Used car over-supply fears unfounded, CAP says

Fears that the increasing numbers of new cars being bought on finance deals will lead to an over-supply of used vehicles in the near future are unfounded, industry experts have said.

According to the forecasting experts at CAP Gold Book, an independent valuation benchmarking tool, the rise of PCP-bought vehicles will not impact on the used car market. Indeed, Gold Book senior editor Dylan Setterfield dismissed these rumours as merely “scare stories”, saying that there will not be an influx of cars being returned to dealerships as reported.

Should there be a notable rise in the number of used cars returning through a dealership’s doors, there could be important implications on motor trade insurance policies. Primarily, a business must always make sure that the full value of the stock it keeps on site is covered – if a firm is storing twice as many vehicles on the premises, then the combined motor trade insurance policy will need to reflect this.

Mr Setterfield explained: “For vehicle sectors where new car supply is a significant factor in used car price changes, increases in registrations have already been incorporated into our forecasts. However, it is also important to emphasise that the increase in PCP is not synonymous with new car sales growth.”

He added: “We will certainly see some increase in volumes coming back into the used market as a result of PCPs, but some of these would have been coming back into the used market anyway and we expect demand to be strong enough to cope with any additional increase in supply going forward.”