword Apak is based in the UK with nearly 100 clients globally.