Car dealerships: corona makes used cars expensive

The automotive trade could probably sell more at present if it had more merchandise.

Prices for used cars have been rising for months. Consumers are in the mood to buy again – and car dealers have seen their supply thin out during the pandemic. This also has a lot to do with home offices.

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Used cars are currently expensive. Diesel in particular cost more in May than a year ago, as current figures from the Deutsche Automobil Treuhand (DAT) show. And car dealers also report higher prices. The reason – by a roundabout route – is the Corona crisis, which has created pent-up demand among buyers and reduced supply at dealerships.

“Cars are getting more expensive because there is a shortage”, says Burkhard Weller, managing partner of the Wellergroup, which also sells tens of thousands of used vehicles each year. He estimates the increase at five to seven percent. “Our inventories have never been so low” and it has never been so fast to sell the cars before.

An industry survey by DAT also shows a clear shortage of used cars (see box below). 65 percent of the more than 400 dealers surveyed said that younger vehicles in particular were in short supply. 77 percent reported that it is currently difficult to buy used cars.

Normally, many of the relatively young used cars sold in branded car dealerships come from company car and rental fleets. But the rental companies, which usually only keep the vehicles for a few months, had greatly reduced their fleets during the Corona crisis and have only recently started to expand them again. In addition, company cars have not yet returned to the dealer in part because they have been driven less, as both Weller and Thomas Peckruhn, owner of the Autohaus Liebe Group and Vice President of the German Association of Motor Trades and Repairs (ZDK), tell us.

ZDK vice-president and Skoda dealer Peckruhn: “Used cars are a scarce commodity at the moment.”

“After all, they were all in the home office and drove very little”, says Peckruhn. In addition, there have also been fewer daily registrations during the lockdown period. “Used cars are currently a scarce commodity says the ZDK vice. Therefore, there would be no need to make them cheap to sell either. But that’s especially true for sought-after models, some of which could be ten percent more expensive, he says. For others, however, prices have not changed.

And it’s not just the young used cars that have picked up. This continues right up to the older models, emphasizes Weller. Ansgar Klein, head of the German Association of Independent Vehicle Dealers (BVfK), also sees corresponding effects. “If the younger car is not on the market, people go for the car that is a year older. That’s how it pushes through to the bottom.”, he says.

In the normalized figures of the DAT, the effects are somewhat smaller. Three-year-old diesels were around three percent more expensive in May than a year ago. No big difference for gasoline-powered cars. But market watchers also see the shortage of young used cars.

A rapid easing of prices is hardly to be expected, dealers agree. Peckruhn says the chip shortage, which is currently holding back new car production, is also a contributing factor. And Weller estimates, “I would think it will take until early 2022 for this to normalize.”

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